Altuzarra inks minority investment from P180, shares focus on digital DTC business

Justified or not, fashion has a reputation for being the slow horse to catch the train. Despite being an industry based on constant change vis à vis seasonal designs, the systems and processes in place to bring those clothes to market and ultimately to the consumer can be traced to the 19th century.

Technological innovations in the 1990s that transformed online shopping as we know it today were approached cautiously by the fashion crowd over the millennium, but thanks to early pioneers such as LuisaViaRoma, in 2024, it’s taken for granted that most luxury brands have an online shopping presence.

As designer Joseph Altuzarra learned, the direct-to-consumer (DTC) digital sector evolves as customers form new fashion consumption habits. Enter P180, a new venture dedicated to driving brand and retailer profitability founded by Brendan Hoffman with partner Christine Hunsicker, also CEO and founder of a proprietary B2B technology company CaaStle aimed at driving the evolution of inventory monetization for apparel and more.The venture  is tasked with taking Altuzarra’s namesake label into the next phase.

Speaking with FashionNetwork.com over Zoom along with P180’s co-founder and CEO Hoffman and Jessica Dvorett, CaaStle global head of growth who works with Hunsicker, the designer discussed the impetus for the new stakeholder. (Previously, the brand was under the Kering umbrella from 2014 to 2021.)

“We were interested in and open to partnerships with those who believe in the business and add value. Altuzarra’s DTC business, specifically in e-commerce, has grown in the last five years. When I met Brendan and Christine, I knew they were the right partners to get us to the next level,” the Altuzarra creative director said.

“P180 and CaaStle have the expertise in this area and can leverage their strength to build on our successes. It’s a complicated and complex side of the business, and they are innovating in this area, which excites me,” he added.

According to Altuzarra CEO Shira Sue Carmi, Altuzarra’s DTC has grown from 5 percent of the business before the pandemic to over 40 percent in 2023. She declined to give the brand’s recent revenue numbers.

For an independent brand of Altuzarra’s size, a sophisticated tech and digital department is an expense that isn’t feasible. Altuzarra said the new partnership won’t result in significant staff redundancies.

“We create assets, have our own stores, and utilize the same staff to work on multiple channels, which wasn’t fully sustainable over a long period,” he confirmed.

The company did not disclose the amount of P180’s stake but asserted a majority stake was not the aim.

“At first, we did think it should be a majority stake, but we realized the secret sauce to these companies like Altuzarra and Elyse Walker [the venture also has a stake in the California-based luxury boutique] are the founders and their teams,” added Hoffman.

Hoffman—whose CV includes stints at Vince as CEO, Neiman Marcus as president and CEO of NM Direct, and Lord & Taylor as president and CEO, among other roles in fashion commerce—saw first-hand how the difference in the scale of business affects its digital departments.

“Twenty years ago, NM.com did 100’s of millions of dollars business with access to large tech teams. When I was at Vince ten years ago, a $30-million brand, I saw the difference between having access to technology and digital expertise on a smaller scale. We recognized smaller but great brands like Altuzarra could not have the necessary digital and technical talent; there are so many other things they should focus on, like design, creativity, and product,” he said.

Specifically, what Hoffman and Hunsicker of CaaStle (‘Clothing as a Service’) bring to businesses starting with Elyse Walker is elongating the life cycle of the markdown period.

“Mobile commerce changed the power the customer has with frictionless price transparency [thanks to comparison shopping aided by smartphones], which has eroded the brand and retailers’ margins. Brands need new tools to interact with consumers differently. We are changing the markdown cycle of products. While we focus on full-price sales, incremental profitability is hidden away in markdowns. CaaStle technology extends this process, reducing the amount of inventory jobbed out every season,” he explained.

P180 and CaaStle do this by keeping it live on the site longer via merchandise rental programs and utilizing data to anticipate which styles will likely end up on a markdown.

“The technology gives businesses the confidence to decide what to mark down and for how much,” he furthered, making an analogy of marking down 30 to 40 percent. “That is a few points every step of the way that retailers and brands are losing in gross margins; bottom-line profitability of 10 to 12 points now turns to struggle to break even,” Hoffman suggested.

“The markdown is more profitable with an elongated selling cycle,” he added, noting how crucial the rental aspect, which Altuzarra only currently participates in with a third party, Rent the Runway, can be managed in-house with the help of CaaStle.

Dvorett concurs that selling full price is still the best way to profitability, and CaaStle’s focus is only on the inventory once it gets to the markdown phase.

“We help brands and retailers squeeze that extra margin, and rental is a way of doing it; it offers another channel and lifecycle of the product, and the presence of rental impacts markdown liquidation decisions,” she said.

The platform brings the abilities of third-party sites like Rent the Runway directly to brands who need help facilitating that.

Typically, the platform can offer a single-time rental or ‘borrow” transaction, a rental subscription that delivers several items monthly, or a flat-out purchase listed simultaneously on the website. Dvorett mentioned Vince’s Unfold program, which, for a monthly fee of $175, offers several pieces monthly to try and return or buy.

“Borrowing extends the product life cycle of clothing while driving profitability. We believe it helps unlock creativity for designers like Joseph. If you know that you have a stronger monetization channel and that you will earn more per item, you can push the boundaries a bit and use more channels; you can commit more to the product buy. If it doesn’t go exactly as you like, you have options. The risks can accelerate growth and ignite creativity,” Dvorett suggested.

Altuzarra also suggests renting can only further his brand positioning.

“We rent Altuzarra on Rent the Runway, and to my understanding in the Venn diagram, there is some crossover for customers who will rent and then buy. A large number of customers come to the website and love the product but can’t buy it. This gets them in the door,” he said, adding,

“I see how Gen Z and younger people in my office consume fashion, and they are all renting; many people are well-versed in it. They are discovering brands and, as they age, will be able to become full-price long-term customers.”

He anticipates that a rental system will allow runway-exclusive styles to be produced for customers to experience without buying at full price, thus supporting innovation and artistry.

Hoffman said it’s mind-boggling to see the number of designer and luxury email blasts touting 75 percent markdowns, a common practice that renting could alleviate.

“The younger customer wants it, and the industry knows something needs to change,” he continued.

According to the executive, it has already affected Elyse Walker’s returns, as the rental feature has helped them implement final sale stipulations at lower percentages.

“In the last decade, growth was prioritized over profitability, and we saw start-ups that only went for market share and weren’t set up for profitability. What we do at P180 and CaaStle is to raise the floor for your liability; if you know you are getting more for markdown inventory, it gives you more confidence to take risks,” he said.

While all parties are excited for this next phase of retail that will maximize inventory while engaging a new customer to be introduced to the brand, they assured another tried and true way to get to know a designer brand, the sample sale, is here to stay.