MAKE OR BREAK FOR VBL?

She’s tried body-con, sharp tailoring and laid-back glamour. But one thing Victoria Beckham’s fashion label is yet to manage

making is a profit. She’s worked hard to

transform her image from the moody Posh Spice into an acclaimed designer. But, last year, Victoria, husband David and other

shareholders were forced to pump £13.5m

into Victoria Beckham Limited (VBL) after it racked up its 11th year of losses.

Sales slid 16% to £35m, after department

stores, particularly in Asia, cut orders. The poor trading led to VBL breaching the terms

of its £10m bank loans. All this financial pain raises the question – will Victoria still be in fashion by the end of 2020?

It’s not unusual for luxury fashion labels

to be unprofitable in their first years.

Building a brand name and getting a

network of committed stockists takes time

and investment. Victoria has arguably had

to work particularly hard to gain credibility in a market that has little crossover with her original fan base. Having started with a

boutique collection of dresses modelled on

her own wardrobe, the brand has developed into a polished, edgy range on a par with

Victoria’s heroes, such as Donna Karan.

Unlike Rihanna or Kylie Jenner’s

cosmetics, which drew on their celebrity backers’ massive social media following,

Victoria has taken a far more costly route to build a market. Her high-end label employs

about 150 people with an annual wage bill of about £10m across two offices in London and one in New York, equivalent to almost

a third of the brand’s sales.

But since Neo took a £30m stake in the label in 2017 – a financial investor that is no

doubt reluctant to continue to bail out the brand – chairman Ralph Toledano has

started cutting costs, saving over £3m by laying off more than 20 staff. He is also

trying to broaden the brand’s appeal by

slashing prices by up to 30% and launching

a make-up line. For many brands, cosmetics

and perfume provide the bulk of profits as

they are a more accessible product that can

appeal to those who can’t afford a £3,000 designer dress. Those efforts build on Victoria’s tie-up with sportswear brand Reebok, which kicked off in 2017.

So, with some well-resourced backers, including her husband, and new advisors with business nous, Victoria may yet build

her boutique brand into a global empire.