Shein’s UK sales soared to £1.55 billion ($2 billion) last year ahead of the online fashion retailer’s potential initial public offering in London.

The company, which was founded in China but is now based in Singapore, saw its British revenue rise 38 percent in 2023 from a year earlier, according to a filing last week at UK registry Companies House.

Shein has become one of the world’s most valuable startups thanks to its model of high-volume, ultra-cheap fashion. The e-commerce company is awaiting regulatory approval in China and the UK to proceed with an initial public offering that would boost London’s stock market amid a dearth of listings. The IPO could value Shein at about £50 billion, Bloomberg reported earlier this year.

Shein had been considering a US listing but decided to look elsewhere given the intense scrutiny of the company and its Chinese roots.

Pretax profit in Britain doubled in 2023 to £24.4 million, the Companies House filing shows. It was filed under Shein Distribution UK Limited, the company’s subsidiary in the country that was incorporated in 2021.

Significant milestones in the year included opening its Manchester office and pop-up shops across the UK, including a bus tour, the company said.

The sales surge in 2023 was down to strong customer demand, a Shein spokesperson said in a statement.

By Jennifer Creery

Learn more:

Shein Plans Investor Meetings Ahead of London IPO

Shein is initiating informal discussions with investors for a potential IPO in London, pending regulatory approvals, as the Singapore-based retailer faces scrutiny over its supply chain practices amidst criticism from UK lawmakers and advocacy groups.

Mytheresa on Monday announced it would acquire its competitor Yoox-Net-a-Porter for €555 million ($609 million) from Swiss conglomerate Richemont, perhaps the most significant deal yet in a year of upheaval for luxury retail that has left few of the category’s major players untouched.

The deal, slated to close in the first half of 2025, would bring together the German Mytheresa, which has built a profitable business catering to ultra-high-net-worth shoppers, with the larger Net-a-Porter, which set the template for online luxury retail when it launched in the early 2000s with its mix of high-end merchandise and more accessible offerings. The companies will remain standalone e-commerce sites.

The hope is that bringing the two under one roof will break the cycle of escalating customer acquisition costs, brand defections and similar-seeming product offerings that have dogged luxury e-tailers for years. Mytheresa shares spiked more than 50 percent on news of the deal, ending Monday at a four-month high.

“The vision is clear: clearly differentiated brand identities based on different assortments, different marketing, different customer touch points,” Michael Kliger, Mytheresa’s chief executive, said in an interview with The Business of Fashion. “There is so much room in luxury to fulfil these positions and attract different customers.”

The acquisition also brings to a close a long period of uncertainty for Net-a-Porter, which remains the first stop for many luxury consumers and brands seeking industry validation (the company was name checked on the most recent of HBO’s hit series “Industry” about young, high-earning finance professionals). But Net-a-Porter has long struggled to convert cultural cachet into consistent profits, both as an independent entity and under Richemont, which acquired the company in 2010.

In 2022, Richemont had agreed to sell a 47.5 percent stake in YNAP to Farfetch, with the opportunity for Farfetch to acquire its competitor once it reached profitability within three to five years. But that agreement failed when Coupang rescued Farfetch from near bankruptcy last December.

There were fears that Net-a-Porter could suffer a similar fate, or even be shut down, as was the case for rival Matches when owner Frasers Group entered the company into administration three months after acquiring it.

What Lies Ahead

Mytheresa has avoided the worst of the luxury e-commerce bust. But it has its own problems: with €914 million in gross merchandise volume — sales on its marketplace — in the year ending in June, it is smaller than its chief rivals. Its adjusted earnings before interest, taxes, depreciation and amortisation accounted for only 3 percent of net sales during that period. Even after surging on Monday, the company’s stock is down over 70 percent since its initial public offering in January 2021.

The YNAP merger, however, gives Mytheresa a chance to change that. The two companies’ combined GMV reaches nearly €3 billion, close to one time leader Farfetch’s sales at its peak in 2022. Mytheresa plans for that to grow to €4 billion by 2029, the company’s finance chief Martin Beer said on an investor call on Monday.

Doing so will require reversing a steady slide in YNAP’s sales, which fell 15 percent year-over-year in the quarter ending in June. It will also need to carve distinct identities for the two sites, which have some overlap in the customers they cater to, and the brands they carry.

“Any merger is not easy,” said Mario Ortelli, managing director of luxury advisory Ortelli & Co. “You have to change the operating model. If for so long you were never profitable and your objective is not just to grow but profitability, you have to change something.”

Becoming a Leader

Mytheresa’s deal with YNAP is its chance to generate the type of sales that would make it the biggest company in luxury e-commerce.

Mytheresa will access YNAP’s distribution centres in China and the US, where it is seeing its largest sales growth. The company, which typically carries a smaller number of brands than its competitors, will enjoy the increase in sales volume from YNAP’s greater number of labels without compromising its curatorial focus.

Mytheresa’s core strengths can also rub off on YNAP. The Germany-based e-tailer has proven its ability to grow profitably by wooing its top spending customers, which has boosted profits because that cohort spends more money with each purchase and returns goods less frequently.

The company has been more successful than its competitors at offering exclusive capsule collections from brands like Loewe and Brunello Cucinelli, and hosting brand trips and private dinners with designers. It ended its full fiscal year in June with €25 million in adjusted EBITDA.

Mytheresa will help Net-a-Porter play to its own strengths, Kliger said, such as doubling down on its editorial content, which contextualises its product offering through celebrity interviews and other lifestyle content that appeals to its more aspirational luxury consumer base.

But if a deal is approved, Mytheresa will first have to undo Richemont’s efforts, where the Swiss conglomerate’s lack of expertise in running a digital business led to decisions that ultimately drained YNAP’s profits.

In 2010, Richemont acquired Net-a-Porter in a deal that valued the company at £350 million ($458 million). When Richemont bought the remaining shares in YNAP that it didn’t already own in 2018, it increased the e-tailer’s investments in technology and logistics. But the €200 million upgrade led to functional hiccups on Net-a-Porter’s site and dissatisfied customers. It also resulted in a massive drop in profits that YNAP has struggled to recoup since.

Mytheresa plans to refocus Net-a-Porter by migrating its operations, along with the latter’s menswear site Mr. Porter, onto Mytheresa’s platform, which boasts capabilities like identifying potential high-spending clients based on browsing activity. YNAP’s off-price division that consists of Yoox and The Outnet will operate separately and remain on the company’s existing platform, Kliger said.

A Refined Sector

Mytheresa’s merger with Net-a-Porter is part of a big shakeout in luxury e-commerce that’s come after years-long shifts in the sector.

The influx of luxury e-tailers in the last 20 years has given brands a range of partners to help grow and consumers several marketplaces with differentiated offerings to explore. But these platforms lost their edge by carrying similar labels and competing on price, causing their margins to suffer and brands to invest more in driving shoppers to their direct selling channels, where they can control pricing and communication with customers.

Still, smaller labels that lack funds to ramp up their DTC businesses remain heavily reliant on multi-brand retailers with a global audience and streamlined logistics to acquire customers and drive sales.

But online luxury could benefit from reduced saturation, where direct competition on price has made it harder for retailers and brands to grow profitably and a return to differentiation, said Stefano Martinetto, founder of brand management firm Tomorrow, which owns popular labels like Martine Rose, Charles Jeffrey Loverboy and A-Cold-Wall.

Luxury e-commerce upstarts, large and small, are already moving toward that goal. Moda Operandi is still where sophisticated luxury shoppers go to pre-order collections; Ssense continues to appeal to younger, fashion-obsessed consumers searching for statement-making pieces from established and emerging brands. There’s also a sector of high-growing and profitable platforms that carry emerging brands that sell exclusively through them, including Garmentory, Cult Mia and Wolf & Badger. These rising marketplaces provide brands with marketing services and let them decide how much discounting they want to participate in.

“Curated multi-brand is the future. It is the mix-match of luxury institutional brands and young independent designers,” Martinetto said. “All of those need one or two opportunities to sell online globally and to reach customers … they don’t need 20, they need two solid players competing on tone of voice and editing and selection rather than pricing.”

On Oct. 19, Shanghai Fashion Week will close with an opening.

For one night only, Italian skiwear specialist Moncler will showcase the latest incarnation of its multi-year “Genius” project — and this time, it’s huge: 30,000 square metres, an entire “City of Genius” with a population of co-creatives to elevate the brand’s profile in the key Chinese market and beyond.

“We’ve given each designer the freedom to build a house in the City,” said Moncler chief executive Remo Ruffini.

Multi-hyphenates Edward Enninful and Donald Glover are among the builders. So are Chinese artist LuLu Li, A$AP Rocky, Willow Smith, Lucie and Luke Meier of Jil Sander and Nigo, who is collaborating with Mercedes-Benz. Hiroshi Fujiwara, Rick Owens and Palm Angels, who have participated in Genius in the past, are also taking part this year.

Ruffini claims 2024′s roster of collaborators — who will each design and market capsule collections for the Moncler — is exactly the sort of thing he had in mind in 2018 when he launched Genius in Milan, replacing seasonal partnerships with designers Giambattista Valli and Thom Browne with monthly activations produced with a wider range of creative voices riffing on the brand’s signature ski jackets.

Early on, Ruffini was able to corral an extraordinary group of collaborators: designers like Jonathan Anderson, Craig Green, Pierpaolo Piccioli and Simone Rocha. The concept then widened to embrace popular musicians like A$AP Rocky, Pharrell and Alicia Keys and brands such as Mercedes-Benz and Rimowa.

Genius is one of Moncler’s key pillars, said Ruffini, alongside its main collection and high-end mountain sports line Grenoble. “These three dimensions give us the opportunity to talk with different cultures and different generations,” he explained. Grenoble’s importance was re-emphasised in a spectacular show staged in St Moritz in February. The Shanghai extravaganza fulfils the same function for Genius.

Ruffini is betting the next instalment of Genius will energise Moncler in a challenging luxury market. Moncler reported double-digit growth in the first-half, defying a wider luxury slowdown, though the picture may be darker when it reports its latest results on Oct. 29.

“[Genius] will never be a big business,” Ruffini said. “But it brings a lot of people into the shop: more creative people, people who don’t follow too much the fashion world. I would always go the day we launched a Genius designer in the shop, and it was always a very different crowd, with a lot of energy.”

While Ruffini clearly expects the initiative to deliver results, building the City of Genius in Shanghai has been an emotional investment, too. He loves the city. Since his first visit in 2005, he’s been mesmerised by the speed of change. “They honestly have given me a lot in terms of thinking,” Ruffini said. “So I thought I had to give something back.”

The night before we met for breakfast at Paris’ Hotel Costes (and just under a week after he tightened his control of Moncler after striking a deal with LVMH), Ruffini hosted a dinner at Versailles for 700 of the brand’s store managers and sales assistants from all over the world as part of an internal retail summit. He’d never visited the palace before and was suitably impressed, so you can imagine the effect the venue had on people who’d flown in from Atlanta or Sydney. When I first met Ruffini, he had 25 people working for him. Now there are 7,500. But, as one of his sons pointed out to him after dinner, he didn’t seem particularly happy.

“My biggest problem is I’m never happy,” Ruffini acknowledged. “I’m looking forward to the next step. What can I do to do better? But this is not only my work, it’s my life. Sometimes I stop and think I’m quite stupid. I should enjoy.” But that thought is instantly replaced by a niggle of discontent. Same with his skiing, his lifelong passion. As many weekends as he can, Ruffini heads to St Moritz, and even after all these years, he often skis with an instructor. “Because I learn a lot. I’m not as good as I think. I could be better. I like much more to technically improve than I really enjoy to ski.”

I think the word is “driven.” Like his restless left leg, Ruffini never stops. He met his match in Jony Ives though. They’ve been collaborating on a four-piece collection which, thanks to Ives’ exacting eye, took three years to complete. Ruffini said the only time he’d ever encountered anyone as obsessive was Kei Ninomiya, who designs the Comme des Garçons-owned brand Noir. One of the Noir jackets had 125 pieces. Ives’ obsession was stitches. “We used this sustainable nylon. Usually a roll is 1.50 metres, but we had to make it in 2.50 metres. We found a mill that normally makes fabric for interiors, like curtains. Because Jony didn’t want to see a single stitch. You feel it’s nothing, but we work so much. And the button — it’s incredible, looks like an iPhone.”

His perpetual dissatisfaction clearly gives way to another state when he’s in co-creative mode. Same effect when he talks about his City of Genius collaborators. Ruffini said his life practically changed when he saw Donald Glover as Childish Gambino in his searing video for “This is America. ““I didn’t know who he was, but I said I need to work with him.” Glover is now devoted to Gilga, his farm in Ojai, California, which he is setting up as a cultural and agricultural hub. “He was very concentrated on his farm, I was very concentrated on the video, and in the end, he won,” Ruffini recalled. Glover insisted on designing clothes he wanted to wear all day, so he essentially made a collection of workwear for the farm.

Moncler for the farm is a concession on Ruffini’s part because his own point of view about a real co-creation for Genius is this: “I leave the freedom to the designer for sure, but they really have to follow also our DNA, otherwise it’s not interesting.” A$AP also showed up with a very clear idea, based on Motocross, not Moncler, which didn’t fit the plan, and he was sticking to his guns. They talked and talked … and talked and eventually reached a point where Ruffini could feel enough Moncler in the mix. “Let’s say it’s very him and very us — very concentrated, no compromise.”

“I’m not a designer,” Edward Enninful said to Ruffini when he invited him to participate. “I told him, ‘You are more than a designer,’” recalls Ruffini, “but honestly, the first time I saw the fitting, the product was hanging and I thought, ‘OK, it’s not …’ Then Edward said, ‘Now I have to prepare the girl to show you the magic.’ I was shocked. He layered everything and it was incredible in terms of product. Very styled but very sellable. 100 percent Moncler, but he found another face for the brand, which is super-interesting.”

Glover, A$AP, Enninful and the other residents of the City of Genius appear as adorable, digitally generated versions of themselves at five-years-old in the teaser film that precedes the Oct. 19 event. In the 1960s, a team of experts were apparently able to figure out what makes a genius based on how the study’s subjects used creative imagination to solve problems. 98 percent of five year olds qualified as geniuses. By the age of 25, that number had fallen to two percent. The study concluded that uncreative thinking is learned. So, if you sustain your inner child, you can remain a genius?

Ruffini said he was a disaster at 5, at 6 and all the years up to 18. He didn’t like school, hated studying. His mother was desperate. “I started working at 20 years old and it changed,” he counselled. “My character, my attitude, my energy changed.” So that’s how you keep up with the two percent — work!

In 2024, major economies are still experiencing stunted recovery and tentative growth across the globe: the UK’s economic recovery has slowed over the past two quarters, according to the BBC; in the US, credit card debt has hit a record high of $1.14 trillion, according to the Federal Reserve Bank of New York; in China, GDP growth is forecast to miss government targets by 0.2 percent, according to the Bank of America.

What’s more, while US government data revealed that monthly US consumer prices dropped for the first time in four years as inflation subsides, apparel prices still rose 0.1 percent from the previous month.

In this context, fashion brands vying for the discretionary expenditure of aspirational customers need to provide a compelling reason for that consumer to part with their money. This cohort is increasingly considered in where and how they spend, meaning brands must carefully consider how they connect with this consumer and how they can show up in the places they spend time.

To learn more about how brands can authentically invest in brand activations, and how to measure their performance, BoF and Ekimetrics hosted a roundtable discussion at Mortimer House in London in September, gathering marketing leaders from across the UK’s fashion industry.

Since 2006, tech-enabled data science firm Ekimetrics has worked with over 50 luxury brands as well as renowned companies such as Estée Lauder and Nestlé to pioneer the use of AI and advanced data science in the industry. This has resulted in rich learnings for the sector, such as those shared in its roundtable companion paper, Driving Long Term Performance with Customer Lifetime Value, and ongoing engagement with sector-leading brands.

“I don’t think we have worked with any brands where they don’t know or don’t believe that investing in brand marketing — those longer-term activities — is the right thing to do. But we have also not worked with many brands where they are really confident in knowing what their investment in long-term brand actually delivers for the business,” shared Matt Andrew, a partner at Ekimetrics, in his opening remarks as a host of the roundtable.

Best practices today to engage consumers include much more effective and nuanced brand marketing, as the efficacy of performance marketing and paid campaigns diminishes due to decreasing relevancy and increasing costs. According to BoF and McKinsey’s The State of Fashion 2024 report, 71 percent of executives planned to increase brand marketing spend in 2024, in a bid to cultivate greater emotional connections with customers. In comparison, only 46 percent of surveyed executives intended to do the same for performance marketing. However, while investments may have shifted to align with this cultural change, success metrics and strategic frameworks have not caught up.

Conducted under the Chatham House Rule and moderated by BoF’s head of content strategy, Robin Mellery-Pratt, the event welcomed executives from brands and retailers Jimmy Choo, Harrods, Frasers Group, Me + Em, Missoma, The Dune Group, Russell & Bromley, Aspinal of London and rental platform Hurr.

Below, BoF shares condensed and anonymised insights from the discussion.

Accommodate long-term strategic goals with longer lead times

“In times of low economic activity, it’s usually the brand that gets hit, but not because it’s not driving value, but because a lot of companies don’t have the right metrics to prove that it’s for everybody and because it’s not a return you get immediately,” shared one attendee. “It’s really about: how can you tie those two things together to look at the performance with the same long-term lens?”

“I think there’s definitely a longer-term view that you need to take,” said another guest. “And it’s [looking] at cohorts of clients that have engaged with us around certain periods X many months later, and also the luxury spending patterns to have them come back multiple times a year — it’s a challenge.”

“So you do need to give it a bit more time. It doesn’t help you make an immediate decision [by] just pumping more money into Google shopping, for instance [...] It’s just a different kind of rationale,” they added.

Adjust KPIs to measure lifetime value effectively

“What we see is the need for more North Star KPIs — like lifetime value, like brand equity, short-term sales — and then the need to have consistent measurement for those things so that everything that you do can be measured against those things,” said one attendee. “There needs to be a culture of innovation as well to remain relevant. So we see that as a combination of North Star KPIs and system framework.”

“That shift from the backwards-looking perspective having a role and being important because you need to know what you’ve achieved [in the past], but having a stronger lens to be clearer about what’s going to come next — like having a strong forecast,” is what one attendee suggested. “[It’s about saying], what can we pull, what can we do to improve that and to say, ‘Actually, how is what we’ve achieved stronger from a revenue perspective versus a customer makeup perspective?’”

One of the changes that we have seen, particularly for younger consumers, is the shift to product-first rather than brand-first — people discover brands through products rather than the other way round.

“What are you doing to enhance that customer base so that you continue to acquire customers, and make those acquisitions stronger? And are you retaining customers through those different personas or segments? It’s about connecting those to the decision-making process and making them equal in terms of what you decide,” the same attendee added.

Align product with brand in a culture of ‘product-first’ paths to brand discovery

“One of the changes that we have seen, particularly for younger consumers, is the shift to product-first rather than brand-first — people discover brands through products rather than the other way round, which creates a really interesting challenge, which is: how do you create brand loyalty if the entry point is a product?” shared one attendee. “Part of the challenge is, if the world is investing in product and you are investing in brand, it’s not just about bridging performance and brand marketing — it’s bridging product and brand.”

“I like the term brand promise,” added another attendee. “It really connects the products to the brand. If your products meet the brand promise, you know what you are getting from whatever product you buy. You know what you are going to get from it is much stronger,” they shared.

“Eighty percent of our customers are coming to a brand for the first time through rental,” shared one attendee, when discussing the opportunity for retailers in the circular business model — both in terms of sustainability and brand discovery via product. “Rental helps with returns; it helps with sustainability; it helps customers make more informed decisions.”

Create rewards and loyalty programmes to understand your customer segmentation

“When you speak of data today, the most important thing is, how do you capture it and [build] a customer strategy that we can monetise, but also provide the best experience on? And the foundation for that was analytics, essentially. For example, we looked at: what is a customer’s behaviour when they first join [the brand] and, regardless of whether you are someone who spends £1,000 a year or £15,000, for us, their early life behaviour was the same,” said one executive.

“So 85 percent of the clients who churn, they make three or less purchases. For us, the fourth purchase is the magic number. Then we looked at, how long does it take to get to [number] four? For us, the average is three months. So now the team has to push our customers to try and get to the fourth purchase, and that doesn’t matter [what the purchase is, big or small],” shared the same executive.

“What we do essentially is for our personas — we build different journeys with different content around that, so different [products] to different people, but essentially more or less they follow the same pattern. We try to engage them through that journey and it has been really successful. But I would say, we are lucky in that we have our rewards programme that’s been running for 15 years and we have 80 percent rewards participation, so we are really data-rich,” they added.

What we see is the need for more North Star KPIs — like lifetime value, like brand equity, short-term sales — and then the need to have consistent measurement for those things.

“We need to do more analysis and think about looking at that top subsection of our customers and how valuable they are or how we should be treating them differently as well, in terms of looking at that retention. Because we do struggle with people only coming back maybe a couple of times a year,” shared one attendee. “We don’t have those repeat purchases three or four times in a month, so it’s about keeping the momentum of those customers so that they keep coming back year after year.”

“For us, especially during Covid, we realised how important the local customer is,” said another attendee. “We really stay on that kind of long-term trend — especially if you’re talking about lifetime value —who is really important to take care of and engage on a regular basis.”

Explore a diverse range of tactics to avoid overreliance on content creators

“Sometimes you can lose control of that brand space because of how you are activating people through the influencer. So for us, we see it a bit more as performance marketing — and it can drive massive growth because it’s ready access to an audience. But I think we still need to really work hard in terms of, ‘what is your brand, what does your brand stand for outside of what the influencer brings you’,” suggested one attendee.

“We’re really looking at how we use content creators. I think [...] we have kind of lost our brand identity along the way a little bit by relying too heavily on these content creators, [which] just confuses even more as to who [our brand] is,” said one guest.

“Sometimes, the ones that work really well are, for instance, a guy taking his top off getting changed [wearing our product] — and we’re like, that is so not on brand, but it works because he’s an attractive guy with his top off. And then what’s taken from his following is — people who are interested in him with his clothes off rather than the product.”

This is a sponsored feature paid for by Ekimetrics as part of a BoF partnership.