Stella McCartney driven to restructuring
The Stella McCartney brand is struggling with the challenges of the Covid-19 pandemic, and is reportedly set to implement a restructuring plan. The fashion house, which is supported by LVMH, is planning workforce cuts, salary reductions and store closures, as reported by WWD, which gained access to an internal note written by the brand's CEO, Gabriele Maggio.
The eco-friendly brand, whose creative efforts have always been led by its eponymous founder and designer, had already been experiencing problems prior to the pandemic. Having founded the house in 2001 through a joint venture with Kering, Stella McCartney took full control of her brand in early 2018 when she bought the French luxury group's 50% stake.
This investment, combined with the additional costs incurred by the operation, which also deprived the brand of Kering's logistical support, had a notable impact on the company's financial results. For fiscal 2018, the house reported an annual operating loss of £10.8 million, while sales remained flat at £42.6 million. This state of affairs led the brand to approach LVMH, which acquired a minority share in the company in July 2019.
After months of stalled operations due to quarantine measures and with the current return to business proving to be a slow slog, Stella McCartney has been pushed to take steps to cut its costs. According to the internal note from Maggio, certain members of staff have been asked to accept salary reductions "for an extended period," while McCartney herself has forgone her salary completely for the duration of the pandemic.
Furthermore, the brand's store network, which is made up of around 50 boutiques, will be reduced through the conversion of certain stores into franchise locations and partnerships with wholesale distributors. The company is also planning to make cuts to its teams, although earlier this week, Maggio stated that "no decisions on redundancies have been taken."
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