Hi, and welcome back to Line Sheet. Hope you’re having a fabulous time on the holiday party circuit, and glad you enjoyed last week’s guide to gift guides. Speaking of, today is the launch of Puck’s third annual Guide to Mirth and Merriment, featuring recommendations from all of our writers, operators, and team members—plus some friends, too. (Big thank you to Line Sheet stars Gwyneth Paltrow and Mickey Drexler for contributing.) Like everything we do here, this guide is smart, entertaining, often funny, and useful. Enjoy.

In today’s private email, I’ve got some delightful deal gossip from the beauty world, the latest legal filings against Estée Lauder and LVMH, and a dive into the past, present, and future of Mansur Gavriel, the brand that made the It-bag to end all It-bags.

One more thing: If you know me—which I guess you do now, right?—you know I love to plan ahead, so I’m currently prepping a mailbag issue for the end of the year. Send through any and all questions related to the fashion and beauty industries! Can’t wait to hear from you. Coverage requests are also welcome.

Mentioned in this issue: Rachel Mansur and Floriana Gavriel, Gucci Westman, David Neville, DFS Group, Andowah Newton, LVMH, Estée Lauder, Tanya and Zhenya Posternak, Shira Sue Carmi, Farfetch, Maria Borromeo, Byron Trott, and many more...

• A new development in the Estée Lauder saga: Last Thursday, investors filed a class-action lawsuit against the Estée Lauder Companies, claiming that the group misled shareholders about what was really going on with its supply chain and inventory management in the U.S. and Asia.

  C.E.O. Fabrizio Freda and C.F.O. Tracey T. Travis are both named in the suit, which accuses the execs of making “overwhelmingly positive” statements during the period between August 2022 and May 2023, thus inflating the stock price. The plaintiffs are claiming that Freda and Travis, in particular, weren’t honest about the supply chain being messed up and inventory levels being too high during calls with investors.

  Investor lawsuits materialize for all sorts of reasons, and this one sure does come at an inconvenient time for Freda, whose unprecedented run of making a lot of money for Estée shareholders ended this year as the stock slid following missed projections. (Shares are down more than 60 percent from their pandemic peak in December 2021.) But while there may be a constituency on the company’s board that wants Freda out, as a recent Wall Street Journal article posited, it’s unlikely this suit would prompt his departure—especially if the S.E.C. doesn’t bother taking a hard look at the plaintiffs’ claims. As I wrote last month, this is going to be a tough period for the group, with succession and big-picture strategy questions looming on top of operational issues. Disgruntled shareholders aren’t the half of it. A rep for Estée Lauder declined to comment.

• Gucci Westman might sell… maybe, someday: The beauty industry gossip this week is that makeup artist Gucci Westman was exploring a potential sale of her cosmetics line, Westman Atelier, beloved by women who buy violet eyeshadow at Violet Grey and wear violet High Sport kick flares, to a strategic investor or private equity firm. There was even talk of flirtation with our friends at the Estée Lauder Companies. (ELC had no comment on that.)

  Upon further investigation, I learned from sources close to the company that it’s not happening, not this year, not next year… maybe in 2025. (A Westman Atelier spokesperson did not respond to a request for comment.) What I know is that there have been no formal conversations about a sale, and a process has not been started. Anyway, the brand hasn’t yet reached $100 million in annual revenue, and there’s just a lot of potential upside for current investors, including Andrew Rosen and Imaginary Ventures, if they wait until it’s bigger.

  But this is certainly the beauty brand to watch, IMO. It checks so many consumer boxes. One industry insider called Westman’s line “The Row of the beauty business”—a reference to its minimalist packaging; emphasis on enhancement, not augmentation; and, more recently, influencer-level front person. It’s an interesting opportunity for investors looking to bet on the customer who wants to look like Gwyneth Paltrow—or Westman, who is gorgeous—not the filler crowd. (And really, it would be an excellent pickup for Estée, which needs a stronger luxury bench. Remember, beauty is all about the high-low right now.)

  Westman, who runs the business with her husband, Rag & Bone co-founder David Neville, is smart to hold out a while longer. After all, $100 million a year in sales is actually pretty small for a beauty brand, and she could probably double that pretty quickly with increased distribution and a bit more paid marketing.

• A former LVMH lawyer is suing LVMH: Andowah Newton, the former vice president of legal affairs in the U.S. for LVMH, filed a claim in a New York Federal Court today accusing the company of a bunch of things, but mostly that she was fired years after reporting sexual harassment by Lloyd Doran, the former director of property and facility operations for LVMH in the U.S. (He retired in 2020.)

  In the claim, Newton says that LVMH “did everything it could to intimidate Ms. Newton into not pursuing her claims and convince Ms. Newton that the harassment was just a byproduct of being an ‘attractive woman’ who works at a company with a French culture, and thus should simply be tolerated.” After Newton sent Doran an email complaining about the alleged harassment, she says that management “chastised” her and said that she should apologize to Doran, who was eventually promoted.

  Newton is suing the group under a new federal law that prohibits employers from “enforcing pre-dispute arbitration agreements in cases involving sexual harassment and sexual assault without the employee’s consent.” (Meaning that the accuser should be able to take a claim to court instead of using an arbitrator to settle the dispute.) She testified in front of the House of Representatives to help get the bill passed, and you can watch her here.

  In response to the new filing, a representative for LVMH North America said, “Ms. Newton is once again pursuing entirely baseless claims following those she initially made in 2018, which were found to be without merit after being investigated at the time internally as well as independently by a retired judge. As to her newest claim, her departure was part of a restructuring of the North America legal department, which affected a number of employees, late last year by our recently appointed North America Chief Legal Officer. Given this, we will continue to vigorously defend our position against these meritless and frivolous claims.”

The story of the brand is both well-trodden and legendary unto itself. The designers, both art-school kids, met at a concert in Los Angeles, where Mansur was living and Gavriel was visiting from Berlin. They developed a friendship over email, and developed the concept for the line over email, too. The intention was never to only do bags, but they started there, and it took them two years to develop those first styles. They each contributed $35,000 to fund the first round of production of two bags, the bucket and a tote, in just a few color combinations.

What happened next never happens to designers: They walked into independent boutiques and the store owners placed orders for their patented bucket bag on the spot. They cold-emailed Net-a-Porter images of the line, and an order was immediately made. Mansur and Gavriel weren’t people who secretly had fashion-world connections. Instead, the product was selling because it looked good. What made the bags so wanted? The price—expensive, originally at $495, but not exorbitantly so—was key. As was the provenance—Italy, not China, but with China prices. And that lacquered lining—initially, two makeup shades of red and pink—was so alluring.

I’ve known Rachel and Floriana for a decade. I first interviewed them in 2013, about a month after the then-blogger Garance Doré published a photograph of the black bucket bag with the cherry-coated lacquer interior, which made the fashion world go wild. In 2013, the market for luxury handbags was no longer ruled by one, most-popular style each season, and yet they had managed to create a once-in-a-lifetime frenzy. If you were there, you remember what it was like to see Mansur Gavriel fly. If you weren’t, I would liken it to the Cabbage Patch phenomenon of 1983 or three straight years of PlayStation 5 mayhem (2020-2023). I had never witnessed anything like that before in fashion.

The designers were obviously inspired by Phoebe Philo, who started her epic run at Céline just a few years earlier, but nothing they did looked like a copy. And the imagery—which they shot themselves before hiring novice twin-sister photographers Tanya and Zhenya Posternak—was as spot-on as the product, itself. (The Ukraine-born Posternaks, who often capture bodies in the abstract, have since done campaigns for Jacquemus, Loewe, and Calvin Klein.) It also looked incredibly beautiful on Instagram, which was, at the time, just becoming fashion’s primary marketing channel—and you could still have plenty of success on there without paying for it.

At each step along the way, from the brand concept to the product, their success came down to attention to detail. Rachel and Floriana are very serious and studious: They were meticulous not only about what the bags looked like, but how they were presented and distributed, from the marketing to the packaging (rendered in Millennial pink long before that color even had a name). Most fashion concepts, or lines, or labels, or whatever you want to call them, never become realized enough to be considered a brand. Mansur Gavriel was a brand from the beginning.

And because of a lucky factory setup in Italy, the designers also had a fairly easy time turning around product. But things were moving so fast that orders would sell out instantly. Stores set up waitlists, and on the brand’s own site, $3 million worth of bags would clear in a couple of hours. (It would take about three months to restock.) The high demand allowed Mansur and Gavriel to ask for more upfront from retailers: Instead of waiting to be paid for 30 or 60 days after the goods were shipped, they’d require that stores give them a 30, 40, 50 percent down payment, which funded their production in those first few years. “We had no financial advisers at the time,” Mansur said. “Doing it all ourselves—keeping the money very tight.”

Investors were circling. (I remember seeing Andrew Rosen and Pierre-Yves Roussel, then the head of the LVMH fashion group, at one of their early presentations.) They hit $35 million in annual revenue by the fourth year, but the majority of sales were coming from the bucket bag. The frenzy would die down at some point, they knew that, but they believed everything they had built around the bag was strong enough to stand without it.

Then, the backlash started. New bag shapes were taking off, but not with the same dog-in-heat energy. When they first launched shoes, they received criticism online that they looked too similar to styles created by another designer, Maryam Nassir Zadeh, who sold her vintage-inspired sandals and pumps out of her influential Lower East Side boutique, and it damaged their industry reputation. And while they won CFDA Awards two years in a row, in 2015 and 2016, you could feel their apprehension and discomfort onstage. “All that CFDA stuff was hard, having to talk onstage twice,” Mansur told me a few weeks ago. “We are definitely shy.” Unlike many designers, they are not interested in the spotlight.

They kept moving forward, though, hiring Shira Sue Carmi, who advised early-stage fashion brands, as their first president in 2017. Carmi was there to manage the tail end of the Maryam Nassir Zadeh incident, which cut so deep because they really related to her: They saw themselves as creative directors of a niche brand, not overseers of a commercial one. Carmi thought they were singular talents. “They can look at a shade of color and say, ‘This is not us,’” she recalled to me recently.

They went ahead and launched a whole range of clothes, which was admirable, but harder to sell than bags and shoes: The prices of the ready-to-wear were higher than the accessories. By the end of 2018, they started looking for a financial backer in earnest.

About a year in, they landed on Gary Fuhrman, whose GF Capital Management had backed Oscar de la Renta and Mark Cross, another handbag line, and been an investor in Tommy Hilfiger when he sold his company to PVH for $3 billion in 2010. But by 2019, when GF Capital invested in Mansur Gavriel, the brand was vulnerable. For better or worse, they gave up a majority stake in the business, and Carmi was quickly replaced by Isabelle Fevrier, who spent most of her career at DFS Group, a Hong Kong-based duty-free retailer owned by LVMH. (Carmi is now the C.E.O. of Altuzarra.)

Blame the pandemic, blame a mismatch between Fevrier and the designers, blame time, but the last four years have been, on the face of it, a fairly obvious disaster for Mansur Gavriel. The product began to look and feel more generic, chasing trends rather than making them. It’s the classic private-equity fashion story: These firms see businesses like Mansur Gavriel as on the rise, and think they can grow super fast with a cash injection. The problem is, when a company is still very much founder-driven, with a singular vision, growth is often much slower. A fashion company typically needs to be north of $100 million in annual sales to truly stand on its own, without its founder. And even then, it’s not easy to maintain.

The elegant strangeness of the line that had made it so distinct—the vegetable-tanned leather, the fuzzy photography, the logo—had been wiped away. The distribution became wider, too, more reliant on major department stores rather than niche boutiques. And along with that broadened distribution came an extreme reliance on discounting. They were forced to close the stores, and to stop making clothes, too.

Mansur and Gavriel declined to comment on their relationship with Fevrier, but did confirm that, during her time at the company, they were relieved of all direct reports—a bizarre and disenchanting organizational decision that left them as founders and creative directors amid a rump state of bean counters. “We were floating in a corner,” Gavriel said. They were witnessing their vision dissolve before their eyes.

This scenario isn’t altogether uncommon: Capital gets invited into a business, takes a controlling position, and has its way. And it almost never ends well. The problem for everyone involved is that the bucket bag was a once-in-a-lifetime success. And while there’s a path forward for a brand like that, it’s an extremely difficult one.

It’s been about six months since Borromeo joined, and since then, things have started to turn around. Annual sales are still in the vicinity of $35 million, but her focus is on introducing products that people want to buy at full price, which means giving Mansur and Gavriel the freedom to be as particular as they want to be. They are, for instance, shrinking the logo, and once again shooting much of the brand imagery themselves. They’ve also started to reintroduce apparel: a shaggy faux-fur jacket to start. (Next year, they’ll reissue a knit from 2018, the “Cloud” sweater, which is currently going on resale site Vestiaire for more than $700.) October was the first month of no promotions in years, and the company managed to surpass its sales goals anyway, and again in November.

Will Mansur Gavriel ever really climb out from under its It-bag baggage? It’s hard to turn around anything these days, given the ever-multiplying competition and insatiable consumer desire for newness. There are also fewer exit options for investors like GF Capital: I.P.O.s are anemic, and firms like LVMH and Kering aren’t interested in brands under $1 billion. The best outcome would be to get it to $200 million, $300 million in sales and sell to another private equity firm, or one of the smaller strategic groups.

But I do think Mansur Gavriel has a few things going for it. For one, it’s still a small business, which means its distribution didn’t get entirely out of hand. It’s also been 10 years since the bucket bag was first introduced, and seven or so since it reached its height of ubiquity. Give it a couple more before people are yearning for it again.

Finally, it has Mansur and Gavriel. Oftentimes, founders get in their own way, and they’ve certainly made plenty of very naive, public mistakes over the years. But they’ve freed themselves of the pressure to re-create that initial success, instead choosing to focus on being uncompromising when it comes to what the brand should be. “I guess maybe one thing I learned during this is that we are so clear on what we want,” Mansur said. “All these tiny, little, subtle things are what come together to make a brand have a feeling.”

Congrats to Rachna Shah, the new global C.E.O. of KCD! [BoF]

Pre-teens being into skincare is real. I just heard about a 10-year-old who had a Sephora-themed birthday party. [WSJ]

It might feel like shoplifting is at its peak right now given how much we hear about it in the news, but it’s down from 2019. [New York Times]

The underbelly of the business of boutique fitness. [Businessweek]

Should Amazon buy Farfetch? Here’s hoping for Farfetch. [BoF]

Byron Trott, known in our world as an investor in The Row and Tory Burch, is advising Shari Redstone on the Paramount deal that Matt scooped. (In other worlds, he’s known as Warren Buffett’s favorite banker ever.) [New York Times]

LVMH sold a majority stake in its cruise-retail business to some dude in Florida. [Reuters]

And finally… hope the board meeting went okay, whatever okay means!