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Victoria Beckham pumps millions into her loss-making fashion business

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Victoria Beckham pumps millions into her loss-making fashion business

Although the company has recorded a loss every year since its inception in 2008, performance has been improving in recent years, with narrowing loss margins.

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Victoria Beckham Holdings Ltd, the company owned by one of the ex-Spice Girls, has reported its latest financial results made up to 31 December 2023 – and highlighted rising sales and reduced losses with the group close to operating back in the green.

The fashion business recorded a loss before tax of £2.9m (€3.45m) in 2023, down from £3.1m (€3.69m) in the previous year, according to Financial Times. 

However, sales still jumped 52% to £89.1m (€105.95m), up from £58.8m (€69.92m) in the previous year, mainly because of a robust performance at the company’s Mayfair store in central London, especially following the brand venturing into beauty and leather goods. Sales carried out through wholesalers also increased. 

Online sales were also significantly boosted by perfume collections, with belts also being the fastest-growing category, driven by new lines. One of the most popular products in 2023 was a midi dress selling for £850 (€1110.73). 

Who is putting the money into Victoria Beckham’s company?

The cash investment, which is worth approximately £6.9m (€8.2m), will be invested across Victoria Beckham’s fashion and beauty divisions and will be provided by her husband David Beckham, herself, and Neo Investment Partners, which is a private equity firm. The company is also part-owned by XIX Management. 

Out of the new £6.9m (€8.20m) investment, £3.9m (€4.64m) has gone towards increasing Victoria Beckham Beauty’s inventory levels, whereas £3m (€3.57m) has been used for working capital purposes for the fashion division of the business. 

The label has made a loss every year since it was launched  in 2008, despite receiving a few cash injections over the years, which have been used to pay off debt and support growth. However, performance seems to be picking up with narrowing loss margins in the last few years. 

Since the joining of Marie Leblanc as chief executive officer (CEO), the company has also made some strategic and structural changes, such as stopping the manufacturing of some products, as well as slashing jobs and merging product lines. Leblanc has previously worked at fashion companies such as Celine and Isabel Marant. 

Victoria Beckham’s company has also tied up with brands such as watch company Breitling and clothing brand Mango to launch limited-edition product lines. 

The company did not respond to a comment request from Euronews.

Is Victoria Beckham’s fashion and beauty line actually bucking the trend?

The increase in sales experienced by Victoria Beckham’s company is a reversal of the trend seen by several other fashion brands such as Kering and LVMH. However, the fact that the company still needs frequent cash injections could be a concerning factor for investors, especially in the current challenging business environment. 

This is especially as major markets such as China are still seeing suppressed luxury goods sales, as consumers still deal with the effects of the cost of living crisis. This has meant that fashion is now competing with other luxury expenses such as travel, and some consumers are choosing to look for bargain deals, which offer more value for money. 

On the other hand, the consumers still spending on luxury goods have become more discerning, choosing to buy fewer, but more high-quality pieces more rarely. This has led to more intense competition between fashion labels to capture a shrinking market. 

As a result, Kering, which owns Gucci, also issued a warning about a weak second half of the year recently. 

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