P180 has taken a minority stake in Altuzarra, advancing its agenda to invest in and grow brands with its innovative technology and industry expertise.
“This marks our first investment in a monobrand, reflecting our belief that designer-led brands like Altuzarra have significant revenue and profit potential when provided with the resources to optimize their operations, particularly in inventory monetization,” said Brendan Hoffman, cofounder and chief executive officer of the New York-based P180, in an interview with WWD.
The Altuzarra investment follows P180’s recent deal to buy a stake in Elyse Walker, the specialty retailer selling luxury fashion brands. Hoffman said P180 is “very active” seeking additional brands or retailers to invest in and work with. “There’s been such great interest from brands in the peer group of Altuzarra because they’re all facing the same obstacles.”
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Asked what the criteria for investment is, Hoffman said simply: “Great brands with a great following that have opportunity to grow their business.” Looking ahead, Hoffman sees P180 with a portfolio that includes “a pretty wide range of brands, from relatively tiny companies to those with a couple hundred million dollars” in volume.
“P180’s forward-thinking approach and industry expertise provide the ideal foundation for our brand’s next phase of growth,” said Joseph Altuzarra. “This partnership will not only allow us to expand our global presence but also help us strengthen our digital strategy. I’m particularly looking forward to leveraging P180’s expertise to create more impactful ways to connect with our customers while continuing to push the boundaries of our creative vision.” He started his brand in 2008.
P180 was cofounded this year by Hoffman, the former chief executive officer of Wolverine Worldwide, Vince, Lord & Taylor and neimanmarcus.com, and by CaaStle founder and CEO Christine Hunsicker. Hunsicker serves as P180’s chairperson.
P180’s mission is to invest or acquire brands and retailers that stand to benefit from Hoffman’s experience running brands, retailers and e-commerce operations, as well as CaaStle’s business-to-business technology and its rental platform called Borrow. CaaStle (which means Clothing as a Service) manages the entire rental process from technology and logistics to cleaning the garments. CaaStle also provides data and analytics designed to help companies buy and price merchandise better and sell more at full price, according to the partners.
They also believe P180 can help retailers and brands build margins by enabling them to rent fashion to customers, instead of resorting to deep discounting or unloading goods at lower margins. Fashion that lingers on the selling floor without getting sold could often be rented, particularly edgier or louder styles shoppers would wear for an occasion or two, but wouldn’t want to own.
Like a private equity fund, P180 has begun attracting backers.
According to Hunsicker, “Investors are responding really well, and it’s actually pulling some people back into the apparel industry wanting to invest.” The partners characterized P180’s business model as “private equity-plus but with its own unique tool kit.”
“I’ve known the Joseph Altuzarra brand since its inception,” Hoffman told WWD. “I was at Neiman Marcus back then and have long loved the brand. So when we got connected with Shira, we hit it off right away,” said Hoffman, referring to Shira Sue Carmi, the CEO of Joseph Altuzarra. “We met in the showroom a few months back, and it just seemed like how Joseph and Shira were looking to continue to grow the brand exactly complemented the skill set we bring. It took off from there.”
Hoffman said P180 will manage Altuzarra’s e-commerce business. “That’s where our expertise is. We know we can run it as efficiently and optimize it as well as anybody, and really turn it into a profit center.” In addition, P180 will launch a rental business at Altuzarra by the end of this year, in time for the holiday season. “Joseph’s product is perfect for those special occasions,” he said.
Hoffman also said P180’s involvement in Altuzarra “frees up” the designer, CEO Carmi, and president Marta Lastra-Moro “to focus on what they do really well. It’s really tough to run a profitable e-commerce business reaching a certain size. I saw it firsthand at Vince, which is a larger business,” than Altuzarra. “That was where Christine and I saw the void and opportunity to join forces, create P180, and bring together the scale and expertise that CaaStle has in e-commerce and my background running brands and retailers,” to advance companies where they see growth potential.
“We’ve been such an art-driven kind of industry, and almost at times averse to data, but that’s what P180 is embracing and bringing to partners like Shira and Joseph,” Hoffman said. “We’re giving them access to data in ways they probably weren’t able to access before.”
Asked why he wanted new partners, Altuzarra said: “The business had grown tremendously in the last five years, especially our direct-to-consumer business. And in a lot of ways, meeting with Brendan and Christine felt like kismet, because that part of our business was growing. We also felt that as a smaller team, to take the business to the next level we really needed a partner. When we met with Brendan and Christine and learned about P180 and CaaStle, I knew they were the right partners and that this was the right time to do it. I started Altuzarra almost 17 years ago. The industry has changed tremendously, and we’ve had to innovate in every part of our business, whether on the design side, on the manufacturing side, or the logistics. In e-commerce, we were not really innovating that much. When I heard about what CaaStle and P180 were doing, it was exciting to me.”
Over the past five years, Altuzarra launched his direct-to-consumer business, which included his first store, on Madison Avenue. But the designer said that understanding his customer “was not something I had as much of a handle on when I was wholesale only. So having the direct relationship with our customer, and understanding what sells, why it is selling, why something is not selling, made me a much better designer. And to Brendan’s point, there is a sort of magic when you’re able to mix the artistry of fashion with the business acumen and data side, and create something that feels interesting, innovative, and answers the needs and desires of your customer.” In addition to the Madison Avenue store, Altuzarra has a seasonal store in East Hampton, N.Y., opened from May through August, and a pop-up in Palm Beach. Elyse Walker is among the designer’s wholesale accounts.
Altuzarra said his company is profitable, but declined to comment on overall sales. “Dresses have been our biggest and fastest-growing category. Knitwear has been a very fast-growing category too. Those are our two star apparel categories,” he said.
Altuzarra is known for modern sophistication, sensuality, elegance and ease, with sharp tailoring, ruching, draping and slits. His multicultural background as the son of a Chinese-American mother and a French father informs his designing.
“We’re going to help make sure that every piece of clothing that Altuzarra designs is monetized to the fullest extent possible,” said Hunsicker. “We focus on the inventory and how to move it at the highest price possible. In theory, everybody wants to do that. But I think what we bring are some tools and technologies through Borrow that actually help set the price a little bit higher, so that we’re monetizing the clothing at the highest rate possible. We want to make sure that we keep the returns down as much as possible, and that we keep the gross margin as high as possible.
“In this tripartite relationship, everybody has their lane,” Hunsicker said. “We all understand and appreciate the other’s expertise. CaaStle’s is to monetize inventory online. Joseph’s is obviously to design beautiful product and understand the consumer. And P180 is the bridge between CaaStle and Altuzarra. Running stores, running brands, and dealing with wholesale accounts, P180 gets all that.”
Retailers try to sell at full price, but as Hoffman said: “At the end of the day, there’s still about 50 percent of the inventory that sells at markdown. Retailers tend to neglect that because we really don’t want to think about it. And yet, the difference between trying to sell at 40 or 50 off, and selling it at 70 or 80 off, which is what happens, represents an enormous amount of profitability. It’s your bottom line. For 100 years, retailers have been looking at certain metrics, and quite frankly, it’s been the wrong metrics. Through CaaStle technology, this different set of lenses, we’re going to focus on monetizing product throughout the life cycle, and a lot on selling markdown inventory at less of a loss, which ultimately leads to tremendous profitability.”