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Hi, and welcome back to Line Sheet. I’m not on vacation yet, but I will be soon, so please reply to this
email with all your very good questions for my upcoming mailbag.
In today’s properly packed issue, accessible only to Inner Circle members (trade up
here), I check in on Gap Inc., and address those enduring—if far-fetched and
inaccurate—Jenna Lyons rumors. Up top, an addendum to Sarah Shapiro’s fabulous profile of Khaite post-Stripes acquisition, with revenue numbers, and more intel on how, exactly, they’ve managed to keep growing in this environment.
Finally, I’m quickly addressing the not-wholly-unexpected news that Jacopo
Venturini is leaving Valentino, and sharing the only take you need on those Tapestry earnings. I’ll be back tomorrow, alongside Sarah, with one more note about the Vogue job. And don’t worry, for all you Hearsties who are feeling left out: Next week I’ll offer a review of the Hearst September issues and all their, um, issues. (You have to admit,
Leo by P.T.A. remains a pretty big get for Esquire, even in a time when these things matter so little.)
Mentioned in this issue: Jenna Lyons, Gap, Richard Dickson, Zac
Posen, Banana Republic, J.Crew, Jacopo Venturini, Valentino, Alessandro Michele, Kate Spade New York, Mark Breitbard, Jemma Cassidy, Meena Anvary, Athleta, Nike, Khaite, Catherine Holstein, Brigitte Kleine, Tapestry, Coach, and many, many more… |
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There’s a reason the industry doesn’t publish wholesale reports often: it’s nuanced, behind the scenes, and
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Three Things You
Should Know…
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- Khaite
explanations: Shortly after Sarah published her extra-sharp analysis of the Khaite business post-Stripes acquisition, a couple folks reached out with some additional intel. First, one wanted to note that designer and founder Catherine Holstein hired the talented jewelry designer Charlotte Chesnais to consult on
that category. The other wanted to break down for me exactly why the business is looking so good.
Contrary to what you might expect from a private equity firm, Stripes encouraged Holstein and her superstar C.E.O., Brigitte Kleine, to control growth. Pre-acquisition, the company partly scaled through aggressive paid marketing, and was not profitable. When Stripes took over, Kleine slowed the paid marketing roll, and even shut down digital customer acquisition channels
altogether for a time in 2023, investing more in new retail stores instead. That year, the brand generated $90 million in sales, then $105 million in 2024. This year it’ll be more than $120 million in revenue—perhaps far more, depending on how this autumn goes—according to multiple people familiar with the figures.
That’s not tremendous growth, but it’s nonetheless impressive in this economy, when it’s tough for any luxury brand to get people to buy clothes. Business at the Mercer Street
store is up 5 percent this year, and it will generate something like $11 million for 2025—nowhere close to the $100 million coming into Louis Vuitton down the street, but much higher than many competitors on the block. How did they do it? Their subtle but striking stores, designed in brutalist fashion by Holstein’s husband, Griffin Frazen (they cost $4 million or $5 million to open), and large-scale fashion shows (the critics typically don’t love them, but the customers eat them
up) have positioned the brand as a competitor in the designer-designer space. Like those still shopping at The Row, Hermès, Loro Piana, and other seemingly insulated brands, Holstein’s top-spending customers are hardly price sensitive. There are already preorders for a $24,000 leopard print jacket that’s arriving in stores this fall. So they’ve been able to raise apparel prices and keep growing, despite probably not selling as much volume-wise.
Another thing to note: Holstein
herself pushes the merchandising team to move on, even if a residual product is still selling well in less-sophisticated markets. (For instance, the oft-copied Ona ankle boot is still around, but only in black leather and brown suede.) “She’s not leaving room to capture the woman who’s three years behind the trend,” one person close to the company told me. “She just wants it
gone.”
Anyway, it sounds like the next step in growth for Khaite will be to become a truly international brand, with far more distribution in Asia, particularly China. If things go as planned, Stripes might get a three-to-five-year return after all. A rep for Khaite declined to comment on the numbers I unearthed. (I’m sure they’re still a little irked that I’m airing their laundry, as clean as it seems to be.) - The Jacopo Venturini
denouement: The Valentino C.E.O. is leaving the business because of health reasons. (WWD reported the news first.) There’s not much to say on that front, other than that Venturini is a well-regarded executive who was working diligently even when he couldn’t be in the office these past months. And it’s unfortunate that Venturini was not able to see through his reinvention of the Mayhoola-owned Roman fashion house after recruiting his former Gucci collaborator, Alessandro Michele. The designer’s vision for Valentino needs to crystallize at retail by the end of 2025, when the overall market will hopefully start to pick up once again. There’s a scenario where
Michele at Valentino works, but a lot of this is simply about bad timing. (The designer continues to be endorsed by the Valentino board… for now.)
Meanwhile, Kering C.E.O. Luca de Meo still has some time to decide whether to follow through with the plan to fully acquire Valentino from Mayhoola by the end of 2028. As I’ve reported, there’s always a chance that the transaction will include an exchange of shares, giving Mayhoola a significant stake in Kering. If he backs
out—which is possible—Mayhoola will have to come up with a new plan. I suspect we will get at least some clarity on September 9, when Kering holds its annual general meeting for investors. De Meo officially starts his new gig the Monday after. - Tariffs blow, but Coach bags sales don’t: Man, these tariffs. Shares of Tapestry plunged by about 15 percent on Thursday after the company said its profits would shrink thanks to costs connected to
tariffs. And yet, sales at marquee brand Coach are incredibly good—and even accelerating.
I recently spoke with a Tapestry competitor about why, exactly, Coach bags are hitting so hard. Part of it, to be sure, is that the business is run incredibly well by Todd Kahn, and that creative director Stuart Vevers has forged a kind and professional culture over his 12 years in the role. The Brooklyn bag (a hobo style) and the Tabby (a shoulder bag) are just…
bags. Their success is the result of a symmetry of factors—the right time, right place, right shape, and a years-long courtship of Gen Z customers. Nevertheless, Coach’s future success will rely on more hit bags, so they must ensure the portfolio is balanced with perennials that can keep the business stable when they inevitably falter on the trendy stuff. (And it is inevitable.)
As for Kate Spade New York, also owned by Tapestry, the company said it’s attempting to apply
the same rules it applied to Coach in order to stop the bleeding. (Sales were down 13 percent in the quarter and the company recorded an $850 million noncash impairment charge related to the business, meaning the value of Kate Spade New York itself was reduced significantly.) So let’s sell this baby! The original genius of Kate Spade under its namesake and her husband, Andy Spade, was that it was a little sinister, but only if you were smart enough to notice. In
its second iteration, creative Deborah Lloyd zapped it of the irony and sophistication, but made it into something equally compelling: a life-events business with a relatable retro aesthetic. In Lloyd’s world, a girl got her first Kate Spade New York bag when she turned 16, wore her first KSNY dress to her high-school prom or college formal, used KSNY stationery when she landed her first job, and put a KSNY china set on her registry. Tapestry demolished that
dream, but I believe there’s an owner out there who could tap the spirit of the original brand, but merchandise and distribute it en masse. Alas, it’ll probably go to one of the licensing firms.
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Now, on to the main event… |
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Those Jenna Lyons-to-Banana rumors are specious, but they were a byproduct of Gap Inc.
C.E.O. Richard Dickson’s urgency to continue his turnaround and pour new life into old brands—including some that arguably don’t need to exist. |
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People sure do like to speculate about the prospects of Jenna Lyons, the
former J.Crew creative director who has never assumed another public-facing designer role since leaving the job in April 2017, nearly a decade ago. (I broke that story, and will remain forever indebted to my source, who was not who you think it was.) Part of this obsession is Lyons’s fault; she seeks the spotlight, and even became a Bravo star for a spell. But it’s also because she’s insanely talented. She really, truly dressed America, and is as admired and beloved as any major
European designer, and arguably far more directly influential.
So over the past few weeks, when people started talking again about her joining Banana Republic, I didn’t dismiss it entirely. She knows Gap Inc. C.E.O. Richard Dickson, and I’ve written previously about rumors that she might join the business in some capacity. Also: While Zac Posen seems to be thriving over there—winning more headcount for his Gap Studio collection and designing
gowns for music festivals—there are many parts of the business that he does not oversee, and I’ve heard about plenty of conversations between Dickson and big-time designers and creative directors. Posen is well aware of the conversations: Part of his job, in fact, is to recruit creative talent across the brands. |
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A MESSAGE FROM OUR SPONSOR |
There’s a reason the industry doesn’t publish wholesale reports often: it’s nuanced, behind the scenes, and
not particularly sexy. But we do it anyway because we care about how brands actually thrive. Our latest B2B report contains data we gathered from 100+ real brands. From choosing retail partners to ditching digital tools they barely use, brands are being ruthless about wholesale efficiency and control. Get your free copy. |
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|
In the end, this round of Lyons-to-Banana-Republic chatter was just a rumor, according to a person
with firsthand knowledge of the situation. Sorry to disappoint everyone. But while making calls about this topic, I did start to believe it was a great, or at least compelling, idea—especially if Lyons were to be installed as brand president or C.E.O. overseeing the whole business, not simply the creative. Banana has been without a leader since Sandra Stangl exited in May 2024. The two top executives, chief product officer Jemma Cassidy and chief marketing
officer Meena Anvary, report directly to Dickson, who, I’m told, has enjoyed being hands-on with a single brand. But it’s not a long-term solution, and while everyone agrees that the product Cassidy is developing at Banana Republic is serviceable, it’s also probably too expensive. Or too cheap. Banana Republic has the same problem it’s always had: There is no clear reason for its existence. Consumers these days act in a binary fashion: They either have very little price
sensitivity or extreme price sensitivity. Banana Republic may sell cute clothes, but it’s never top of mind. Sales were flat compared to last quarter, which is fine, but the brand needs a personality, and a unique value proposition. Lyons could, theoretically, create both.
Anyway, it’s not happening with her, so let’s see what Dickson does instead. There’s certainly an argument that the creative teams at Banana Republic should be based in New York, where it would be easier to
recruit top talent, and perhaps even a leader of Lyons’s caliber. Mark Breitbard, who now runs the Gap brand, moved the B.R. operation to San Francisco when he was running the business. That move aligned with the broader company initiative to consolidate on the Embarcadero. (Locals are heading back to work five days a week starting in September.) Long-term, though, it’s going to get tougher to get good people to move there. |
Meanwhile, Dickson has significant short-term challenges. In particular, he needs to reverse the
trend line at the failing Athleta, where he appointed Maggie Gauger, a 20-year Nike veteran, as C.E.O. The change-up indicates to me that, despite an obvious misalignment with the rest of the portfolio, Dickson is set on making Athleta work.
It’s a long shot. Longtime Nike executives notoriously struggle to succeed outside of the company—a result of both the love ’em up management culture (a unique perk of working at a
remarkably successful enterprise) and, relatedly, the fact that executives there have relatively narrow remits that focus on incremental market share capture, rather than turnaround plans. (That’s partly why Nike itself is so challenged right now.)
And, as my partner Sarah Shapiro has noted, the market for activewear is pretty
crowded these days. There’s always room for one more, but that one more has to have a real differentiator, or simply be the best. Athleta isn’t different, better, or newer than anything else—in fact, it’s the definition of basic. |
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As Dickson preps for his second-quarter earnings call, he’ll have to face plenty of questions about the
inevitable impact of tariffs, which he’ll surely contrast with the company’s recent marketing wins, like Posen dressing Gracie Abrams in a pink gown for Outside Lands, the distinctly Gen Z–coded Bay Area music festival.
As usual, I have no idea what this gown has to do with Gap, but obviously it’s
pretty, we live in an attention economy, and all that matters is that the numbers back up the story, even if it feels incongruous. Dickson can’t afford to think too far ahead. He just has to make what’s in front of him work. |
What I’m Reading…
and Listening To…
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Love this chart that shows the correlation between the drop in name-checks of luxury brands in hip-hop and
R&B songs and the decline of the luxury market. [Bloomberg]
The industry’s googly eyes for Tory Burch and her family (Pookie! Pierre-Yves!) is unparalleled. I had so many positive conversations about this Chloe Schama profile. People really
do love them. [Vogue]
Kirsty Godso leaving Nike for Vuori has the fitness community “shook.” Extreme drama. [WWD]
I’ve come to an impasse with podcasts. Several of my favorites are
gone or winding down. These days, I prefer just listening to music (and, occasionally, an audiobook) in the car. However, I still enjoy podcasts about the entertainment industry, perhaps because it runs parallel to fashion and luxury. This narrative series on The Ringer’s Big Picture feed, about films that were released during the George W. years, is just what I needed to end the drought. The first episode is about Bring It On and Donnie Darko. Guess
which movie is one of my favorites ever? [Mission Accomplished] |
And finally… never forget!
Until tomorrow,
Lauren
P.S.: We use affiliate links because we are a business. We may make a couple bucks off them. |
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Puck fashion correspondent Lauren Sherman and a rotating cast of industry insiders take you deep behind the scenes of this
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