As Acne opened its third London store, part of a wider global store rollout, BoF sat down with executive chairman Mikael Schiller to discuss the company’s growth, the perils of private equity money and why he sees himself as a Caribbean fisherman.
LONDON, United Kingdom — Alongside a thriving wholesale business that ships to 650 global accounts, severely cool Swedish apparel companyAcne Studios has grown its network of directly owned and operated stores to a current total of 35 locations; the latest of which has just opened on London’s Pelham Street, in South Kensington. Though the company does have a minority investor that came on board in 2006 and owns 21 percent of the business, unlike many other labels at a similar stage of development, Acne’s retail expansion has been completely organic, financed exclusively through the cash flow generated by the business.
“I think we are going to do about €100 million [turnover] this year,” Mikael Schiller, Acne’s charming and jovial executive chairman, told BoF, as we sat on a set of steps inside the company’s latest store.
Choosing to beat its own retail path by eschewing prime, or “AAA,” locations, the label has, previously, approached store expansion with a fair degree of caution. But, in keeping with its name, Acne is currently experiencing a teenage-like growth spurt — and a boost in confidence as well.
The success of the label’s existing own-store locations in the US and Asia, fashion’s two most important global markets, has prompted Acne to roll out a spate of new stores. Along with a second location in Japan and a 5000-square-foot flagship in downtown LA (café included), the company plans to open two shop-in-shops and a freestanding store in Seoul, as well as a third store in Paris “on the Quai Voltaire, near Dries,” said Schiller.
Because of the baggage it often carries — from private equity funding and conglomerate upscaling to soulless 10 year strategies — the phrase “retail expansion” sits uneasily with Schiller, who was keen to distinguish the label’s growth strategy. “Yes we are opening new stores, but the big change I would say that happened last year was that we opened our own retail in Asia and the US. We opened in New York in June last year and in Tokyo in December,” he said. “We have had a lot of stores for many years; we have been opening stores quite organically for a long time, but Tokyo works really well, New York works really well, and that gave us the self-confidence to open in Osaka and LA.”
Despite Schiller’s uneasiness with the phrase, five more store openings (coming after last year’s Tokyo and New York launches and in addition to last week’s London launch) looks an awful lot like “retail expansion.” But phraseology matters a great deal to Acne Studios, a label that not only publishes its own magazine, Acne Paper, but was founded by a creative collective, “very much influenced by Andy Warhol’s Factory,” which named itself after an acronym of the phrase “Ambition to Create Novel Expressions.”
Indeed, perhaps what is most interesting about the Acne business is its dedication to independent growth and taste for strategies rooted in gut instinct. The company’s fashion business (there is also a creative agency) was founded on the back of 100 pairs of jeans, with distinctive red stitching that were given away to friends, colleagues and families in 1997.
“[Acne] started to make a collection in 1998 — creatively very interesting, very progressive; it got into great stores, got a lot of press,” said Schiller. “But when it came to systems, logistics and production, it was not great at all, because it was very creatively driven. The company was on the verge of bankruptcy — the fashion part — in 2001.”
At the time, the difficulties born of being purely creativity-driven were compounded by the fallout of 9/11. “We had to raise money,” Schiller admitted, “but we couldn’t do that, so we basically had to restructure the whole company. I spoke a lot with other people and they said ‘Focus on Sweden and make jeans and t-shirts because that is easy’ and Johnny [Johansson, co-founder, creative director] said ‘I am fine with making it more local for now, but if we are just going to make jeans and t-shirts we are just going to be just another jeans brand, so I am going to go; I am not up for it.”
Acne responded to market realities by focusing on Scandinavia — the label has since opened 19 of its stores there — but it adamantly retained its ready-to-wear collection. This compromise, balancing commercial reality with the label’s dogged desire to preserve its independence and creativity would become its over-arching strategy.
“Yes there are business decisions, yes there are creative decisions, but I think what we feel is that we want to do something that feels great long-term. So maybe I could sell a lot of one product, but that product doesn’t feel good to sell, or we know that it would be great to do this collaboration, but it is not something we are going to be proud of,” said Schiller.
The same balanced, common sense approach informs Acne’s retail strategy. “If we find something we really like and can afford it, we do it. If we find something really cheap, but don’t love it, we don’t do it. If we find something we really love, but can’t afford it we don’t do it.”
In an industry where labels tend to fall into two camps — those that prioritise commerciality and those for whom creativity is king above all commercial reasoning — there is something different about Acne’s approach, pairing creativity with commerciality and a healthy dose of common sense.
“It is not that we don’t like being commercial. It’s great when you have commercial hits. But the thing is, you want to do it with integrity.” When asked how Acne ensured it had the commercial manoeuvring room to maintain its integrity, Schiller responded: “I mean this is not an exact science, but you can have some cautions, like, ‘Ok, we don’t have any debt right now, because if worst comes to worst we could borrow some money from the bank.’”
It’s refreshing that Acne’s strategy can ultimately be posed in such simple terms. But simple terms do not mean simple problems. Acne Studio’s ability to upscale its business, in the manner in which it has, reflects the strong commitment and personal investment of Schiller, Johansson and Mattias Magnusson, Acne’s CEO.
“I met with Kering,” said Schiller. “They are really nice people and, of course, it’s flattering, but we [would] have to be a fully-owned company by them, because that is the strategy, or a majority-owned [company] and then it becomes a totally different ball game. I think being in control is so important to us,” he continued, then paused and added: “I mean we can never say never.”
As for other potential exits, Schiller was open about having been approached by others and the temptations these invitations raised. “There are so many private equity companies that approach me and say, ‘If I gave you $100 million, you could open 50 stores in China. But have you heard the story about the fisherman in the Caribbean?” he asked.
“There is this fisherman in the Caribbean and there is this New York stockbroker who goes there and sees this fisherman bringing up all these fish and [the fisherman] is only there for like 20 minutes, because he gets all the fish [he needs]. And then the stockbroker goes: ‘If you did this all day, could you get as much fish the whole day long?’”
“‘Yes’ the fisherman replied. Then the stockbroker asks, ‘Do you have any friends that you could hire to do that? Do you think you could build a factory?’ ‘Yes’ the fisherman replied again. ‘Then you should do it and then I can take the company public and you could earn a lot of money.’ ‘Why?’ the fisherman asked. The stockbrocker replied: ‘You could do whatever you want, you could go to an island, chill out, maybe go fishing, be with your family.”
‘What, like what I am doing now?’”