LXR sells high-quality pre-owned designer leather handbags and other accessories through a network of approximately 70 stores located in major department stores around the world, as well as through its e-commerce website. The company sells brands such as Hermes, Chanel, Louis Vuitton and Gucci.
The company was recently acquired by Gibraltar Growth, a special purpose acquisition corporation co-led by Mimran and former financial services industry executive Cam di Prata. As part of the acquisition, LXR has become a publicly traded company.
“We got very excited when we were introduced to the company,” says Mimran. “We are playing off of the two strongest retail trends that are occurring today: one is the luxury market continues to be extremely strong and buoyant and growing; and the second is, it’s also an off-price play.”
LXR was founded by Fred Mannella and Kei Izawa in 2010, and in the years since, it has achieved success with its store-within-store retail strategy. It has partnered with major department store retailers such as Hudson’s Bay, Lord and Taylor and Dillard’s, to establish boutiques within those retailers’ stores.
“We target an average age of 35 years old, and the average price point is about $750, so it’s very attainable,” Mannella says. “We’re targeting to do deals in mid-tier department stores.”
The company’s philosophy revolves around the mentality of recycling, which is a concept that resonates with many consumers today, Mimran says.
“One of the things we do see a lot of these days is the circular economy and the importance of that,” he says. “That’s what fascinated us the most [with LXR].”
LXR will continue to be led by its founders and its current management team. di Prata has assumed the role of executive chairman and director, and Mimran is now a director of LXR, as well as leader of its international expansion committee.
Growth is a key goal for LXR under its new ownership. Over the next five years, the company plans to grow its retail network to more than 500 stores around the world, including 20 to 25 freestanding flagship stores. The company is especially focused on growth in the U.S. and Europe.
“Over the next three to five years, we see a clear path to significant growth,” Mimran says.
The company plans to open its first freestanding store in 2019. Although the management team hasn’t decided on specific locations yet, Mannella says the company will concentrate on markets where LXR already has a concentrated presence within local department stores, such as Toronto and New York.
“Where we have some clusters and the brand is recognized, it would make sense to consider a bricks and mortar strategy down the road,” Mannella says.
E-commerce is also an area with growth potential for LXR. Online sales accounted for less than 5% of the company’s total net revenue in 2016, and Mimran expects that the company could grow that proportion to 20%-25% of revenue over the next three to five years.
The physical stores, however, are what sets LXR apart, according to Mimran.
“You’ll see a lot of competition in the online space, but nobody is doing this in the physical space,” says Mimran. In the pre-owned market in particular, he says a physical retail presence appeals to customers. “For some customers, it is a real advantage to be able to go into a physical store.”
The acquisition provides LXR with the capital necessary to pursue its aggressive growth plans, as well as valuable guidance from an experienced board of directors, Mannella says.
“This is a board that is very, very experienced,” he says. “That can really help us solidify business plans and help us grow the business.”
Megan Harman is a business reporter based in Toronto. She writes about topics including retail, financial services and technology. Megan covers Toronto’s retail industry through her blog Retail Realm (torontoretail.wordpress.com). Follow her on Twitter at @meganmharman.