Fashionistas this weekend will be fixated on the fate of the £6.9 billion empire of Giorgio Armani. But soon talk will return to the struggles of online luxury fashion retailers. These businesses were once the last word in style, but are emerging as some of the most high-profile casualties of the global luxury goods downturn – a crisis exacerbated by President Trump’s tariffs.
Last week, the New York-listed LuxExperience said it would be cutting 700 staff at its luxury website divisions – Yoox Net-a-Porter, one of the big names on the UK scene, and at MyTheresa, a German business.
Meanwhile, Canada’s SSense and Italy’s Luisaviaroma have gone bust, and there is trouble elsewhere.
Three years ago, the London-based Threads Styling website was rescued by Chalhoub, one of the largest retailers in the Middle East. But in July, its staff were told in a memo from boss Antonio Corso that further investment was proving hard to secure, and that all roles could be at risk of redundancy. According to sources close to the situation, Threads was said to be selling off laptops, printers, and even cushions to staff. The firm did not respond when approached.
More attrition is possible as the Chinese love affair with upmarket baubles, bags and outfits wanes. Gen Z consumers worldwide tend to prefer luxury travel to status handbags, such as the Balenciaga Rodeo which retails at £3,250 (for the small size).
Between 2019 and 2023, the sector relied on steep price rises to provide growth. But this strategy has been derailed by a more cautious mood among the affluent. In America, luxury purchases are already set to become more expensive thanks to the 15 per cent tariff on exports from the EU to the US.
Dressed to kill: Luxury brands such as Gucci and Yoox Net-a-Porter (left and centre) have struggled, but Burberry (right) is recovering
High-end stores have also lost out as brands build their own slick and distinctive websites. This move to take back control was spurred by distaste for online retailers’ habit of offering discounts to help cashflow.
The malaise that has spread through the sector became a big story in December 2023 when Farfetch, one of London’s biggest names in the sector, was rescued from bankruptcy by South Korea’s Coupang in a £370 million bailout.
It was a dramatic fall from grace for a company valued at £4.9 billion when it was floated on the New York stock exchange in 2018. Subsequently, Farfetch has been described as ‘perpetually unprofitable’ though Coupang – South Korea’s answer to Amazon – has been rapidly addressing this and other issues.
Another rescue was mounted the same month. Matches Fashion, a highly popular UK luxury website, was bought by Frasers, the group founded by retail maverick Mike Ashley. Though Frasers seemed to be Matches’ salvation, in March last year it said it would cost too much to overhaul the firm and turned off the lights. Brands were left out of pocket with customers unable to return expensive outfits.
The Yoox Net-a-Porter saga has provoked wistful memories of the glory days of online luxury fashion. For the first time, shoppers had their pick of outfits from Chanel, Marc Jacobs and the rest without needing to visit Bond Street or Sloane Street.
Set up in 2000 by Dame Natalie Massenet, Net-a-Porter was the multibrand e-commerce pioneer. Its elegant black and white packaging and nifty delivery vans enhanced the cachet of the shopping experience. The entire luxury sector is now looking at ways to win back the 50 million customers it lost between 2022 and 2024, according to the consultancy Bain.
But seems that one British company has found a way to engage with the 350 million that remain.
Burberry will rejoin the FTSE 100 index later this month, underlining the pace of the turnaround at the once-struggling iconic British brand. It came as the firm stepped away from really costly bags and embraced its Britishness.
Thanks to the doubling of its share price over 12 months, some investors will be able to reward themselves with a £425 check scarf. Or even a £1,895 trenchcoat.
DIY INVESTING PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund dealing and investment ideas
interactive investor
interactive investor
Flat-fee investing from £4.99 per month
InvestEngine
InvestEngine
Account and trading fee-free ETF investing
Trading 212
Trading 212
Free share dealing and no account fee
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
Compare the best investing account for you
#Riches #rags #online #fashion #titans #fell #style
