Stella McCartney, the sustainable fashion brand backed by LVMH, is facing the impact of the Covid-19 pandemic head-on and is now preparing to implement a comprehensive restructuring plan. The brand’s CEO, Gabriele Maggio, shared this information in an internal note obtained by WWD. To mitigate the challenges posed by the pandemic, the company will be implementing measures such as reducing its workforce, implementing salary cuts, and closing certain stores.

Even before the Covid-19 outbreak, Stella McCartney was already grappling with financial difficulties. The brand, established in 2001 through a partnership with luxury conglomerate Kering, faced a turning point in 2018 when McCartney bought back Kering’s 50% stake in the company, enabling her to regain full control. However, this decision came at a cost, including the loss of Kering’s logistical support, which had a significant impact on the brand’s financial performance. In 2018, Stella McCartney reported an annual operating loss of £10.8 million, while sales remained stagnant at £42.6 million.

To weather the storm caused by the pandemic, Stella McCartney is implementing various cost-saving measures. As per Maggio’s internal note, certain employees have been asked to accept salary reductions for an extended period. Moreover, Stella McCartney herself has decided to forego her salary throughout the duration of the pandemic. The company also plans to restructure its retail footprint by converting certain stores into franchise locations and partnering with wholesale distributors. While the brand is considering team cuts, Maggio emphasized that no final decisions regarding job redundancies have been made yet.

Due to the prolonged quarantine measures, Stella McCartney’s operations have been at a standstill for several months. Now, with businesses gradually reopening, the road to recovery seems daunting. Nevertheless, by implementing this comprehensive restructuring plan, Stella McCartney aims to navigate through these challenging times and ultimately emerge even stronger in the post-pandemic fashion landscape.

Useful links:
Stella McCartney Official Website
WWD