hollywood billionaire

Chapter 445: Light Luxury War
"Wha...what?"

"Two billion?"

Madison's extremely surprised look made Han Yi instantly think of a squirrel.

A little squirrel happily returned to his tree hole after basking in the sun, only to be stunned to find that all the pine cones he had worked so hard to collect had been stolen.

"Yuzhen, are you willing to explain this to your artist?" Han Yi looked at Zhao Yuzhen with a smile. He didn't intend to hide it in front of these girls, but at the same time, he felt that if he told this matter, it would seem like he was showing off too deliberately.

It is appropriate to let the manager answer McGrady's questions.

"Ah good."

Yuzhen was stunned at first, then nodded slightly with a gentle expression and agreed.

"I don't know the whole story, and it's been a long time since then, so I don't remember some of the details very clearly. But the basic situation is probably like this... McGrady, after visiting your house last time, we drove to South Hampton...Medo Trail, yes, that's the name. In that big house by the sea, we first met David Rubinstein, the co-founder of the Carlyle Group."

"There, we saw the vice president, the original copy of the Magna Carta of 1297, and learned about..."

Having said that, Yuzhen looked at Han Yi and then at Xu Yiru with mixed emotions before continuing.

"Since 1987, the Yi family has entrusted the Carlyle Group to manage its assets."

“In addition to the $3.99 million in CEP-III, Rubinstein told Yi and his parents that an additional $12 billion was held in trust by Carlyle.”

As soon as the words were spoken, everything was silent.

Jordan Bromley, Han Yi's legal advisor, turned on his phone very tactfully, swiping his fingertips aimlessly on the screen, looking very busy. Yi had introduced him to the investment portfolio at Carlyle, so he was definitely an insider. But if he wanted to continue to be an insider, he had to keep silent when others talked about it, unless Yi took the initiative to invite him to express his opinion.

The other two people who already knew about this, Xu Yiru and Zhao Youzhen, were recalling the shock and impact they felt when they first heard the news.

As for Madison Beal?

"This happened...after you came to my house?"

"Correct."

"The day he wrote a contract proposal on a tissue on my dining room table?"

"It seems that we only went to your house that day."

"I knew earlier..."

Madison stared at Han Yi for a long while, then heaved a long sigh, lowered his head and muttered something.

"If I had known, I would have added an extra zero to the tissue."

With just one sentence, the salon was filled with laughter again.

"If you can add a zero after the number of albums in the contract, then I have no objection." Han Yi replied with a smile.

"Sure." Madison agreed. "Based on the rate of releasing an album every two years, I can fulfill the contract when I'm about 160 years old. It's up to you if you think it's appropriate."

"The albums you can't finish recording can be passed on to your granddaughter." Han Yi joked, "Or your great-granddaughter."

"Ours." Maddie muttered in a voice that only she could hear clearly.

"what?"

"What? Nothing." Madison touched her earlobe and glossed over it. "Let's... let's get back to the point, friends. We now know that Yi is richer than anyone of his age on Earth, but I still can't believe that Kate Spade is so expensive. I mean, this is Kate Spade, 24 billion?"

Madison didn't need to explain too much, everyone in the room understood what she meant. Compared with luxury brands like Louis Vuitton, Hermès or Chanel that stand at the top of the fashion contempt chain, Kate Spade's brilliance is indeed much dimmer. The brand's namesake founder, Kate Spade, is not like Coco Chanel, who has been a tailor since childhood and conquered women and the world with her skillful hands, nor is she like Guccio Gucci, who has a family heritage of hundreds of years and is a famous leather master in Florence. Kate, who graduated from Arizona State University in 1985, even studied journalism.

The reason why she chose to create her own brand was that after seven years of working in the accessories department of Mademoiselle magazine in New York, Kate felt that this kind of life was over and there was no future at all. So, after a dinner conversation with her husband Andy, Kate decided to quit her job and study how to make handbags at home.

Kate, who had no design experience at all, found a pattern maker who worked at home through the network she had established at a fashion magazine. She started as an apprentice, learning how to cut paper and fabric until these new skills became part of her blood and a habit.

However, in this world, hard work does not always pay off, and not every effort always yields results. Throughout 1993, Kate spent more than $4000 on materials alone. She paid to attend the New York trade show with her semi-finished bags, but did not receive any attention. The money she earned from selling bags at the show was not enough to pay for the booth. In the next few years, they mainly relied on Andy's income from the advertising company and their joint savings to live. For a while, the couple even emptied their 401(k) retirement account to make ends meet.

Not only did Andy Spade support his wife with real money, he also helped Kate get cooperation opportunities with two department stores, Barneys New York and Fred Segal, to sell her handbags in designated stores. Although the brand still didn't make a penny at that time, Andy always encouraged his partner with the favor of these two department stores. "Katie, you already have the two best stores in the United States." He told her, "Let's not give up."

The love of a partner is like sunshine, nourishing the life that should have withered. Three years after its establishment, Kate Spade finally began to make a profit. In the same year, Spade won an award from the Council of Fashion Designers of America, which usually honors industry giants such as Ralph Lauren or Donna Karan. Then Saks Fifth Avenue and Neiman Marcus called: they wanted all their stores to sell Kate Spade handbags.

This expansion increased Kate Spade's business volume fourfold, and also allowed Kate Spade to enter the fashion industry for the first time as a local emerging designer. In the next twenty years, it gradually became a well-known mainstream clothing retail brand.

However, mainstream does not mean high-end. Kate Spade has been pursuing the light luxury route since its inception, focusing on meeting the fashion needs of middle-class women. A handbag can cost two or three hundred dollars, while a cheap one can cost only a few dozen dollars. Not to mention Neiman Marcus and Saks Fifth Avenue, after it began to develop other peripheral products, people can even buy Kate Spade perfumes, lipsticks, or sunglasses at Target or Walmart.

No one would find it strange to say that such an affordable brand is valued at hundreds of millions of dollars, but 2.4 billion dollars is indeed a bit too exaggerated.

"Kate Spade has 475 directly-operated or franchised stores worldwide, 250 of which are in North America. Last year's net sales were $12.42 billion and gross profit was $7.54 million. In comparison, Versace's net sales last year were 6.45 million euros, which is about 7.2 million U.S. dollars."

"Wow," Madison exclaimed softly, "I didn't expect Kate Spade's sales to be so high."

"This situation exists in many industries - the alpha wolf gets the highest praise and the most prominent scenery, but the ones who eat the most meat are the seemingly ordinary followers following behind them." Han Yi patiently explained to the Long Island girl, "People admire Hermès, they talk about Birkin bags all the time, but in the end, they still take home a Kate Spade. There is a difference between expectations and reality, and reality always wins."

"Yi is absolutely right. The same applies to Coach and Michael Kors. Like Kate Spade, they are affordable brands that ordinary middle-class people can afford, or entry-level luxury goods. These handbags and high heels are inconspicuous. No shopping mall or department store will put them in the most conspicuous place, but they are the most indispensable part, and they are the bridge connecting ordinary people and the fashion industry."

Jordan echoed.

"Michael Kors, $43.5 billion in revenue, $28 billion in gross profit. Coach, $44.9 billion in revenue, $28.5 billion in gross profit. And that's what American fashion companies are good at, or what American companies are good at in general - we may not know how to make products truly luxurious, but we know how to scale them."

"So, the current situation is that there is an 'arms race' going on in the light luxury fashion industry, or in other words, between these large American fashion companies, and Kate Spade is lagging behind. The result of lagging behind is that it will be eaten up by the players ahead." Zhao Youzhen made a summary, and then cast a rather playful look at Han Yi, "Does it sound familiar?"

"UTA." Han Yi pointed his index finger at Zhao Youzhen, "That's what you want to say, right?"

"Don't you think it's very similar? The two giants, WME and CAA are leading the way, and two slightly smaller competitors are chasing behind, UTA and ICM, and behind them are weaker opponents like Gersh, APA and Paradigm." Zhao Youzhen asked back.

"They are indeed very similar." Han Yi did not respond immediately. Instead, Xu Yiru agreed with Zhao Youzhen's point of view, "Among these light luxury brands, the leaders are undoubtedly Coach and Michael Kors. Kate Spade is a bit like UTA... What other brands are there?"

"Tory Burch." Madison raised her hand.

"Yes, Tory Burch! Oh, yes, and Tumi." Xiaoru also added one.

"Yes, Tumi is considered affordable luxury."

"Where's Mulberry?"

“Mulberry too, but on a smaller scale, like Paradigm.”

"Furla?"

“This one seems…too small.”

"Does DKNY count?"

"I don't think so. After all, Donna Karan has a high-end line, not just a light luxury line."

The three girls chatted with each other and soon outlined the power map of the light luxury market.

"Although I've never thought about it this way, but according to what you said... yes, I do see the similarities." After thinking for a moment, Han Yi himself found it very interesting, "It seems that I always put myself in the middle of the war. First I led UTA to fight WME and CAA, and then I led Han Music to fight Universal, Sony and Warner."

"So... what about now?" Zhao Youzhen rested his elbows on the back of the sofa and massaged his neck with his palms. "Will you also participate in this war?"

"Which side will you choose?"

“Is it to help Michael Kors acquire Jimmy Choo?”

“By helping Coach by financing this Kate Spade merger?”

"still……"

"Take over Jimmy Choo and Kate Spade, create a 'third in line' and challenge the throne?"

(End of this chapter)