Victoria Beckham’s sales soar, but profitability remains elusive

Is Victoria Beckham’s turnaround finally starting to take shape? More affordable price points, a core knit line and a high-margin beauty unit help usher in what Beckham and her team hope will be a new chapter for the company.

Profitability remains elusive 15 years after the label was founded, but sales have grown by double digits for the past seven seasons, said chief executive Marie Leblanc.

In 2021, sales rose 13 percent year-on-year to £40.8 million ($49.6 million), beating pre-pandemic levels by 7 percent, the company reported on Tuesday. Growth accelerated to a high double-digit percentage in 2022, the company said, boosted by the launch of a new leather goods and knitwear line, “VB Body,” as well as staging a show at Paris Fashion Week.

Losses in 2021 have narrowed to £5.9 million ($7.2 million), compared to £8.6 million ($10.5 million) in 2020. “We are close [to profitability] and that’s obviously our focus,” said Leblanc, who declined to commit to a timeline pointing to an uncertain economic climate.

Still, the label’s newfound momentum has inspired big ambitions: the brand now hopes to triple sales to over £120m within three years, Leblanc told BoF. “Our ambition is to really tap into the potential of the business,” she said.

When Beckham launched her eponymous luxury brand in 2008, her sophisticated sexy figure-hugging dresses quickly became popular with celebrities like Eva Longoria, Blake Lively and Heidi Klum. The former Spice Girl shook off her glitzy pop image with simple, sleek collections that were flattering and wearable.

Despite Beckham’s celebrity profile and a warm welcome from industry insiders, the brand has yet to turn a profit and has posted a bumpy top line in recent years, despite receiving a £30m cash injection from private equity firm Neo Investment Partners in return. for an undisclosed stake in the company in 2017. (At the time, the business reportedly valued the business at £100 million.)

Since 2019, when former Printemps buyer Leblanc took the reins as CEO, the brand has revamped its product mix to reduce exposure to ultra-high-end ready-to-wear, a segment where the brand has had to compete for clients with more established luxury houses. and buzzy upstarters alike. In 2021, the brand merged its main collection with the diffusion line “Victoria, Victoria Beckham”, reducing the average price of dresses on the combined label by about 40 percent. It has also developed a cosmetics line, which Leblanc says has seen “tremendous growth” and has been profitable since launching in 2019.

“The potential and value of the brand was there, but in terms of the efficiency of the business model and the positioning of the brand, things needed to be reassessed,” said Leblanc. On the other hand, the company has been working to optimize its supply chain and streamline operating costs to increase gross margins, she said. Now, the line remains “beautifully made,” he says, but with a much more affordable price point.

Certainly, while the revised price point (including £350 shirts and £800 dresses) sits more comfortably in the affordable luxury space, Beckham will still have to work hard to compete with the cohort of up-and-coming contemporary womenswear brands. such as Nanushka and Frankie Shop, which offer similar stylish offerings at more competitive prices.

Leblanc is betting that the category’s recent expansion will help fuel future growth. The brand’s VB Body range features figure-hugging knit pieces priced from £90 for a bandeau top to £690 for a midi dress. Last year, the brand also launched its debut collection of bags – a competitive but often lucrative category for high-end brands.

This year, the company plans to focus on increasing brand awareness, including by continuing to show at Paris Fashion Week, as well as expanding into new markets including the Middle East and Asia.

“Geographical expansion gives us confidence that we can really take the business to the next level [a] higher potential,” Leblanc said.