Investing in distressed fashion brands

I underwrote several fashion companies this year. Here's what I learned:

Hello everyone, and welcome back to The Stanza. This deep dive is a bit personal as it involves a sneak peak at what I’ve been up to outside of The Stanza.

I spent a decent amount of time this year looking at buying distressed fashion brands with a few partners. I can’t name any names for confidentiality reasons, but the purpose of this deep dive is to provide more color on the mechanics of fashion investing, and just to share my overall experience and what I learned. Ultimately I didn’t end up acquiring any businesses, and I’ll also explain why.

Thank you to those who submitted their questions in the comments section of this newsletter.

Table of Contents

1. Key clarifications: distressed, revenue, emerging, independent

2. Why is it so hard to run a fashion start up?

3. My investment criteria and strategy

4. Capital won’t make a difference unless you can turn $1 into $10

5. Rapid growth is a double-edged sword

6. The success of emerging fashion brands lies in their distribution & cash flow management

7. Q&A - capital structure, preserving a brand, valuation

8. Conclusion