Tom Chapman and Ruth Chapman

LONDON — is a unicorn — and its high valuation shows not just its potential, but the increasingly fierce competition in designer fashion e-tailing.

As reported, Apax Partners has acquired a majority stake in the London-based company following a bidding frenzy among private equity firms. The bidding battle drove Matchesfashion’s valuation up to a reported one billion pounds — clearly an amount founders Tom and Ruth Chapman and their other shareholders could no longer resist.

With its new owners and plans for global expansion, Matches is now poised to scale against online luxury retail pioneer Yoox Net-a-porter, as well as newer businesses such as Farfetch, with the aim of becoming “the number-one luxury fashion commerce company in the world.”

“Digital luxury has become a bandwagon and pushback has dissolved, as it is clear consumers are researching and buying fashion and luxury products online. YNAP has been a pioneer in this field, but a number of other players are tooling up to be relevant actors in this market,” said Luca Solca, head of luxury goods at Exane BNP Paribas, pointing to new business models like Farfetch and online ventures by department stores such as Bon Marché — which has the heft of parent LVMH Moët Hennessy Louis Vuitton behind it — as other key players competing for a bigger stake in the market.

Last month, YNAP reported that for the first time it surpassed the billion euro mark in revenues, with all its divisions registering strong growth in every geographical market as the company continues to invest in new technologies and attracting more brands.

Even though Matches is significantly smaller in scale than its competitor, its growth trajectory — revenues last year rose nearly six times to more than 204 million pounds while earnings before interest, taxes, depreciation and amortization, or EBITDA, came to 19 million pounds — and potential to expand further made it an attractive investment worthy of the expensive price tag.

“That’s a huge, huge price tag for a business that’s got a reasonably small profit and sales but Apax is buying into its potential. Well done to the founders for holding out to a price like that,” said Paul Thomas, retail consultant at Retail Remedy, of Matchesfashion’s valuation, which rose from an initial 600 million pounds, following increasing interest by numerous private equity suitors, including Permira and KKR.

Although the company declined to offer projections for 2017, sources said revenues could exceed 300 million pounds, with profits heading toward 40 million pounds.

Ludovic Grandchamp of the financial advisory firm Savigny Partners also pointed to Matchesfashion’s compound annual growth rate of 50 percent for the years 2014 to 2016, which is higher than YNAP’s 20 percent annual growth rate during the same period.'s Style Report

An editorial image from’s Style Report.  Courtesy Photo

In a statement, Apax said that as it foresees further online penetration in luxury in coming years, the group wanted to tap into the market with a company that stands out for its “distinctive assortment, unique voice and unparalleled customer service.”

In order to scale the business against the likes of YNAP, Apax should focus on international growth to attract more customers, as well as more brands, according to analysts.

“It’s about going into other territories so that they can tap further into international markets using that same brand name,” said Thomas, pointing to the U.S., the Far East and China in particular, as well as the rest of Europe, as markets with growth potential. “By doing that, they’ll also be able to add more brands to the site and expand their customer base. Then once they start to get to that sort of size, they would need to look at how they can minimize their operating costs and maximize their profit margins on the returns.”

But Matchesfashion and new parent Apax won’t be the only ones trying to do that. Besides YNAP, Farfetch is another retailer that has been focusing on expanding to international markets, particularly China, that Matchesfashion will have to compete with. Last June, Farfetch secured a $397 million dollar investment from in order to scale its business in the mammoth $80 billion Chinese market. Saint Laurent is among the first luxury brands to benefit from the deal; the Kering-owned label will integrate the collections from its stores in China onto the Farfetch platform, becoming the first luxury brand to offer 90-minute delivery in China via Farfetch to customers in Shanghai and Beijing, followed by Hong Kong.

The move mirrors an earlier initiative by Matchesfashion, which launched on-demand, 90-minute delivery service across London last year, aiming to re-create the immediacy of being in a store.'s "In Residence" in Paris.’s “In Residence” in Paris. 

As it gears up to scale against its competitors, Matchesfashion has already been laying the foundations for international expansion in the last few years. In 2016, it launched a customized French language web site and hosted a series of “in-residence” programs in key markets, including Seoul, Los Angeles, Paris and New York. The residencies aimed to bring the spirit of the Matchesfashion town house in London to new territories and saw the company host a series of events, from yoga classes to talks on wellbeing and dinners with brand partners.

It has also been working on improving operations, with the opening of a new creative hub in East London. The hub is equipped with state-of-the-art facilities which will enable the company’s editorial, photography and video teams to increase the amount of product uploaded on the site, as well as explore new ways of presenting products on the page.

“They’re going to have to sell more product to get that investment up,” Thomas added.

Investing in technology to innovate the customer experience is another area of focus that would aid the business’ expansion.

“Most likely Apax will invest in developing new technologies, maintaining the best product selection, providing efficient customer service, and marketing and communication in order to be the dominant voice in luxury e-commerce,” Grandchamp said.

This is in line with the company’s strategy to date, which has delivered 165 tech products in 2016 aimed at improving the online shopping experience. It also invested in the fields of artificial intelligence and 360-degree technology as part of a sponsorship of New York Fashion Tech Lab’s Accelerator Program.

Ulric Jerome

Ulric Jerome  Paul Stuart/WWD

“Fashion is the one industry that has the lowest Internet penetration, so the opportunity is massive,” Ulric Jerome, Matchesfashion’s chief executive officer, told WWD in an interview earlier this year, also pointing to certain aspects of virtual reality as another area of interest.

Both Apax and Matchesfashion executives declined to comment further on Monday, on their plans for the business.

What are the other challenges? As the business scales, the risk would be losing its curatorial approach and overall ethos, as the Chapmans take a step back from the business to take on an advisory role and focus on new projects.

“The risk would be to stock brands that are not as high-end, ending up from being quite niche to gaining more volume. That would mean losing what Matches is about. So brand selection and the edit they offer remains absolutely key. Strong buying, merchandizing and category management roles within the business going forward will be essential to get into other markets. Can they take the brands that other businesses have already established? Lots of risk in that respect and potentially lots of reward,” Thomas added. “There’ll be quite a lot of growth and changes in their next three to five years, otherwise their investment is not going to be returning. To do that successfully, the Chapmans should be able to stay in tune as much as possible and influence decisions, without being disenfranchised by the amount of change bound to take place.”

Tom Chapman, Roksanda Ilincic, Ruth Chapman

Tom Chapman, Roksanda Ilincic and Ruth Chapman. 

Matchesfashion’s overall aesthetic — it offers a mix of established labels such as Gucci and Balenciaga and less commercial ones such as the London-based emerging label Halpern — is the company’s biggest strength, according to Thomas, making it an attractive retail partner for all luxury brands, including the ones that are becoming more focused on setting up their own direct-to-consumer channels.

“They’ve got a good product selection and a good way of working, so all the top brands want to be part of That’s quite a rarity, as a number of them are now launching their own web sites,” said Thomas, adding that Matchesfashion’s small cluster of brick-and-mortar stores and private town houses gives the company an additional advantage. “People still want to be able to feel luxury brands in person, in their hands. Also the big advantage is that their bricks-and-mortar exposure is a lot less than some other companies that are trying to do a bit of both. Having a private, luxury town house is another really clever move because it really ties in with the top-end customer and brands. The brands love the fact that their product is sold in an environment, which is conducive to what they’re trying to do in their own shops.”

The retailer operates three U.K. multibrand stores — in Marylebone, Notting Hill and Wimbledon, which is where the company started — as well as a store for its private label Raey. It also has a town house in the Marylebone area which is used for personal shopping appointments and to host social events in partnership with designers. In May, the company revealed plans to open a second town house on Carlos Place, near Mount Street, in a bid to connect further with existing high-value customers.

Speaking of Matchesfashion’s overall mission, Tom Chapman said: “We do the hard work for you. We keep it simple for the customers. We don’t want to be a marketplace or a department store. We want to be a curation of brands, a place where you discover something new. It’s all about customer choice. The more touch points we have with our customer, the greater the loyalty of that customer.”

men's women's issues The Style Report

The covers of the new men’s and women’s issues of The Style Report.  Courtesy Photo

Luxury online retailers’ ambitious expansion plans and the competitive nature of the market also seem to be aligned with consumers’ appetite for online shopping, as they start to value convenience and speed more.

“There might be more competition, but the cake is also growing with consumers shifting to digital. In 2011, studies reported that one-third of all luxury goods were sold online, and by 2016 that number went up to 50 percent,” Grandchamp said.

“These online players are enabling the market by making it easier for customers to shop and that’s where the appeal is,” Thomas said. “Everyone says the bubble has got to burst at some point, but it doesn’t seem to do that, it seems to keep on going. It’s almost to the detriment of the bricks and mortar stores. They have been slow to adapt to technology while these companies are bringing it to mobile; you can be sat in a taxi or on the bus and place an order.”

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