The future of the Stella McCartney fashion label is under intense scrutiny after the company reported a sharp increase in losses and a significant drop in revenue, sparking fears it could exhaust its cash reserves within a few years.
Deepening Financial Troubles
According to newly filed accounts at Companies House, the British brand endured a difficult 2024. Pre-tax losses widened to £33.6 million, a substantial increase from the £25 million loss recorded the previous year. This financial setback was compounded by a severe decline in revenue, with sales plummeting by 27% to just £16 million.
The label, celebrated for its steadfast ethical stance and commitment to vegan materials, has not turned a pre-tax profit since 2017. Directors have now issued a stark warning, indicating that the business could run out of cash by 2028. This projection stands even if its parent company, Anin Star Holding, which is controlled by the designer herself, does not demand repayment of its loans.
Market Challenges and Strategic Shifts
Company directors, including Stella McCartney, attributed the dramatic sales fall to "challenging market conditions." The luxury sector globally faced headwinds last year, with even affluent consumers tightening their belts due to the rising cost of living. A notable pullback in spending by Chinese shoppers further impacted performance.
While the brand noted sales growth in its UK stores, this was more than offset by a decline in royalty and wholesale income, dragging down the overall turnover. The situation reflects a broader trend affecting British luxury, with brands like Burberry also pointing to the previous government's decision to end tax-free shopping for tourists as a dampener on UK sales.
In response to the crisis, directors stated they have identified contingency measures to extend the company's cash runway. However, they admitted they "may consider alternative sources of funding to secure the long-term viability of the business."
A New Chapter of Independence
The financial results come amid a period of significant corporate change for the label. In January of this year, Stella McCartney bought back the 49% stake in her brand that was held by the luxury conglomerate LVMH. A joint statement at the time said the move reflected her desire to independently write a new chapter in the brand's story.
This deal followed another major shift just over a year prior, when McCartney ended a 17-year partnership with LVMH's rival, Kering (the owner of Gucci), and repurchased its 50% stake. The brand has now returned to full ownership by its founder, who first rose to prominence as creative director at Chloé before launching her eponymous label in a joint venture with Kering in 2001.
As the company navigates these turbulent financial waters, the industry watches closely to see how one of fashion's most prominent ethical voices will secure its future.
