Online luxury fashion retail platform Farfetch has purchased New Guards Group in a US$675 million acquisition, gaining control of a handful of luxury streetwear brands including Virgil Abloh’s trendsetting label, Off-White. A key initiative in its long-term strategy, the popular marketplace hopes to build out its own private label platform as a means to test out fledgling brands, and build scale and buzz for the existing portfolio utilising its vast online and offline sales channels.
In purchasing New Guards Group, Farfetch comes under control of some of the most buzzed about streetwear brands, including Off-White, skate culture-inspired Palm Angels and the sporty, genre-bending American label, Heron Preston. These millennial-driven brands are set to become a key source of revenue for Farfetch going forward, with New Guards Group generating revenues of USD$345 million in the previous fiscal year, with USD$95 million pre-tax profits. In the first half of 2019, the group’s revenues shot up 59 percent year-over-year — evidence, if anything, of the unprecedented rise in popularity of luxury streetwear, a trend fuelled by prior landmark acquisitions such as the Carlyle Group’s 2017 purchase of a stake in Supreme, valuing the latter at US$1 billion.
Farfetch has stated the deal as key to its plan to ‘launch brands of the future’, in acquiring a platform that is well-known for its ability to identify up-and-coming talent and provide a stepping-off platform for highly buzzed-about brands. “[New Guards is] a platform — they are not a brand, they are not a Maison, they are not a conglomerate,” said Farfetch founder and Chief Executive Jose Neves, as reported by BoF. “They are absolutely best in class in terms of spotting the new stars of tomorrow.”
Farfetch plans to boost its e-commerce and revenues generated through a network of more than 650 boutique stores. The first step will be launching new websites and online platforms to turbocharge growth and profitability for New Guards’ brands, which have mainly been selling through wholesale and franchise stores until now. Directly operating e-commerce and retail, Farfetch hopes to scale existing buzz, while continuing to identify new culturally relevant brands of tomorrow. For now, the acquisition will not affect New Guard’s day-to-day operations, with co-founder Davide De Giglio staying on as chief executive, and Andrea Grilli remaining chief commercial officer.