Fabletics took several steps during the pandemic that positioned the El-Segundo-based sportswear brand for a retail expansion that will bring its store count to 74 this year, a 48% increase from a year over year.
âOur point of view was that retail would come back,â said co-managing director Adam Goldenberg. âIn the midst of the pandemic, we signed leases and got the best location and best deal we’ve ever seen.â
Fabletics, which Goldenberg co-founded with his friend Don Ressler and actress Kate Hudson in 2013, started as an online-only, subscription-based business spun out of their company TechStyle Inc. doing business as TechStyle Fashion Group. , which is also based in El Segundo.
Fabletics now has over 2 million VIP members and generates around $ 650 million in annual revenue, according to Business Journal estimates.
The membership program costs $ 49.95 per month and offers merchandise credits and access at discounted prices. Fabletics uses the program to collect consumer data and increase its accuracy with inventory management and clothing design and sizing. The program also helps boost consumer engagement – members buy Fabletics equipment three to four times more often than a regular retail or e-commerce consumer, according to Goldenberg.
Membership data guides company decisions on new store locations, such as prioritizing top malls that have a high density of VIP Fabletics customers within a 30-minute drive radius.
âMy take is that overall the US has too many malls and too many retail outlets, but there are definitely those A + destination stores (malls) where you want to go with your family. and your friends on the weekends, âGoldenberg said. . âThere is entertainment value, and we believe these places will continue to function well. We open stores that meet both of these criteria, and we find the performance of those stores to be incredibly predictable. “
In addition to opening new stores, other measures implemented by Fabletics management during the pandemic included investing in three-month training for its home-confined store workers instead of laying them off or putting them into practice. time off, which made it easier to restart operations during ongoing labor shortages nationwide.
Nor has it given up on its manufacturing agreements – a move by Goldenberg has turned factories abroad into “good partners for us today” as an influx of goods from overseas continues to grow. straining the supply chain.
âNow these things seem obvious, but they were pretty scary back then,â he said. âI think it comes down to having a really good team and coming together. “
Goldenberg and Ressler founded TechStyle in 2010 as Just Fabulous Inc. and focused on selling clothing through its subscription-based business model. They acquired FabKids from Andy Moss and actress Christina Applegate in January 2013 and migrated the digitally native children’s clothing brand to its membership platform. In August of the same year, they bought ShoeDazzle from founder Brian Lee, and two months later they launched Fabletics.
In 2016, they renamed the company to TechStyle Fashion Group, but kept the name JustFab for its womenswear business.
Two years later, Goldenberg and Ressler teamed up with singer Robyn Rihanna Fenty, better known as Rihanna, to launch Savage x Fenty. The plus size lingerie company raised $ 115 million in February in a round led by private equity firm L Catterton, which valued Savage X Fenty at around $ 1 billion. The funding will support an expansion in retail.
Savage x Fenty recently produced a third iteration of their popular Savage X Fenty Show Vol. 3., which aired on the Amazon Prime Video streaming service and featured a celebrity roster, including singer Ricky Martin, rapper Nas, and model Gigi Hadid.
TechStyle has undergone “kind of a pretty significant tax reorganization over the past few years,” according to Goldenberg.
JustFab, ShoeDazzle and FabKids are now united under a Global Fashion Brands entity headed by Managing Director Laura Zhukovsky, while Goldenberg and Ressler are in charge of Fabletics. The brand separation recently became physical when Fabletics moved into a new 110,000 square foot space within a mile of the corporate headquarters that Fabletics shared with TechStyle, Savage x Fenty and Global Fashion Brands.
Zhukovsky’s team includes around 200 employees who helped his group reach around $ 300 million in revenue last year.
JustFab, ShoeDazzle, and FabKids are all sold online through the membership model which costs around $ 39.95 per month, and Brand Ambassadors promote the merchandise. Former brand ambassadors include chef Ayesha Curry, model Aoki Lee Simmons and singer Tinashe.
âWe’re just trying to bring the product to life, to be able to show it from a personality point of view, to add an element of fun,â Zhukovsky said.
One of its brands, ShoeDazzle, struggled somewhat during the pandemic as large numbers of consumers worked from home and reduced their outings.
âFrom a category perspective, it was difficult to drive the growth of fashion footwear during the forties,â she said, adding that the membership model has helped ShoeDazzle âstay very close to our customers. , and we’ve seen a lot of good movement in terms of meeting at the moment. We, for example, hadn’t had a lot of slipper business before, and it’s become a category that people are interested in, shoes you can bring home and walk the dog.
All brands under the TechStyle umbrella have their own design and merchandising teams and outsource production to overseas manufacturers. They also share some back office functions, such as fulfillment and customer service, which are performed by a subsidiary, TechStyleOS.
Fabletics has 650 company employees and 1,000 more working in its stores, 800 of whom have joined the company this year. The brand is looking to hire another 400 to 500 workers in the United States next year as more stores come online. It will also continue to add complementary product categories and expand its Fabletics Men division, which launched in April 2020 and “has exceeded all expectations,” according to Goldenberg.
âI feel like we are still at the very beginning of this brand,â he said. âWhat’s great is that the business is profitable. I think we are in control of our own destiny there, and we will continue to invest aggressively in growth.
The path to growth will likely include debuts in public markets in the near future.
Fabletics aims to raise around $ 500 million in an IPO offering, which would value the brand at more than $ 5 billion, the Wall Street Journal reported in July, citing “people familiar with the matter.”
The company has also posted vacancies on its website for a corporate controller who has “SEC reporting experience” and a corporate lawyer who “will play a crucial role in the execution of merger transactions and acquisition, corporate finance transactions, preparation of SEC files, oversight of SEC reports / compliance and advising general management.
Goldenberg said his team had been “fairly transparent” about a possible public market entry, but “could not confirm or talk about anything regarding the timing of the IPO.”
Broad Goals: TechStyle started Fabletics as a subscription business and has since grown to include strategic brick and mortar locations. The company aims to raise $ 500 million in an IPO offering.
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