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Fashion IPOs Are Trending: Why Poshmark, Dr. Martens & Mytheresa Could Be Good Buys in 2021

The 2021 IPO race is off to a running start, and fashion companies are eager to capitalize on the booming stock market.

Poshmark is set to begin trading on the Nasdaq this week, Dr. Martens said yesterday it is planning an IPO on the London Stock Exchange and Mytheresa today revealed its terms. ThredUp also is forging ahead. The activity comes as insiders predict a rebound in fashion spending as the COVID-19 vaccine takes hold, consumers return to the office and special occasion events resume.

“It has been kind of a dry spell without clear, new fashion trends and great upstart companies to replace the old guard,” said Bryan Eshelman, managing director in the retail practice at AlixPartners, the global consulting firm. “[Now] some of the direct-to-consumer brands are getting to scale and they could benefit from outside funding. Good legacy brands [are being] rebooted. There is pent-up consumer demand and pent-up investor demand.”

There are several specific factors at play, Eshelman noted. Consumer spending is poised for a rebound, particularly with more government stimulus money likely to flow in. “With COVID starting to resolve … people are going to be in a mode of getting back to work. Clearly, companies that are e-commerce heavy and more direct-to-consumer oriented will be beneficiaries.”

While Dr. Martens (a heritage brand), Poshmark and ThredUp (resale platforms) and MyTheresa (a luxury purveyor) play in different areas of the market, they all are intensely focused on digital — and that’s a distinct advantage.

1460-Boot
Dr. Martens 1460 boot has been a winner during the pandemic.
CREDIT: Dr. Martens

“This past year, firms with an online presence have prospered, while those that depend on bricks-and-mortar sales have faltered,” said Jay Ritter, a University of Florida professor and IPO expert.

The resale market, in particular, has been an area of focus for many companies, consumers — and now investors. A recent ThredUp report revealed that online secondhand market is expected to grow 69% between 2019 and 2021, gaining 27% in 2020. The sector is expected to hit $64 billion by 2024 (from $28 bilion in 2019).

“I have mixed emotions about resale. It is a growth story on top of a pretty small base,” Eshelman noted. “The environmental, sustainability angle and that kind of thought process certainly benefits them. Consumers buying experiences rather than goods [is an advantage]. It’s a trend that’s here to stay.”

While Poshmark and ThredUp might be squarely at the center of current shopping trends, Dr. Martens has proven that a classic brand with a modern strategy can also dominate the digital space.

The Permira-owned label, under CEO Kenny Wilson, has spent the last several years building its direct-to-consumer channel. The company said yesterday e-commerce has been a key contributor to its “substantial” overall growth, and is expected to be the main driver going forward.

Mytheresa is a digital native, and while the company faced an uncertain future when it was owned by a troubled Neiman Marcus Group, it is now poised to take advantage of the appetite for online fashion and luxury retailers.

Although a Mytheresa IPO had been mooted for months, pre-and post-Neiman Marcus ownership, analysts and investors  believe the November alliance forged between three online competitors — Richemont, owner of Yoox Net-a-porter Group, Farfetch and Alibaba — spurred MyTheresa to take immediate action.

Today, the retailer said it would offer 15.6 million shares on the New York Stock Exchange and expects its share price to debut between $16 and $18 per share. — With contributions from Samantha Conti

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