Welcome back to The Spin! Retail news dominate today’s issue of The Spin. While HBC’s European division is losing millions, it’s current joint-venture partner Signa has raised over €1 billion. Over in the US, J. Crew's Madewell brand prepares for an IPO, while Neiman Marcus raises eyebrows for an oddly shaped $7,000 couch. Enjoy the read and feel free to share! Best, Ulrike


Burning millions... In Q2, HBC's European business, which still includes its Galeria Karstadt Kaufhof joint-venture with Signa - lost (paywall; translated by Google) about €48 million. In the coming weeks, the Canadian retail group will hand over its 49.99 percent stake to Signa for around €1 billion. Meanwhile, its unprofitable Hudson's Bay department store chain in Holland is said to close later this year, thus ending the group’s European adventure for good. This is likely to painfully reflect in the balance sheets as well, since HBC has assumed extensive guarantees for the long-term rental agreements.

...raising billions. Signa, on the other hand, is increasing (paywall; translated by Google) its equity by €1.2 billion to fund acquisitions and expand its liquidity reserve to over €1 billion after the completion of the Kaufhof transaction. According to the Austrian company, its real estate assets will exceed the €20 billion mark by the end of 2019. The new investors have not been identified. Strategic shareholders include the RAG Foundation, insurers R&V and LVM, the Peugeot family’s FFP Group, Madison International Realty and Longbow Finance.

Split. J. Crew’s crown jewel, Madewell, is filing for an IPO. According to documents filed by the brands’ parent company Chinos Holdings with the US Securities and Exchange Commission (SEC), Madewell recorded revenues of $614 million in 2018. 52 percent was contributed by products to match with jeans including tops and leather goods, followed by denim (29 percent) and lifestyle categories (19 percent). The number of shares and price range for the offering have not yet (press release) been determined.


The Clash. To combat the growing costs of increasing return rates, H&M plans to test a revenue-based store rental model in the UK, where the Swedish fast fashion chain currently operates about 300 stores. H&M, which saw a dramatic drop in its operating profit in the UK, offers British landlords arrangements where its stores’ lease payments would be based on H&M’s net revenue, including deductions for all returns at participating stores, even those of online purchases.


To leisure, or not to leisure. US sports brand Under Armour, which plans to grow its store network from 1,100 to 2,500 over the next five years, is turning away from athleisure to focus on performance innovation. One of the brands to pick up the business is Urban Outfitters’ Free People division, which just announced the expansion of its FP Movement sports collection and installed new workout spaces in three of its 136 stores, many of which also plan to host workouts and organize outdoor activities.


Twin Peaks. Following his exit from Calvin Klein in December 2018, Raf Simons’ past year has allegedly been extreme, with hearts and broken hearts. The Belgian designer, who in the 1990s redefined how men dress, pairs a hand for a masculine sense of practicality with an unexpected tendency towards intense emotion. Now back in Antwerp, his two-part Diptych collection is testament to his dualistic soul.


(Chaise) longue of luxury. US luxury chain Neiman Marcus, which just secured a $100 million facility to increase liquidity, is raising eyebrows for selling unusual items including a $7,000 couch in Hot Dog design, complete with mustard, tomato and cucumber slice - a dubious choice for a company that is ailing from a debt load of over $4.5 billion. Even if customers have to pay the $295 shipping cost themselves…


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