LONDON — Victoria Beckham’s brand is getting hotter despite the chill winds blowing through luxury, said David Belhassen whose private equity firm NEO Investment Partners holds a significant minority stake in the business.
Beckham’s brand, which will show the fall 2024 collection in Paris on Friday, reached a milestone in 2022, turning a modest profit at the EBITDA [earnings before interest, taxes, depreciation and amortization] level, and has continued to build momentum.
Belhassen, the founder and managing partner of NEO, said in an interview that EBITDA “significantly multiplied” in 2023 on the back of a 50 percent uptick in net sales. He added that each of the key activities of the house is now profitable at EBITDA level.
In addition, the business has reached net sales of 100 million euros, following a compound annual growth rate of 35 percent since 2020.
He declined to give more specific numbers. Victoria Beckham Holdings Ltd. will publish its full 2023 financial results on Companies House, the U.K. business register, at the end of the year.
“The house of VB is now fully live, and a reality. It was a dream for Victoria and I when we partnered, and it is happening. We are now embarking on a new phase with only the sky as the limit,” said Belhassen, whose firm purchased its stake in Beckham’s business for about 30 million pounds in 2017.
He said NEO has been fully aligned with Beckham and her team, and they have “scrupulously” applied the original strategy that he put in place five years ago.
The business was born as an online, direct-to-consumer proposition, and Belhassen said that today more than 60 percent of sales, including beauty and fragrance, are done on the brand’s own platform.
Accessories have been selling well, and handbags are on track to become one of the biggest product categories. The double-buckle Frame belt has been a sellout, while sales of dresses, tailoring and denim are also on the rise.
As reported, fragrance launched last September, with results “way above our expectations,” said Belhassen, adding there are ambitious plans for the category.
The brand has also opened a few beauty counters in the U.S. and the U.K., and has performed strongly at Selfridges, where it is one of the top-selling brands on the beauty floor.
Growth did not happen overnight, and the company has certainly had its share of challenges, especially during the pandemic. Beckham used that time to restructure her business and cut costs, and was forced to lay off staff.
In 2021, Beckham and the team merged the main line with the VVB secondary collection and slashed the average price point.
They also lowered the entry prices of the unified collection; refined their approach to sourcing, supply chain and manufacturing, and pushed ahead with plans to launch new categories and capsules, such as VB Body luxury knitwear and a T-shirt collection with humorous slogans such as “Fashion Stole My Smile.”
In the past six months alone, the brand has launched fragrance, enhanced its skin care offer and collaborated on a watch project with Breitling.
Last fall saw the introduction of three unisex scents inspired by personal moments from Victoria Beckham’s past, and especially her alone time with husband David Beckham. The niche fragrances, developed by the perfumer Jérôme Epinette are priced at $200 for 50 ml. and $290 for 100 ml.
Beckham described the fragrances as “my autobiography through scent, and a new way of communicating with my community.” The launch coincided with Beckham’s runway show during Paris Fashion Week, and she even appeared in the fragrance ad campaign, which was shot by Steven Klein.
The campaign, and Beckham’s own posts on social media and Instagram, generated more than $2 million in media impact value in the immediate aftermath of the launch.
Belhassen said it surprised him to see so much fragrance selling online, which has not traditionally been an easy sales channel for debut fragrances.
“We sold more than expected through our own e-commerce, and that’s been very encouraging. We want to make it a major category and have big plans,” he said.
In February, the brand introduced a new beauty category, cleansing, as part of a collaboration with the celebrity facialist and aesthetician Melanie Grant. The brand is now offering a gel cleanser and an oil-based cleanser.
Also in February, she partnered with Breitling on a limited-edition collection reimagining the watch brand’s Chronomat Automatic 36 watch. Beckham said she always wants to collaborate with the best in the business.
“That’s what I’ve done with my beauty brand. When I go into something that is so specific like watchmaking, that’s not something that I would have known to do myself,” Beckham told WWD in February.
Beckham’s approach to business has been consistent. She creates specific products that she wants to wear, or use, and stays close to her community. Customers, many of whom will have grown up watching and listening to the Spice Girls, have remained loyal, and appear to respond to her sense of humor and woman-to-woman conversations.
She also has a powerful ally in Belhassen, a successful private equity operator who specializes in investing in luxury lifestyle brands.
Last year, NEO successfully concluded the sale of its chocolate business, Pierre Marcolini, to VM2 Holding, owners of Godiva Japan and part of a Korean investment fund.
It also sold Vuarnet, which it had relaunched from scratch, to Thélios, the eyewear subsidiary of LVMH Moët Hennessy Louis Vuitton. Following those sales, Belhassen said NEO is “actively working” on two to three new luxury acquisitions.
Asked about the difficult environment for luxury right now, Belhassen said he isn’t overly concerned about the normalization in demand for luxury goods.
“It’s important to recognize that, despite a recent slowdown, the luxury industry overall has displayed resilience, growing 8 to 10 percent versus the previous year. While the slowdown in growth can be partly attributed to reduced purchasing power among aspirational buyers and economic readjustments in China, high-net-worth individuals are continuing to drive demand,” he said.
At NEO, he added, “our approach centers on the understanding that our brands, being comparatively smaller players, can capture market share and grow, even amid a broader market slowdown. While the wholesale segment has seen some impact due to more cautious retailers, our increasing focus on direct-to-consumer channels has protected us from this slowdown,” he said.
He added that despite the broader challenges, NEO’s total portfolio registered 30 percent year-over-year growth in 2023. The Italian leather goods maker Valextra grew by 25 percent compared with the previous year, while the coed French clothing brand Ami Paris was up by 35 percent.
