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Inside the Shakeup at Marc Jacobs

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Inside the Shakeup at Marc Jacobs

NEW YORK — That 59-year-old Marc Jacobs has become an influencer, speaking directly to his 1.7 million Instagram followers about everything from relationships to plastic surgery, is perhaps no surprise. Many of his peers — including Isaac Mizrahi and Todd Oldham — have also attracted fervent online fans, especially those nostalgic for the 1990s, when fashion designers were idolised like rock stars.

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Jacobs is a different kind of person.

His followers aren’t just scouring vintage stores and resale sites for rare pieces from his Spring/Summer 1998 collection, or pristine versions of his Stella handbag, first beloved in the mid-aughts. They’re buying new Marc Jacobs as well. Baby tees in Heaven, the youth-driven collection designed by Ava Nirui (art director and digital superstar). Tote bags are also available from the main collection.

He’s still staging closely-watched runway shows, too. Monday will see the designer present his latest creations at the New York Public Library in Midtown Manhattan. This is where he remains a hometown hero, thanks to the glossy magazine scrum.

Marc Jacobs is actually on the rise. While owner LVMH doesn’t break out revenues for its brands, a source close to the business said that sales are up by double-digit percentage points from pre-pandemic levels. In the next 18 months, 20 stores will be opened by the company.

It’s a long way from 2017, when the future of Marc Jacobs was in question.

Eric Marechalle (CEO), who joined LVMH five years ago from Kenzo, is responsible for the restructuring that led to the turnaround. Marechalle cut costs, scaling back the brand’s runway collection. He found a way to translate Jacobs’ madcap vision, which the fashion world loves, into something more accessibly priced that still comes off as original and novel, rather than watered down. He’s also managed to layer in new elements, like Heaven.

A laser-focused accessories collection, including the best-selling accessories, can be added. “Tote”And “Snapshot”The company has a target of $1 billion in annual sales over the next three to five year. (That’s not including its robust — and still growing — fragrance business with Coty.)

The brand wasn’t always as healthy.

“We were in a situation five years ago that had to change,” Marechalle said during an interview in the company’s Spring Street office building in New York’s Soho neighbourhood.

Five years ago, we were in a position that needed to change.

Marc Jacobs’ success was for LVMH less important than keeping Jacobs at Louis Vuitton for many years. As a deal sweetener, the company often invests in the namesake labels its top designers. Jacobs was the first to transform Vuitton’s luggage brand into a global fashion giant. He did this through his well-respected runway shows and by creating headline-making accessories collaborations alongside artists Takashi Murakami, Richard Prince, and others. (In 2000, Louis Vuitton was valued at $6.9 billion, according to Interbrand’s annual ranking of the “best”There are many brands around the globe. It was worth $22.5 billion in 2014, the year Jacobs left the brand.

The fact that handbags and shoes from the designer’s namesake Marc Jacobs label, as well as its contemporary Marc x Marc Jacobs line, became a major sales driver in the 2000s was icing on the cake. Analyst estimates suggest that Marc x Marc Jacobs had a peak revenue of $400 million per year.

During its first 15-or-so years under the LVMH umbrella, the Marc Jacobs team experimented with retail and product concepts — who can forget the corner store on Bleecker Street that sold branded lipstick pens? Its runway was also a big deal: it was the most anticipated show in New York. But as Jacobs — who was living part-time in Paris (for Vuitton) and part-time in New York — faced a series of personal setbacks and Marc Jacobs co-founder Robert Duffy receded from the picture, the label blew through CEOs at a rapid clip.

It wasn’t until Jacobs’ tenure at Vuitton ended that the group began seriously contemplating the future potential of the Marc Jacobs business, which was cruising along but no longer at the height of cool. There was even talk about an IPO.

“Marc Jacobs wasn’t even a $10 million company when we invested in it. Now it’s making a billion euros a year in revenue,” LVMH CEO and Chairman Bernard Arnault said at the company’s annual investor day in 2014. “Marc Jacobs is the most emblematic designer in the United States. [An IPO could mean] that over the next five to 10 years one company could equal a third of the value of the group. You can see the kind of promise all of this holds.”

That year, LVMH brought in Sebastian Suhl, a seasoned executive with successes at Prada, Valentino and Givenchy under his belt, to manage the company’s next phase.

He first closed Marc x Marc Jacobs, the contemporary cash-cow, and he intended to incorporate the lower-priced collections into the main line. “Collapsing”At the time, collections were in fashion. Dolce & Gabbana (Versace), Burberry and Dolce & Gabbana all made similar moves with the intent of streamlining operations, and sending a unified brand messaging to consumers.

Suhl’s plan was never to get rid of more affordable pieces, but instead give everything the same point of view, one that had more personality than something that could easily be found at Zara. However, the wholesale buyers were confused by the change and reduced their orders for the collection which featured many different products at different prices.

By 2017, the business was suffering, most evident to insiders in the runway shows at New York’s Park Avenue Armory, which were stripped bare of any set decoration to conserve budget. The closure of several Marc Jacobs stores — including its most famous, a converted garage on Mercer Street, and a string of five outposts on a little chunk of Bleecker Street in the West Village — made it even more clear that the company was in trouble.

“I’m more concerned about Marc Jacobs than the U.S. president,”Arnault spoke on a January 2017 earnings conference, one week after Donald Trump was sworn in as president.

Suhl was out, replaced by Marechalle, who was credited with transforming Kenzo into a youth-driven, contemporary-priced label designed by Opening Ceremony’s Humberto Leon and Carol Lim.

But Marechalle’s early moves backfired. He hired John Targon in early 2018 to create a new collection at a lower price. Targon lasted only three months. (Olympia Le Tan was a French accessory designer who popularised embroidered books clutches. She was quietly added to the mix and stayed for a while, before being removed at the start of the pandemic.

LVMH could have closed the brand or sold it off as it did with Donna Karan International, which was struggling. Marc Jacobs was still well-known and loved among fashion enthusiasts. It could be a reputational hazard to dispose of or close it. What’s more, its fragrances were still bestsellers, generating hundreds of millions of dollars a year in sales. Its positioning was better than Donna Karan’s for LVMH.

Marechalle’s plan, in some ways, was in line with the label’s history. Back to the 1980s when he sold a “junior” collection at Macy’s, Jacobs has almost always offered some sort of accessibly priced product, whether that was a full collection or cleverly branded tchotchkes.

However, LVMH’s track record with US-based apparel brands is not great. In the late 1990s, it invested heavily in Marc Jacobs and Donna Karan International. It then sold off Kors before it peaked, and Donna Karan in 2016, after many failed attempts at revitalization. But with the retooled Marc Jacobs, the group seems to think it’s finally figured the market out.

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“In America, we expect brands to be more democratic,”Marechalle said. “A broader audience can buy it.”

Sidney Toledano is the CEO of LVMH Fashion Group, which also includes Marc Jacobs. He mentioned Ralph Lauren as an example of a high-end fashion brand that generates a large portion of its revenues from $95 polo shirts.

“It’s hard to be a luxury [fashion] brand in the United States, unless you are, frankly, imported,”Toledano stated that luxury ready-to-wear companies take decades to build and that having access to expert ateliers as well as manufacturing makes it easier in Europe. In the USA, high-end manufacturing is almost nonexistent. “it’s hard to develop.”

Robert Burke, a retail consultant said that the market needs a more democratic approach at the right time. Tibi and Ganni, two of the most popular contemporary-priced brands today, are thriving. The difference between the old and new way is that they are design-driven and not trend-driven. The demand for new brands is high.

“There’s a big void right now in affordable, interesting fashion,”Burke said. “This path [for Marc Jacobs] makes a lot of sense to me.”

Marechalle: How did he do it? His first goal was to better link Jacobs’ still-admired runway collections with what was sold in stores.

“When Marc’s doing a show, his pieces are extraordinary, but it’s not very accessible,”He said. “What we’ve improved a lot is our capacity to develop this commercially viable product that is really in Marc’s vision.”

Runway Marc Jacobs, Autumn 2021 collection. Marc Jacobs

The main collection, priced as accessible luxury — or contemporary — was rebranded The Marc Jacobs, filled with products directly riffing on Jacobs’ runway takes. While there were already budget cuts underway, when the pandemic hit in 2020 the company laid off 60 people — including designers and other corporate employees — and shrunk things further. The runway collection was reduced down to two seasons and sold exclusively through Bergdorf Goodman.

This could be seen as a major downgrade for Jacobs, whose public identity was largely defined by his shows at the time. Marechalle and he position it differently. Jacobs is free to express his creativity by removing pressure to make the runway economically viable en masse.

“That’s classic in terms of the way most designer businesses work,”Jacobs shared his thoughts with BoF. “My process hasn’t changed: I basically think about fashion all the time. Now that we focus on smaller [output], it gives me complete freedom to tell a story and say something. We have less resources, yes, but it’s very high-end, without any limitations, and that’s what’s most important.”

The new mainline may have been tweaked to better serve Jacobs’ fanbase, but was there a way to attract a new generation of consumers? A third collection — Heaven — was developed by Nirui, a Brooklyn-based creative who had become known for her one-off, “bootleg” items — a Barbie dressed in a “Prada” polo neck, a pair of Nike Air Max made from bullet-proof nylon — as well as an interest in Jacobs’ early designs. Nirui drives the aesthetic, using her own circle of image makers and collaborators, like the illustrator Ancco or video director Hideyuki Tanaka, rather than Jacobs’ go-to’s.

“It’s really Ava’s baby,” Jacobs said. “What’s interesting to her about our past and our history … feels fresh and new. In a way, it’s like Marc x Marc, but I don’t really have much interaction. Ava really has a very specific community of creative people who are outside of this company.”

Heaven is a growing part of the business today, but it’s its popularity among young people who make it so valuable to the brand. Pieces sell out quickly and can often be found on secondhand websites like Depop, often at a much higher price than originally priced. (A $185 cropped, broken-stripe cardigan — sold out — is currently listed on the marketplace for $500.)

Searches for “Marc Jacobs Heaven” have increased by 67 percent in the last year, according to Agustina Panzoni, the platform’s trends and category manager, with searches for the label’s “teddy” logo tee — worn by Olivia Rodrigo and Bella Hadid — up 35 percent over the past six months.

Panzoni observed that Heaven also ties in with the emerging “weird girl” aesthetic on TikTok — all reminiscent of Jacobs 1990s, early-2000s heyday, when his own look, and the looks he was creating as a designer, were deeply reflective of the skate and underground youth culture of the time.

Longtime Marc Jacobs muse Winona Ryder in a 2022 campaign featuring one of the brand's newest handbags.

Cultural relevance is crucial, but so is a successful accessories company. Marc Jacobs makes accessories the fastest-growing product category in its first year.

The Snapshot, a cross-body camera bag, was for many years the label’s best-selling product, followed closely by a simple $250 tote, with “The Tote: Marc Jacobs”Engravers Gothic’s signature font is used to print the Tote. Now, the Tote — rendered with Jacobs’ signature humour and lightness — has eclipsed the Snapshot as the top seller. These are not the high-end bags Jacobs used for, but the focus is on a wider audience and not just a select few. Marc Jacobs has created something unique with the Snapshot. This is an almost impossible feat in handbag design, where almost everything is referential.

Beauty, the most stable part of the business, is still evolving. In the past, a brand like Jacobs’ could have subsisted on fragrance sales alone, and it remains a pivotal part of the business. Marc Jacobs fragrances earned more than $39M in the US in the first four months of 2022, up from $36M in the same period in 2021. This is according to NPD data that was shared by a source who requested anonymity as the information was confidential. It’s the ninth-best-selling fragrance brand in the US, based on that data.

But a much-hyped makeup and cosmetics collection, launched by Kendo, LVMH’s beauty incubator, in 2013, was put on hold in 2021. Marechalle stated that it will be relaunched, but he would like to approach it in an alternative way. “innovative”It makes sense when you consider how he rebuilt the rest.

Marechalle continues to expand on the structure that he has established. The return of colour cosmetics is imminent, the retail network will expand and more runway collection retailers will likely be added to the US. Given that the US and Europe — its first and second-biggest markets — are on track, the company is focused on expanding its business in Asia.

For Jacobs, who loves to post the hashtag #gratefulnothateful, it’s a best-case scenario. He can keep designing without the pressures associated with creative director positions. He claimed that he can. “rise creatively to a request from merchandising,” he isn’t a merchandiser himself, and Marechalle doesn’t expect him to be.

“Over the years, we’ve had a lot of CEOs and most of them have done nothing to really grow this business or help this company,” Jacobs said. “I really love Eric, and I’m not just saying that. He allows me the freedom that I so want to do what I do.”

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