When making luxury brand acquisitions, management firm executives have recently focused on the legacy (and, thus, the potential) of these brand names — no matter how well they are doing at present. WHP Global founder, chair and CEO Yehuda Shmidman emphasized Marc Jacobs’s status as “one of fashion’s most influential brands”. Marquee Brands CEO Heath Golden lauded Cavalli as “one of luxury’s defining Italian houses, with a bold creative identity and enduring brand ethos”.
This doesn’t mean the way they operate is undergoing a 180. Brand management firms take a more practical, private equity-like approach to managing brands today, says Bernstein luxury goods analyst Luca Solca. “[They] make sure they have a low BEP [break-even point] and good profitability prospects,” he says. “They would not play in the premier league — 100% full price, 100% direct — but they would look for a middle ground made of licensing, wholesale (wherever still available), and off-price.” In this, the tension with luxury norms remains a barrier to success.
Still, that these brands won’t play in the top luxury league could actually be a positive, Solca flags. As the industry continues to price out shoppers who might once have splurged on top-end products, a white space has emerged where one-rung-lower — but still luxury-level brands — can take share. If done right, brand management firms could help steer their premium acquisitions into this arena. “There is a lot of demand orphaned by top-end brands and their price hikes that they could intercept,” Solca says. “It is a good coming back to reality.”
This may be so, but if the function and goals of brand management firms sits at odds with what makes luxury brands successful, can a marriage between the two ever really work?
Slow burn
Historically, the reason brand management firms have fumbled the luxury bag is because they’ve wanted too much, too soon. If these groups take a long-game approach, they could see success in the luxury space, experts agree.
To win, brand management firms need to build these brands more slowly — and at a smaller scale than they’re used to with the more mass brands in their portfolios. “Luxury brands derive value from scarcity, storytelling, and cultural relevance,” Lepor says. “The challenge for large brand management firms is scaling these businesses without diluting the very attributes that make them valuable in the first place; the brand should always be bigger than the business.”
You can’t simply flood the market with new products and categories to capitalize on short-term buzz, cautions Jessica Ramírez, retail consultant and founder of The Consumer Collective. Saunders wonders if the success of brands like Ralph Lauren and Coach — both of which have executed long-term, meticulously planned elevation strategies over the last five years — will encourage these firms to adapt their approach. It could happen, he says, but he’s skeptical.
These companies would also need to bring in the right people. Saunders is not sure firms would be willing to cede some of the day-to-day control to a luxury leader, but points to Brooks Brothers as an example that worked. “Catalyst Brands has done a very good job with Brooks Brothers. It has allowed the CEO of the division to drive the vision — but it is rare,” he says. (Catalyst is a 2025 joint venture between JCPenney and Sparc Group, the latter of which acquired Brooks Brothers in 2020. Under CEO Ken Ohashi, the brand returned to profitability in 2023.)
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