Mini-Report: The Row valued at $1B - will it deliver?

Introduction

The Row, founded by Mary-Kate and Ashley Olsen in 2006, has become a recognized player in the luxury fashion industry over the last 10-15 years. The brand started as a t-shirt company and expanded into high-end fashion, selling in department stores like Barneys of New York and winning several prestigious Council of Fashion Design (CFDA) awards. The Row is well-known for its minimalist aesthetic and "quiet luxury" niche.

More recently, the brand raised a significant amount of capital from investors including the Wertheimer family (owners of Chanel), Françoise Bettencourt Meyers (L’Oréal heiress), and fashion entrepreneurs Natalie Massenet and Lauren Santo Domingo. These investors have valued the brand at approximately $1 billion. With this valuation, The Row positions itself in the upper echelons of ultra-luxury apparel, similar to brands like Hermès, Chanel, etc.

However, while the valuation is reasonable given industry benchmarks (i.e., ~4x est. revenue of ~$250M, or 16x est. EBITDA of ~$65M), questions remain about the sustainability of the brand's long-term growth and profitability. Ever-changing consumer preferences and the potential celebrity influence in the valuation may complicate the future of the business. We'll analyze three key insights from Particl's online sales data for The Row: historical performance, assortment and associated revenue, and discontinued (or failed) products.

Historical Performance

The Row’s online revenue growth over the past 12-18 months has been notable. Based on Particl's online inventory data for The Row, the brand generates between $50-75 million in annual e-commerce sales. Based on our research and estimations, this is roughly 30% of the total $250M business. While this is relatively in-line with the rest of the industry, it is a higher online share than average (luxury apparel brands rely heavily on in-store sales due to the sensory aspect of their products). The growth of this channel for The Row is also a positive indicator for the durability of the business and customers' comfort level purchasing expensive clothing and accessories online. The Row has grown nearly 175% when comparing September 2023 online revenue with the same month in 2024. Overall, this data supports the notion that a $1B valuation may be warranted.

Assortment

Next, we will turn to The Row's assortment. Nearly all of The Row's revenue comes from the Apparel & Accessories and Luggage & Bags categories in Particl's database. Roughly 75% of sales are driven by apparel (i.e., the "ready-to-wear" line), while 25% of sales come from The Row's handbags. Moreover, its top five best-selling individual products are all handbags. Our analysis suggests that while the business drives most of its volume and topline revenue from apparel, its handbags are likely the most profitable products and also serve to maintain high brand equity given their resale value.

The Row's top five selling products are all handbags from the Margaux and Park Tote lineups.

Potential Headwinds

While most indicators suggest The Row is heading in the right direction and will deliver on its $1B valuation, there are still notable risks associated with the venture. All high-end luxury brands face fickle customer preferences, and while the "quiet luxury" trend is hip right now, it may not be in the future. Moreover, production costs are steep for ultra luxury apparel and accessories, and while high price points offer the potential for large margins, those margins can quickly erode if product lines underperform. The Row has had over 10 notable product category discontinuations in the last year, which could indicate struggles with selling certain high-priced apparel.

Additionally, the competitive nature of the luxury market, and the brand’s reliance on a small, ultra-wealthy customer base add further pressure​. Quality control missteps, such as the viral "jelly shoes" failure, also highlight the risks that even small errors in production can damage profitability and brand reputation​. The Jelly Shoes were ultimately discontinued.

Summary

In conclusion, while The Row’s $1 billion valuation is backed by strong investor confidence and a growing digital presence, the brand will face a handful of challenges in sustaining long-term profitability. Focusing on its core high-margin handbag line while being selective with apparel launches may be a prudent strategy. By doing so, The Row can preserve its brand equity and profitability while carefully navigating the complex and ever-changing luxury landscape. A slow and steady approach to growth, aligned with its investors’ luxury market expertise, might ultimately be its most sustainable path forward.