Acquired brands were cash-burning, CFO says
When Mytheresa folded Net-a-Porter, men’s site Mr. Porter and off-price high-end website Yoox under one corporate roof, executives at the company now called LuxExperience saw an opportunity to offer more designers and reach more shoppers. Some restructuring was needed, executives concluded, but they did not want to alter everything, according to the Wall Street Journal’s CFO Journal.
“If you really compare why a customer shops at Mytheresa or why they shop at Net-a-Porter, they will clearly explain the differences,” Martin Beer, CFO at what’s now called LuxExperience, told analysts last year. “And that’s why also in the upcoming acquisition, we, after closing, want to keep the storefront separate.”
The acquired brands were cash-burning businesses, and that needed to change, Beer told the CFO Journal. LuxExperience’s new high-end platforms didn’t focus enough on high-end shoppers, so the company decided to sacrifice casual buyers looking for deals to target shoppers who spend tens of thousands of dollars on clothes.
“This is not a customer that saves up for two years to buy a Louis Vuitton bag,” according to Beer. “It is really high-net-worth individuals that are not so affected by inflation and gas prices.”
The approach has pushed up net sales, top customer spending amounts and average order values, the CFO Journal reported. Along with moves to cut operating costs at its new properties — which LuxExperience deemed much too high for their size — the strategy has boosted the company’s bottom line at a time when some in the luxury space have struggled with cooling demand.
The same newsletter reported that the Federal Reserve held interest rates steady Wednesday after last month’s increase, buying time to decide whether more rate hikes are needed to keep energy costs and an artificial-intelligence building boom from seeping into broader inflation. The decision, which maintained the Fed’s benchmark rate in a range between 3.75% and 4%, was approved on a 10-2 vote, with Fed governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favor of a quarter-point increase. In September, most officials projected the Fed would raise rates at least once more this year, at either this week’s meeting or the one that concludes Dec. 9.
The newsletter also noted that the Bureau of Economic Analysis releases its personal-consumption expenditures price index for September and its advance estimate of third-quarter gross domestic product growth.
Christine Lagarde will step down as president of the European Central Bank, vacating one of the continent’s top jobs at a time when debt problems and resurgent inflation are looming over the economy, the newsletter reported. Lagarde said in a statement Thursday that she would resign in February; her eight-year term was set to end in October 2027.
The newsletter also reported that gift cards remain a longtime target for fraud. After retailers cracked down on in-store thefts, thieves moved online, according to law-enforcement and industry officials, and draining card balances using spoofed gift-card websites, in particular, is increasing. Companies from Target, Apple and Home Depot to gaming company Valve are updating packaging, retraining store clerks and advising shoppers on where to check their balances. The stakes are especially high heading into the holiday season, when gift cards rank among the most popular presents.
GE Vernova agreed to a purchase price for Trench Group in a deal the newsletter said will strengthen its grid-equipment manufacturing capabilities as demand for energy continues to skyrocket.