The Unraveling Of NGG, Ye Fires His Loyalist Soldier And Nike Has A Moment
Womp Womp: FL, BIRK, LULU
New Guards Ungroup
When the José Neves-founded and led Farfetch collapsed and was acquired by Coupang in a $500M deal in December 2023, not a lot was said about what would become of New Guards Group (NGG), a holding company for multiple streetwear brands.
Recall if you will that Authentic Brands Group (ABG) launched a partnership with NGG to manage Reebok’s distribution in Europe. NGG was also tasked with leading brand collaborations. Given that ABG signed the deal with NGG in February 2022—not long before Farfetch began to spiral—timing could not be worse. From what I’m hearing, NGG’s handling of Reebok has been a colossal mess and ABG is planning to bring collaboration management back in house. Timing is uncertain. I reached out to ABG for confirmation, but haven’t yet heard back.
As for NGG itself, there was chatter back in January that Roberta Benaglia's Style Capital had made an offer to purchase the group but nothing came of it. In the meantime, Marcelo Burlon, who founded NGG in 2013 with Davide De Giglio and Claudio Antonioli, stepped down as creative director of his label County of Milan in April and the brand’s Instagram feed hasn’t been updated since June.
Looking around at the landscape of NGG brands, Heron Preston’s entire ecommerce site is on sale and the brand’s Instagram account hasn’t been updated since February 2024. French designer Ben Taverniti, who led Unravel Project, no longer references the brand on his Instagram feed and is now leading a label called B1Archive, which was launched in 2023. Opening Ceremony’s Instagram feed was last updated in May to announce an Ugg collab, and the brand’s website is no longer live. Peggy Gou’s Kirin and A Plan Application were non-entities before Farfetch was sold.
Brands that appear to still be active are Alanui, Ambush and Palm Angels though it’s unknown whether or not production is still being handled by NGG. Louis Vuitton now owns Off-White’s intellectual property and there was chatter back in November 2023 that it was attempting to buy back the license held by NGG.
On LinkedIn, there are recent NGG job listings for Off-White store managers in six cities, and an NGG financial controller (good look with that!) but that’s about it. All told, it appears NGG possibly holds the license for a grand total of four brands, which is not a lot considering Farfetch purchased the company for $675M million in 2019.
All Falls Down
Accomplished footwear designer Steve Smith, often referred to “the godfather of dad shoes,” is no longer working for Ye’s Donda Design. A loyal employee to the end and one of the few prominent individuals to defend Ye after his ugly falling out with Adidas in October 2022, Smith was fired by Ye about a month ago, according to reporting by Fast Company. “He’s lost his mind,” Smith told Fast Company. “The whole of Yeezy is circling the drain and this is just part of it. He has surrounded himself with toxic, c-grade losers.”
Things for the Stoughton, Massachusetts-born Smith allegedly began to fall apart in the spring when Ye began speaking about launching a porn platform, a plan which has since been shelved. However, it's unclear why Ye cut off Smith and allegedly blocked him on Instagram, a noteworthy move given Smith has been one of his most loyal soldiers since 2016
Adjusting to taking the lead on production and sourcing that Adidas once handled, Donda Design hasn’t exactly been productive since breaking ties with Adidas. The brand has released just one shoe silhouette: YZY Pods, a sock shoe made in Italy that initially was priced at $200 and released in December 2023. With thousands of shoes sitting unsold, the brand slashed the price to $20 two months after the initial release.
Ye has stayed productive musically, releasing the 16-song Vultures 2 in early August, and more recently traveling to Seoul to hold a listening party, and yet controversy continues to swirl. Recently, former Donda Design employee and highly controversial individual Milo Yiannopoulos alleged the 47-year-old music creative is addicted to nitrous oxide. Ye hasn’t commented on the accusation and the dentist Yiannopoulos accused of supplying Ye with the drug has denied the accusation.
As to where Smith is headed next, he isn’t sure. Despite his legendary portfolio of designs (details below), Smith admitted in an interview last year that he isn’t a millionaire, and it sounds like he currently is open to work. “I’m in a very happy place with it all. I will certainly be a priceless asset to whoever I work with next. It’s all his loss and the result of his foolishness,” he told Fast Company.
A list of shoes Smith had a part in designing:
New Balance: 550, 574, 997 and 1500
Adidas: Artillary
Reebok: Instapump Fury
Fila: Grant Hill
Nike: Shox Monster, Air Streak Spectrum Plus and Nike Air Spiridon Cage 2
Adidas Yeezy: Boost 500, Boost 700 Wave Runner and Foam Runner
YZY: Pods
Glimmers Not Shoots
Amidst the muck and mire Nike has been slogging through as of late, the brand has occasionally conjured moments of brilliance that provide a looking glass back at the brand’s better days. Naomi Osaka’s whimsical U.S. Open kit is one such instance. Designed by Nike women’s creative director and Ambush designer Yoon Ahn, the ensemble sparked waves of delight across social media.
Commenting on the effort on Instagram, Ahn wrote, “Lolita fashion (Japanese subculture context) offers an escape from adulthood, a return to the innocence and beauty of childhood. It’s a doorway to a fantasy world where you can craft an ideal identity that may not fit everyday norms but feels perfect in this imaginative space.”
As cute as the uniform was, the magic actually was made when Nike announced what was viewed as a well-regarded women’s tennis collection days before the start of the U.S. Open. Timed with the instantaneously viral reveal of Osaka’s look, the collection was launched on nike.com along with several wholesale accounts. A week later and the $70 polo top is sold out in both colors as is a $550 varsity jacket. There’s also a $175 cardigan is sold out in multiple sizes.
Nike long ago wrote the playbook on building excitement for launches through on-point design, well-timed influencer seeding and athletic endorsement and thoughtful distribution—a strategy everyone copied, but which Nike itself has lost the plot on in recent years.
And yet, let us not grow too excited for Nike just yet. The same items sold out on Nike are available in full size runs among the handful of retailers with allocation. Glimmers here and there, yes, actually green shoots…not yet.
Finance
Just a quick word to note the disparity between earnings I covered last week compared with this week. In my last note, six of seven companies had surprisingly good earnings, while this week all three names disappointed.
Foot Locker
Foot Locker announced a solid Q2, reporting positive comps (up 2.6%) for the first time in six quarters. Alas, the company announced 659 door closures in Europe and Asia that nobody was expecting and the stock dropped 10% on the news.
Notably, the brand continues to shift its stores to off-mall locations with penetration now at 40% of North American square footage, an increase of 4% yy with a goal of reaching 50% by 2026.
The retailer highlighted brands by category as follows:
Performance basketball: Adidas AE1 and Puma LaMelo Ball MB.03, also Nike signature shoes for Sabrina Ionescu, Devin Booker, and John Moran, along with Jordan athlete Jayson Tatum
Lifestyle basketball: Nike Air Force 1, Dunk and Air Jordan 1
Lifestyle soccer: Adidas Samba, Campus and Gazelle
Lifestyle running: New Balance, Asics and Nike Air Max Dn, which is being rolled out to additional doors
Performance running: On and Hoka, “especially women and kids”
Boots: Uggs and Timberland with expectations of a stronger boot season versus ly
Vulcanized: Remains challenge with some positives coming from Vans New Skool franchise
Birkenstock
Birkenstock Q3 revenue and earnings per share came up short, news that cause the stocked to dip a whopping 16%. The company described revenue increases of 19% as “record breaking,” and attributed growth to “strong consumer demand supported by new production capacity and category expansion.” While Birkenstock maintained a sunny attitude, analysts were concerned by a deceleration in growth in the Americas
Because of the earnings miss, analysts’ questions on the call were more aggressive than usual, and because Birkenstock is new at this, there were some testy exchanges, something I always find eminently amusing given earnings calls epitomize corporate speak striving.
Lululemon
Lululemon reported yet another disappointing quarter, missing on Q2 revenue and guidance. One pristine and perfect, it appears the brand has entered into the can’t-do-anything-right phase of its existence. Revenue in the Americas is officially a problem with constant currency sales up a measly 2% constant currency while comps were down 2%. The company blamed missed opportunities in women, hurt by a lack of seasonal newness, different, executives noted, from innovation.
During the call the company introduced the Power of Three x2, a confusingly-named plan whose focus on newness and innovation has a target of doubling the company’s revenue from $6.25B in 2021 to $12.5B in 2026.
Lululemon’s attempt to right its ship at least for the near term will likely be challenged by changes to design team leadership changes. Sun Cho stepped down as Lululemon’s chief product officer in May, announcing a move to Vans. Rather than replace her, Lululemon appointed Jonathan Cheung as head of product design and innovation strategy and Nikki Neuberger as chief brand and product activation.
Et Cetera
Nike and the Museum of Modern Art have collaborated on the cutest set of colorful crew socks.
Vice presidential candidate Tim Walz runs in Hoka, meanwhile, Azealia Banks takes the opposite tack and is a fan of Vibram Five Fingers: “I need to join an online club for people who are fans of vibram five finger sneakers because the absolutely undeserved hatred I get for having multiple pairs is just not cool. Sorry you're not into ergonomic shoes and don't care about ur posture bro.”
Nokia and Mattel’s Barbie are collaborating on a dumb phone, a $130 mobile device capable of calls and texts that’s intentionally devoid of internet accees. This is meant to address Gen Z’s penchant for digital detoxes but in my opinion this will find more appeal with millennials feeling nostalgic about their own first phones.
Comic Druski takes aim at streetwear culture, mocking not just the style choices and doing it for the ‘gram, but also the music and an all around obsessions with being perceived as a weirdo.
Angel Reese’s first collection with Reebok dropped last week and most items are available in full size runs. The vector cropped jacket is the only item sold out in multiple sizes.
Since we’re talking sell-through, don’t look now but Ralph Lauren’s skinny Tompkins jeans priced at $128 are 100 percent sold out. There’s been a lot of chatter about the return of skinny, but in my opinion it never really left. Baggy cargos pants and jeans are cute and still relevent, but for women who are in their post college era, it can be very challenging to dress them up. And let’s be real, another underrated reality is that most guys prefer skinny over baggy!
Adidas Yeezy silhouettes are being sold from 30%-70% off on adidas.com.
Wendy’s is set to announce a SpongeBob SquarePants-themed Krabby Patty meal, launching in the fall 2024.