Why is Victoria Beckham's brand doing so badly?

All that glitters is not gold. Not even if your last name is Beckham and you are one of the world's most famous and envied celebrities. Even if you manage to make most of the dreams you had as a child come true. And Victoria Caroline Adams born in 1974 born in Harlow, England, had some big ones. The first? To become a pop star, singing and dancing like the cast of Fame. The second was marrying the golden boy of British sports, David Beckham and with him building a perfect family and financial empire. The third was fashion. So after signing her first luxury denim line, VB rocks, and fragrances, she founded Victoria Beckham, her own clothing line, in 2008. When she presented her first collection at LFW, all the haters who had been waiting in the wings for her, ready to criticize yet another brand from an artless celebrity, had to think again, finding themselves faced with tailored, minimalist creations that were more reminiscent of a glam version of The Row than L.A.M.B. (Gwen Stefani's old line). Her proposal, which has remained virtually unchanged over the years, was based on a mix of femininity and minimalism in a sartorial and stylish key that was perfect for both a sophisticated office wardrobe and evening gowns. Yet despite good product and good reviews in the trade press, something never quite worked out so much so that it seems the brand was never in the black in its 14 years of operation. 

The numbers tell an all-negative story. In 2018 the company had posted a drop in revenue from £41.7 million to £35 million (with a loss up 16 percent from 2017), followed by a chiaroscuro 2019 budget. The year marked a 7 percent increase in revenue to £38.3 million, but still posted a major loss of £16.6 million. In 2020, the performance was further adversely affected by the health emergency. The latest accounts of Victoria Beckham Holdings Ltd show losses of £5,887,036 in 2021 (despite the fact that during the year final shareholders provided the group with additional loans of £0.6 million), down from £8,581,944 in 2020. The report released in August 2022 speaks of a loss of nearly 54 million pounds, equivalent to about 64 million euros. According to The Mirror, which first broke the news, the main reason would be the pandemic that slowed down purchases, along with the overpriced garments. Still the British tabloid shows that over the years debts have worsened and have never been so high. In fact, figures from early 2023 show overall losses for the company would now total 66.3 million pounds. Although the figures are more than worrying, a spokesman for the company told the Daily Mail online that shareholders continue to support the company and invest in the business, stressing that the balance sheet is good and there are no debts. Where is the truth?

The situation seemed so dire that rumors began to swirl about "significant doubts" about the company's ability to continue operating with accountants claiming that the company would need continued financial support from shareholders to keep going and other rumors that David Beckham had expressed skepticism about whether he would continue to invest in a hard-hit business that was no longer responding positively to expectations. Suddenly Victoria had found herself responding to those, including her husband, who accused her of setting up a vanity line, a brand that was not based on her real skills as a designer and businesswoman, but only on her love of fashion. So last March she declared, "If I want this brand to still be here in 10, 20, 30, 40 years, I have to break even, and then I have to be profitable."

In an effort to bring the accounts back into the black expanded her business in Europe and the Middle East; offered new products such as leather goods and the VB Body range; launched its own cosmetics line; and formed a partnership with Reebok; but more importantly, relied on a new management team. Ralph Toledano, former head of the Puig Group's fashion division and current president of the Fédération Française de la Couture, was appointed president, and Marie LeBlanc de Reynies replaced outgoing CEO Paolo Riva with the task of accelerating the company's achievement of profitability. The strategy devised by LeBlanc involved merging the two main lines, Victoria by Victoria Beckham and Victoria Beckham, into one signature collection and, most importantly, drastically lowering (by about 40 percent) product selling prices. "We saw a huge opportunity in the market, which is a space for an affordable luxury brand. It's about maintaining our high DNA, but providing greater simplicity and making sure consumers can relate to the brand in terms of both usage and price." Although the brand intends to maintain its luxury positioning and aesthetic, Beckham and CEO Marie Leblanc are focusing on affordable pricing and more understated designs to attract new buyers. The goal is to offer designer luxury at a realistic price The reason? Apparently, experts say the brand's minimalist aesthetic has struggled to capture shoppers with a penchant for purist luxury, the same shoppers who tend to shop at brands like The Row or who used to go crazy over Phoebe Philo's Celine. Although Beckham's garments are reminiscent of them in style and are equally top quality the fact that the brand is owned by a celebrity tends to make one recoil when confronted with a £1,500 cross-body bag or similarly priced dress. Despite the exceptional workmanship, for many buyers its offerings remain incomparable to that of a luxury house. And in an effort to restore credibility to the Victoria Beckham designer, the brand recently debuted at Paris Fashion Week. Will the new strategy pay off?