What Gianvito Rossi’s and Tamara Mellon’s New Deals Say About the Challenges of Being an Independent Shoe Designer in 2023
Is the luxury shoe world on the cusp of an M&A boom? Footwear was at the center of this week’s deal activity, as veteran designers Gianvito Rossi and Tamara Mellon both teamed up with larger companies.
That follows Arezzo & Co.’s acquisition of Paris Texas this spring and comes as many independent shoe designers grapple with the complicated realities of a post-pandemic landscape. Simultaneously, the big luxury houses seem to be getting bigger by the day. Just look at Kering’s major move to snap up a 30 percent stake in Valentino, which values the hot label at 5 billion euros. (The deal opens the door for Kering to fully acquire Valentino in the next five years.)
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As the juggernauts — Kering, LVMH, and Richemont (Rossi’s new owner) — ramp up their acquisition activity, they’re also relying more heavily on the footwear, handbag and accessories businesses — which have long been the big revenue and profit drivers — to help them continue to capitalize on the luxury craze of late.
With competition mounting, along with worrisome production pressures and a rocky department store climate, many smaller shoe designers now find themselves at a critical crossroads.
Perhaps that’s why both Rossi and Mellon — who today announced a partnership with California company Titan Industries — decided that going at it alone was no longer the best option. (The financial terms of both deals were kept private.)
Notably, both designers have been entrenched in luxury footwear for decades — Rossi grew up under the tutelage of his legendary father Sergio Rossi before branching out on his own in 2006, while Mellon co-founded Jimmy Choo back in 1996 — and understand the intricacies of the business like few others in the industry.
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Both have also had experience with dealmaking. Mellon helped engineer several acquisitions at Jimmy Choo before she left in 2011. Rossi had a front-row seat when his father sold Sergio Rossi to Gucci Group, now Kering, in 1999. (Sergio Rossi has since changed hands two more times.)
For Gianvito Rossi, who had been a buzzy target in M&A circles for the last year, partnering with Richemont could give him the resources he needs to take the brand to the next level.
“I decided to choose them to keep developing the brand worldwide and for their expertise and model of global expansion,” said Rossi, who still owns a stake in the business. The designer was attracted to the company because they share “common values” around quality, design and craftsmanship.
In Mellon’s case, the partnership with Titan Industries and its CEO, Joe Ouaknine, was born after the designer realized she needed a proven player to help her venture into wholesale. The two parties hold an equal stake in the brand, they said.
Mellon launched her namesake label as a buy-now, wear-now venture in 2013, then restructured in late 2015 and began to pursue a new path. She relaunched as a direct-to-consumer label in 2016.
“As we came out of COVID, we were still facing a lot of challenges with Italian manufacturing, particularly as an independent brand,” she said. Mellon — who will continue to control all design and creative aspects of the brand — plans to move production to Spain and lower her price points slightly as she and Titan target department stores and upscale independents beginning for the spring ’24 season.
As they embark on fresh paths, Mellon and Rossi will certainly be brands to watch in the coming months — and insiders believe M&A activity in the shoe space will definitely continue.
Robert Burke, chairman and CEO of his eponymous company, said dealmaking is partly being spurred by the fact that many larger companies are looking for genuine expertise and know-how in the footwear business, which is very different from ready-to-wear and requires a unique set of skills.
One name at the top of Burke’s list of potential targets is Amina Muaddi, who managed to build a $55 million business in just four years.
The designer recently opened a sizable shop-in-shop at Harrods and is diversifying her collection beyond the heels she is best known for as she looks to build an enduring brand. She’s inarguably the biggest independent shoe designer success story of the past five years, but the designer is candid about what it takes to be successful right now.
“Maybe now I don’t have the hardships I had in the beginning, but I have others. It’s a matter of navigating and continuing no matter what,” she told FN last year.
It’s very likely that Muaddi has been approached with offers, but it’s unclear if or when she might entertain them.
Edgardo Osorio, who has steadily grown his Aquazzura brand over the past decade and just opened his second Mayfair door in London, is another label that could be ripe for a deal. In an interview last year, he said a full retail rollout of Aquazzura stores would inevitably require the backing of a partner.
“Doing it on your own is increasingly challenging and financially complicated. We’re in a stage where we’re growing and testing categories,” Osorio said. “The customer needs to see and react to the product. In the next two or three years, once these categories are more fulfilled, I can make a full-on decision and say I need to open 35 or 40 stores in these cities and this is the retail footprint for city A, city B and city C in these sizes. The value of a company that makes just shoes and the value of a company that makes shoes, jewelry, bags, home — all the things we’re working on — is different. It’s a process.”
And once a deal does come to fruition, the marriage doesn’t always last of course. Case in point: Nicholas Kirkwood bought back his namesake brand from LVMH in 2020 (after seven years) before he shuttered it this year and decided to focus on a new sustainable business venture.
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