DTC brands hit hard by inflation

DTC brands hit hard by inflation

Last week, while luxury brands showed strong earnings, DTC fashion was feeling the impact of inflation. Also, touching tributes to the late Issey Miyake poured in across the industry, Ferragamo partnered with Farfetch, and E.l.f. Cosmetics became the first beauty or fashion brand to dive into BeReal. Don’t forget to subscribe to the Glossy Podcast for both Friday’s Week in Review episodes, hosted by myself, and Wednesday’s episodes focused on interviews with industry insiders, hosted by Glossy’s editor-in-chief, Jill Manoff. –Danny Parisi, sr. fashion reporter

Warby Parker feels inflation pressure

While luxury brands have been mostly insulated from inflation, DTC brands are bearing the brunt of the damage that increased costs are causing.

In its most recent earnings report, on Thursday, Warby Parker revealed widening losses due to increased production costs. While revenue grew by more than 13% to reach $150 million for the quarter ending June 30, the company’s already-negative profit margin widened considerably. Last year at this time, Warby Parker operated at a $10 million loss, compared to more than $30 million this year.

DTC brands, especially ones for which low cost is a major selling point, will likely continue to struggle due to inflation, though the rate of inflation has seemed to slow somewhat in July. DTC brands are well aware that they’re in a vulnerable spot, as our sister site Modern Retail wrote back in April. 

DTC executives like Sean McGinnis, president of Kuru Footwear, are making plans. McGinnis told Modern Retail that the brand is looking toward its cheaper-to-make and higher-profit-margin products like sandals to help carry Kuru through the tough months ahead.

Ferragamo turns to Farfetch for e-commerce help

In May, Salvatore Ferragamo’s new CEO, Marco Gobbetti, revealed plans to double the brand’s sales in the next five years, particularly by bringing in more Gen-Z customers.

Now, one of the first big changes under Gobbetti’s leadership has been announced. Ferragamo struck a partnership with the luxury online marketplace Farfetch that will revamp its e-commerce in multiple ways. Farfetch’s e-commerce technology will power Ferragamo’s online store, and Ferragamo will increase its presence on Farfetch’s online store. The two companies will also work together on improving Ferragamo’s digital advertising reach.

The fashion world pays tribute to Issey Miyake

The beloved Japanese designer Issey Miyake, known for his pleated garments that gained popularity both in Asia and the rest of the world, died on August 5 due to liver cancer.

One of the first Japanese designers to show in Paris, Miyake was an iconic figure. The past week saw dozens of tributes to his life and work pour in from across the fashion industry. Magazines like Vogue and Esquire ran touching obituaries and retrospectives on his influence. More tributes came from fashion organizations like France’s Federation de la Haute Couture et de la Mode, as well as companies like Tradesy and individual designers like Rakesh Thakore.

E.l.f. gets real on BeReal

As the social media app BeReal, with its two-minute window for posting, gains popularity among users, brands are taking interest, as well. E.l.f. Cosmetics is one of the first brands to begin using the platform, teasing new products and showing glimpses of the behind-the-scenes process of creation.

BeReal doesn’t have any advertisers yet, so E.l.f. offered a free five-piece skin-care kit for its first 150 followers. While the platform is still in its infancy and it’s unclear whether it will prove to be a worthwhile effort for brands, E.l.f. is at least showing how brands can start testing the waters now.

Weekend Briefing: DTC brands hit hard by inflation