LONDON — Hello, goodbye.
In an exclusive interview she told WWD that it wasn’t an easy decision, but she’s eager to safeguard her name and her company’s future and is up for the challenge of running an indie brand.
“The future of the business is so bright, we have so much more to say and we have established ourselves in the fashion world with a point of difference. This time almost feels like the beginning for us,” said McCartney from her airy new offices near Westfield London.
Dressed in a languid, navy blue boiler suit and Velcro sneakers, McCartney said her option to buy back Kering’s 50 percent stake in the brand had been in her contract from Day One. She said she couldn’t turn it down.
“It is an incredible blessing and a once-in-a-lifetime opportunity that’s not awarded to many fashion designers with their name on the door. I have four children, I have the opportunity to take control of the business that bears my name and that is extraordinarily exciting. To be afforded that chance as a designer, as a woman, as a mother of four, it’s something I had to take on,” McCartney said.
She and her lawyers had put the option there when she launched her label as a 50-50 partnership with Kering, then known as PPR, in 2001.
“It was there for a reason. I’m very protective and very aware of my name. It has a lot to do with my heritage, a lot to do with how I’ve looked at the world growing up,” the designer said. “I’ve understood the value in the name — and the emotional value — so this was a very patrimonial decision. It’s about the ability to control my name and, hey, who knows what happens in the future? I guess having that security means that whatever happens, you’re going to have the ultimate say.”
In a statement released on Wednesday evening after the Paris and London stock markets closed, François-Henri Pinault, chairman and chief executive officer of Kering, said it was the right time for McCartney to move on.
“Kering is a luxury group that empowers creative minds and helps disruptive ideas become reality. I am extremely proud of what Kering and Stella McCartney have accomplished together since 2001,” he said, adding that McCartney and her team had brought far more than business to Kering.
“Stella knows she can always count on my friendship and support,” he said, echoing McCartney.
“I have had an incredible relationship with Kering and, first and foremost, the Pinault family, whom I consider to be great friends. I’m incredibly close to them. We had such a successful business together, an incredible partnership,” she said during the interview.
Both parties have promised a “smooth transition” in order to maintain the brand’s momentum in the market.
The handover process will take two years: The first 12 months will see the financial transaction completed, while Kering and McCartney have given themselves a further year to work together and sort out the final details.
In Kering’s 2018 financial report, Stella McCartney will be listed as a discontinued operation, while the profit-and-loss statement for 2017 will be restated to reflect the brand’s new status within the Kering stable.
McCartney said her licenses and partnerships — which include Kering for eyewear, Italy’s Isa SpA for men’s and women’s swimwear and lingerie, Coty for fragrances and the Adidas by Stella McCartney collection — will remain in place. McCartney also plans to remain on the board of the Kering Foundation, which aims to improve women’s lives, and said she will continue to work alongside Kering on fashion sustainability.
Kering and McCartney declined to confirm the value of the deal, or the overall size of McCartney’s company. Kering does not break out the financial results of its smaller brands.
McCartney also declined to comment on how she plans to finance the buyback, although it is understood her famous father Sir Paul McCartney will not bankroll the deal. She added that there were no plans for an initial public offering and no intention to take on a new business partner right now. Industry sources say that prospective investors have been circling and that the designer has been conducting exploratory talks.
“This has been a very mindful and serious option for me to look at, and I looked at it from every single angle,” said McCartney of her decision to split from Kering. “Fundamentally, if I didn’t think that we could do this, I would not be doing this. It’s a decision based on patrimony and also based on the fact that I feel we are really equipped to take this on. I’m a designer, but I’m also an independent businesswoman, and we are a healthy business.”
The time is certainly right to be raising money: Be they private equity or sovereign wealth funds, trade buyers, family investment businesses or high-net-worth individuals, investors are looking to put their money to work while interest rates remain low.
Investors are also using their cash to beat a path to Millennials, and looking for companies with strong social media strategies, direct-to-consumer plays and sustainable products.
Were McCartney to pursue new investors she’d be in good company: Dries Van Noten is said to have hired Elsa Berry’s Vendôme Global Partners to bring in an investor. It is understood a number of discussions have taken place in recent weeks with a variety of potential partners.
As reported, Acne has given a mandate to Goldman Sachs to look for buyers, while Tresalia Capital is said to have hired the same bank to handle the sale of its 20 percent stake in Tory Burch.
According to documents filed at Companies House, the official register of U.K. businesses, turnover at Stella McCartney’s U.K. division rose 31 percent to 41.7 million pounds in the 12 months to Dec. 31, 2016. Profits in the period were up 42.5 percent to 7 million pounds.
Those numbers refer solely to Stella McCartney’s U.K. business and the brand’s worldwide licensing revenue. They do not take into account wholesale sales or turnover from the brand’s directly operated stores outside the U.K. The collections are available in more than 100 countries at wholesale and through 51 freestanding stores worldwide.
Asked what more she feels she can do with an independent brand, McCartney said she never felt constricted by Kering in the nearly two decades they worked together, so the plan is to proceed with business as usual.
As reported, the label will move its flagship from Bruton Street to 23 Old Bond Street, in the former Joseph space, at the end of May. The following month McCartney plans to stage a presentation of her spring 2019 men’s collection and her women’s pre-spring 2019 collection in Milan.
In June, she’ll also launch The Loop, a glue-free sneaker for men and women with components that fit together like Lego pieces (as a mother, she’s well acquainted with the plastic bricks).
Asked about breaking free from Kering during such uncertain times for luxury fashion, McCartney acknowledged that it was a massive period of change for the industry.
“Everyone’s exploring different methods and different means of expanding their businesses. We are, too, and I look at it as a great challenge, as something that’s exciting. When you are creative person, you never want to just fit into a mold or stand still. At Stella McCartney we pride ourselves on exploring new techniques, new technologies, new ways of looking at an industry. We certainly don’t fit into a mold and we see opportunities going forward. We also don’t have these preconceived ideas that we have to sit in a certain price point, or territory. We are responding as well as respecting,” she said.
The no-fur, no-leather label has recently made a number strides on the raw material front, including winning Cradle to Cradle Certified Gold level certification last year for using pesticide-free, safer wool yarns in cooperation with Zegna Baruffa.
McCartney’s team is working with the Israel-based start-up developer and manufacturer TIPA on environmentally friendly plastic, and with Bolt Threads, a U.S.-based biotech company that makes fibers from scratch based on proteins found in nature. For Stella McCartney, Bolt Threads created silk using yeast, making the textile vegan-friendly.
McCartney added that, going forward, she plans to continue creating an annual environmental profit and loss account. The EP&L measures the impact of the business and supply chain on the environment. Hers was the first company in the Kering stable to do so.
While McCartney is fired up, she’s also apprehensive about her big leap.
“Of course, this has elements of fear attached to it. But I’m a glass-half-full person, so even fear for me is exciting and challenging and part of a reason to stay alive. I think it’s an opportunity for us, for everyone at Stella McCartney to have an incredible new moment, fresh air. This is an extraordinary opportunity afforded to very few, and to take the opportunity feels exciting, and like the right decision at the right time.”