Victoria Beckham’s sales are growing, but profitability remains elusive

Is Victoria Beckham’s brand turnaround finally starting to take shape? More affordable prices, a core line of knitwear and a high-margin beauty department help make what Beckham and her team hope will be a new chapter for the company.

Profitability has been elusive 15 years after the label’s founding, but sales have grown by double digits for the past seven seasons, said CEO Marie Leblanc.

In 2021, revenue rose 13 percent year-on-year to 40.8 million pounds ($49.6 million), beating pre-pandemic levels by 7 percent, company data released Tuesday showed. Growth accelerated in 2022 to a high double-digit percentage, the company said, supported by the launch of a new leather goods and knitwear line “VB Body” as well as staging a show at Paris Fashion Week.

Losses in 2021 narrowed to 5.9 million pounds ($7.2 million) compared to 8.6 million pounds ($10.5 million) in 2020. “We are close [to profitability] and of course that’s the focus,” said Leblanc, who declined to give a timeline indicating an uncertain economic climate.

Still, the label’s new momentum has fueled big ambitions: the brand now hopes to triple revenues in three years and top £120m, Leblanc told BoF. “Our ambition is really to bring the business to its potential,” she said.

When Beckham launched her eponymous luxury brand in 2008, her sophisticated-meets-sexy figure-hugging dresses quickly gained attention among celebrities like Eva Longoria, Blake Lively and Heidi Klum. The former Spice Girl shook up her flashy pop image with low-cut, sleek collections that were both flattering and wearable.

Despite Beckham’s celebrity profile and warm reception from industry insiders, the brand has yet to turn a profit and report a bumpy top in recent years, even after receiving £30 million in cash in return from private equity firm Neo Investment Partners for an undisclosed stake in the company in 2017. (At the time, the business was reportedly valued at £100m.)

Since former Printemps customer Leblanc took over as CEO in 2019, the brand has reshaped its product mix to reduce exposure to ultra-high-end ready-to-wear — a segment where the brand has had to compete for clients with more established luxury houses and buzzy upstarts alike. In 2021, the brand combined its main collection with the diffusion line “Victoria, Victoria Beckham”, reducing the average price of dresses in the combined brand by about 40 percent. It also developed a cosmetics line that has seen “tremendous growth” and has been profitable since launching in 2019, according to Leblanc.

“The potential and value of the brand was there, but in terms of the effectiveness of the business model and the positioning of the brand, things had to be rethought,” Leblanc said. On the other hand, the company has been working to optimize its supply chain and rationalize operating costs to increase gross margins, she said. Now the line remains “beautifully produced,” she says, but with a much more affordable price point.

To be sure, even if the revised price positioning (including £350 shirts and £800 dresses) sits more comfortably in the affordable luxury space, Beckham will still have to work hard to compete with a cohort of contemporary womenswear brands on the rise like Nanushka and Frankie Shop, which offer similar stylish offerings at more competitive prices.

Leblanc is betting that the recent expansion of the category will help with future growth. In the brand’s VB Body line, figure-hugging knitwear is priced from £90 for a bandeau top to £690 for a midi dress. Last year, the brand also launched its debut bag collection — a competitive but often lucrative category for high-end brands.

This year, the company plans to focus on increasing brand awareness, including continuing to show on the Paris Fashion Week schedule, as well as expanding into new markets including the Middle East and Asia.

“The geographical expansion gives us the confidence that we can really start a business [a] more potential,” said Leblanc.