LONDON — Fashion designers have two new fairy godmothers — and they're backed by Compagnie Financière Richemont SA.
Marty Wikstrom and Dawn Mello have joined forces to create an investment fund, called The Atelier Fund, whose principal investor is Richemont. And their first investments include adampluseve, whose show is today at Jane Street Studio. Sources said Atelier paid about $9 million for a 49 percent stake in the fashion brand.
Atelier, founded 11 months ago, also has taken stakes in Harrys of London, the men's footwear brand founded by Matthew Mellon, and Mary Norton, the handbag firm.
Retail industry veterans — and friends — Mello and Wikstrom are working alongside Jon Brilliant, a former financial strategist at Harrods, and former managing director for U.S. operations at Syntek Capital AG, the Munich-based private equity fund.
In an exclusive interview, Wikstrom and Mello said the aim is to apply their decades of retail experience to building up affordable luxury fashion brands.
"We're retailers — we have a sense of what works on the selling floor. We're not your average private equity investors," said Mello, the former president of Bergdorf Goodman and head of Dawn Mello & Associates, a consultant to fashion and retail firms.
Wikstrom, the former managing director of Harrods and former president of Nordstrom's full-line stores, said the goal of the fund is to "help very talented designers implement their strategies, and achieve their goals."
Although Wikstrom and Mello declined to comment on the value of the fund, the size of the companies they're scouting and their brand-building strategies, Wikstrom said they are not interested in start-ups, but rather in "functioning" businesses with potential.
They are not looking to buy businesses outright, but will take minority and majority stakes in companies on a case-by-case basis. They are looking worldwide for investments, but have a strong preference for North American brands, Wikstrom said. She did not reveal whether Atelier would have right of first refusal to buy the remaining shares in the companies in which it takes a stake.
A Richemont spokesman declined to say how much money the luxury goods group has invested in Atelier, but he did say it was an attractive opportunity for the company, whose brand portfolio includes Cartier, Van Cleef & Arpels, Chloé, Mont Blanc and Dunhill. "It allows Richemont to piggyback on Dawn Mello's and Marty Wikstrom's talent-spotting expertise," he said, stressing Atelier was a separate entity from Richemont.Adam Lippes, creative director of adampluseve, has no doubts about Atelier. Lippes said he chose Atelier after talking to a host of interested investors.
"Dawn, Marty and Jon knocked my socks off — they were very different from all the other people I was talking to. Basically, what other investors wanted to do was to give me money — and no guidance — or absorb my company into theirs and implement their vision, not mine. But the team and I have worked too hard to give up now.
"What I'm getting from Atelier is money — and mentoring," continued Lippes. "I can call Dawn, Marty or Jon when I need advice. Their combined retail, product and financial experience is extraordinary. They are going to be incubators for the growth of this company," he said.
Lippes is now "looking actively" in Manhattan for his first retail space, which he hopes to open by September, and he said other U.S. stores are in the works. With Atelier, he's also building up the brand's wholesale and e-commerce businesses.
Mello said Lippes has a "remarkable sense of style, high quality standards — and a great, international future."
Wikstrom said Atelier is about providing financial investment and industry expertise rather than simply throwing money at the brands. She sits on the board of Richemont, which has become much more attracted to the fashion business in recent years. A decade ago, the luxury goods group considered itself primarily a jewelry, watches and leather goods company and barely mentioned its fashion interests. That all has changed since the skyrocketing success of Chloé.
"I think brands are interested in us because of our industry expertise — it's where we can bring the most value. If they just want money, they won't be working with us. For our part, we are taking a long-term view on these investments," Wikstrom said.
In that sense, Atelier is in the minority.
The luxury fashion industry is flooded with private equity, venture capital and leveraged buyout companies looking to snap up brands, turn them around — and flip them in the short to medium term. Often, they are run or managed by people from outside the fashion and luxury sector. Even when a fund is run by those inside the luxury sector — such as the Luxembourg-based Opera — it is not guaranteed to succeed.Once a highly trumpeted mergers-and-acquisitions player, Opera today has a nearly empty portfolio, consisting of furniture group B&B Italia and a minority stake in California-based A.G. Ferrari Foods. It is part owned by the luxury jeweler Bulgari, which is now thinking of reducing its stake. As reported last week, Opera recently sold its Bruno Magli subsidiary to U.K.-based investment fund Fortelus.
Industry observers say it's a delicate balance of bucks — and business smarts — that makes the investment funds' investments stand or fall. "The only way these funds' investments can work is if there is a marriage of money and expertise. Money without expertise just falls into a black hole," said Edward Whitefield, chairman of Management Horizons Europe, a London-based retail consultancy.
Whitefield said Wikstrom and Mello are ideally positioned to build brands. "They've been at the sharp end of this business all their lives — watching how products perform on the shop floor. They've spent their careers managing a portfolio of fashion brands at the store level," he added.
Wikstrom said she sees Atelier as investing foremost in people. Harrys, she said, is a particularly attractive brand because of its creative director Kevin Martel, whom she calls a "very, very special designer." Martel is formerly director of men's footwear and accessories at Giorgio Armani in Milan, and Mello said he's got strong knowledge of the Italian manufacturing business.
Mary Norton, the South Carolina native who until recently designed under the label Moo Roo, is the third brand in the stable. She specializes in evening bags, and her collection sells at Saks Fifth Avenue. "Her bags are beautiful, and the evening bags have a unique twist," said Wikstrom.
Wikstrom added that Atelier has other, more personal criteria for the people it chooses to work with. "Everyone is really nice, driven, focused and hard-working. They're also educated and entrepreneurial. They embrace change and are ready to evolve with the customer."
Asked if Atelier's aim was to be the next LVMH Moët Hennessy Louis Vuitton or Gucci Group, Wikstrom said it's far too early to tell. "All we want to do is keep our heads down and work very hard to build these brands. We'll see how it all plays out in the future."Mello said the three partners all live in different places and do a lot of their business on the phone, which she sees as a plus.
She is in Manhattan, Brilliant is in Delaware and Wikstrom is based in London. "We're all seeing different things every day — and when we have a spare moment, we're all rushing to look at store windows," Mello said with a laugh. Wikstrom added: "For us, it all comes back to the same thing: The consumer, and the presentation and quality of the product."
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