What Happened at Coperni Owner Tomorrow Ltd.?

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Hello from Paris, where the sun is beaming down on the Rue Mazarine and the guy next to me is chain smoking while reading Foucault. Some things never change.

Like how hard it is to make money with a small designer business. Tomorrow Ltd.’s founder Stefano Martinetto had bet he could make these businesses work: by grouping them together to create some economies of scale, and by attaching them to his popular showroom founded in 2008 — which he rebranded as a “fashion brand development platform” starting in the late 2010s.

The thesis was that Tomorrow could provide labels with a “plug-and-play solution” for product development, supply chain, sales and logistics. This would allow designers to focus on creativity and dramatically ease the path for their brands to break even.

The project got off to a roaring start as A-Cold-Wall, Coperni, Martine Rose, Colville, Charles Jeffrey Loverboy and Machine-A inked deals with the group.

But by 2024, A-Cold-Wall founder Samuel Ross had exited Tomorrow, leaving behind his once-buzzy brand, as had fashion consultant Julie Gilhart, who helmed Tomorrow’s consulting arm from 2021 to 2024. Stavros Karelis and his store Machine-A split from the group. Colville was no longer in operation.

In recent months, Coperni and Martine Rose have both publicly clashed with the group while seeking to buy back control of their brands behind the scenes, according to sources with direct knowledge of the matter.

On Thursday, Tomorrow Ltd. announced it would be sold to Italian e-commerce entrepreneur Andrea Ciccoli’s holding company, Progetto 11. Financial details of the transaction were not disclosed.

What Happened?

In the mid-2010s, as the multi-brand e-commerce boom coincided with historically low interest rates, investor appetite for “platform” businesses in the fashion space surged.

Three Hills Capital Partners acquired a stake in Tomorrow in 2016 via a management buy-out. In 2019, rather than exit, Three Hills chose to re-invest, providing additional capital to support the conversion from a showroom to a brand incubation platform.

But that growth capital was ultimately burned through as Tomorrow grappled with a number of unforeseen challenges:

• Covid-19, a major shock to sales that durably advanced fashion’s shift to direct-to-consumer. “Tomorrow has spectacular teams, but we didn’t have the scale or expertise needed to keep up with the shift to DTC,” Martinetto said in an interview Thursday.
• Brexit, voted on in 2016 but not effective until the end of 2020, turned out to be far more disruptive than the firm anticipated. Cross-border shipments and transactions became expensive and logistically fraught overnight. The group attempted to retool its model, shifting many functions to Italy, but the founding thesis — that a London-based platform could power international fashion businesses — came under existential strain.

“Tomorrow’s transformation from showroom to brand incubator happened in 2020, when we had just done a sizeable fundraising at a healthy valuation. Little did we know how dramatic the impact from Brexit would be,” Martinetto said.

• Turbulence in wholesale: Wholesale has been having a rough go, from the collapse of multi-brand e-commerce players like Matches and Farfetch to physical department store groups like Hudson’s Bay and Saks Global under strain, to over 17,000 fashion boutiques going out of business across Italy in the last four years.

Farfetch’s collapse had ripple effects via brick-and-mortar stockists who sold on the platform. “We realised some buyers had been inflating their orders by as much as 30 percent, hoping to sell on Farfetch,” Martinetto said.

The company’s 2024 annual report included a £28 million ($37.6 million) write-down to the value of its trading and inter-company debts: essentially acknowledging that tens of millions in invoices were unlikely to ever be paid.

• Russia’s invasion of Ukraine: Russia was a major market for certain brands in the group, while Ukraine’s appetite for fashion was on the rise.
• Jersey’s decline: Sales of high-margin designer merch — along with the sizeable chunk of orders linked to Farfetch — were parts of the business that were “too good to last,” Martinetto now realises. As the appetite for expensive streetwear declined, brands lost a pillar of profitable sales.

By 2022, investors had to inject additional capital to keep the business running, leading Three Hills Partners to increase its equity to a controlling stake.

In 2024, Stefano Martinetto stepped aside as CEO of the group, continuing to lead the distribution platform. Former LuisaViaRoma CEO Alessandra Rossi was brought in as an interim manager for the wider portfolio.

Three Hills initially mandated that Paris’ Lazard manage a sale of the group, an industry source said. The process was eventually taken over by UK restructuring specialist Interpath.

Martinetto says Ciccoli, founder of Italian e-commerce firm The Level Group, was long discussed as a potential buyer. Ciccoli will bring needed expertise in e-commerce for Tomorrow to adapt to the continued shift to DTC.

“The focus of the board throughout this process has been to guarantee protection and continuity for the business,” Martinetto said.

Road Ahead

Continuity is hardly guaranteed, however. Frustrated designers may seek to exit the group — some believe they are owed millions of pounds in unpaid royalties. (Sources in Tomorrow’s camp contend it’s the other way around, and that certain designers owe significant sums to the group.)

Distancing founders from the reality of running a business was sure to get contentious. Designer labels can generate enormous buzz, devise hit products, secure deals with the world’s most prestigious stockists — and still never turn a profit.

Without some hands-on exposure to how their brands are making and spending money and all the difficult decisions that process entails, creators are likely to wonder where the money went: suspecting mismanagement at best, foul play at worst.

Tomorrow needs a clearer vision for how designers can graduate from this set-up. If more creators walk away without a deal (like Samuel Ross did), Tomorrow’s new owners will be left with the tricky — usually ugly — process of extracting value from founder-driven brands in the absence of their founders.

Additional reporting by Lei Takanashi.