Hi, and welcome back to Line Sheet. I wrote the top of this note outside a Malibu coffee shop, where the weather was so breezy that I could have worn a sweater. Condolences to my friends and family in New York, where temperatures reached 96 degrees Fahrenheit (but apparently felt like it was 118?) on Tuesday. You would have been happier at Armani’s sunset-hour cocktails at Malibu Beach House, where I ran into Phill Picardi (who explained bulking and cutting to me, finally) and Nick Wooster, Celine (of course), Laurence, and someone who looked like Poppy Delevingne. (It wasn’t her.) Anoushka was there all the way from Milan! Scott Speedman was there all the way from where he lives! My dinner date cancelled (Covid), so I ate the perfect solo meal at the bar at Hillstone in Santa Monica. What a life.

I have some fun things for you in tonight’s issue—two items from Europe (including a sensical take on the Supreme acquisition news), and others from the mall—before turning things over to Rachel Strugatz, who divulges what’s really happening at Estée Lauder after the board announced the “retirement” of C.F.O. Tracey T. Travis. It’s obviously about soooo much more than Travis’s departure. Bag-of-popcorn-worthy stuff.

Per usual, I implore you to subscribe to Puck, because it’s the right thing to do and you will have a fabulous time. Ask yourself: Is there any other media entity you can say that about?

Mentioned in this issue: Estée Lauder, Tracey Thomas Travis, Fabrizio Freda, Deirdre Stanley, Supreme, James Jebbia, EssilorLuxottica, Oakley merch, Burberry, Hedi Slimane, Daniel Lee, Joshua Schulman, J. Crew, Maryam Nassirzadeh, Olympia Gayot, Brendon Babenzien, Macy’s, Puig, Dries Van Noten, and many more.

• An eyewear company bought Supreme: What is there to say? A lot, actually, but I’ll keep it short. To recap: VF Corp., the heritage-enthusiast-sport holdco that bought Supreme for $2.1 billion in 2020, offloaded it today for a substantial loss after pressure from activist investors to fix its own financial situation—mad debt load ($7.43 billion in Q1), declining sales at its biggest brands, and a messy distribution strategy. Supreme, while growing, is doing so at a normal pace because they refuse to over-distribute their product. Investors didn’t think it fit with the group, and it was the easiest thing to sell at a decent price.

  The buyer? EssilorLuxottica, the European eyewear conglomerate that owns Ray-Ban and Persol (both Line Sheet-approved brands) and makes sunglasses and glasses for luxury labels including Miu Miu, Prada, Ralph Lauren, and Giorgio Armani. They paid $1.5 billion in cash for Supreme, so yes, VF lost money on it, but VF probably paid too much for it in the first place when it bought it from the Carlyle Group.

  Weird, though, right? Well, yeah, EssilorLuxottica and Supreme are not an obvious match. The supergroup has barely touched apparel. But there’s also much more competition in the luxury eyewear market since Essilor and Luxottica merged in 2017, in part because fashion companies (like Kering, owner of Gucci and Balenciaga) have entered the business, themselves, instead of relying on an independent eyewear manufacturer. In luxury, eyewear is really the last bastion of the old licensing model—in the 1970s, there were a lot of licenses, and the brands deteriorated—but, like everything else, the brands are working harder and harder to take that category in-house, which better protects the brand and can be far more profitable. So maybe EssilorLuxottica buying Supreme is an effort to protect itself against inevitable decline. (Think about the way Puig, which used to predominantly make fragrances for other brands, has diversified by buying makeup and fashion labels outright.) In a note to investors, analyst Luca Solca also mentioned EssilorLuxottica’s Oakley business. It’s sunglasses first, but they also make clothing and backpacks.

  As for VF, I assume they would have liked more money for Supreme, but EssilorLuxottica had the cash, and could get the deal done fast. Too many companies wait for better offers and then never sell. (VF’s stock rose on the news, EssilorLuxottica’s dipped.) For Supreme, it’s a far better outcome than being purchased by a private equity firm (which would want to ramp up fast while managing costs) or a strategic group like LVMH (which would be vampiric in the extraction of information). The hope, I assume, is that just as Puig pretty much left Dries Van Noten alone after its 2018 acquisition, EssilorLuxottica will let Supreme do its own thing. At least for a good while. Remember, Supreme’s $500 million a year in sales or whatever is an absolute blip on the topline. (EssilorLuxottica generated €25.4 billion in 2023.) All James Jebbia wants is to be left alone!

• The Hedi-Burberry argument: How much does the Line Sheet contingent love Hedi Slimane? A lot! In the hours following the news of Joshua Schulman’s appointment as C.E.O. of Burberry, I received several inbounds wishing and hoping, speculating and suggesting, that Hedi should be the next designer. (Apparently he has been looking at real estate in London. Big whoop, guys. Also, I can’t confirm that.)

  But let’s back up for a minute. Daniel Lee is still working at Burberry. (Today was Schulman’s first day on the job; let’s see how they get on.) Even if Lee does end up exiting—and there is a chance he will—I fear Slimane is not the right candidate. Would he do well? Yes. He would merchandise the living daylight out of that tartan and those trenches. He can sell $4,000 military jackets and $10,000 peacoats with ease. He makes the best Chelsea boots in the world. The problem is that Burberry, more likely than not, can’t afford him. Designers at his level make several million dollars a year—sometimes $15 million, $20 million!—and I’m not sure shareholders would really get why Slimane was such a good hire. But even more than that, Slimane isn’t really a turnaround expert, per se. He does a great makeover, but at this point in his career, Burberry may be too much of the wrong kind of hard work. But yes, I get what you’re saying.

• The great M.N.Z. unlock: A few weeks ago, I caught wind that the New York-based brand Maryam Nassir Zadeh and J. Crew were unleashing a capsule collection, which finally hit J.Crew.com on Tuesday. As I scanned the line sheet, I mentally checked off several things I’d want to buy myself—I was impressed by the summery appeal of the swimwear, light dresses, and little knits in sun-washed colors—and even more that I could recommend to friends. Nassirzadeh, after all, is one of my personal influencers. I don’t follow her on social media because it’s my job, but because I’m genuinely inspired by her way of dressing and being. I’ve been shopping at her store on the Lower East Side since the late 2000s.

  Olympia Gayot, J. Crew’s creative director on the women’s side, has mass appeal and is, by the accounts I’ve heard, designing stuff that sells. But this collection is targeting a niche that is important for mass brands to tap. I think of brands like a bull’s-eye: The people at the center (the fashion-literate) influence consumer sentiment more broadly. A lot of mass brands lose the person at the center, but in this fickle era, it’s important to keep them engaged. I liken Nassirzadeh to Brendon Babenzien, J. Crew’s menswear designer, whose more directional styles—like a pair of not-so-wide wide-leg chinos—have given fashion guys who abandoned J. Crew long before the Liquor Store closed a reason to pay attention again.

  However, the women’s business is different from the men’s—women’s is much bigger, and needs both Gayot and Nassirzadeh. I hope they make this a quarterly or biannual collection. My final argument: I haven’t bought anything from J. Crew in more than 10 years, and now that streak is over. (If you want to know, I got the drop-waist skirt, a t-shirt, and a swimsuit.)

• When they go low…: So do I? A faithful reader (and retail analyst) asked for my take on the Macy’s fiasco. To catch you up: In March, an investor group that included REIT specialist Arkhouse Management and activist Brigade Capital made a bid for the department store, which is truly at the end of its consolidation run. (We talk a lot about consolidation at the high end of the market, but mid-priced department stores have been merging since the 1970s. Macy’s and Dillard’s are really all that’s left, and it’s a sad, sad scene.) Ultimately, the investors couldn’t get the funding together. They were also proposing some fangled structures to use the company’s existing real estate that would have caused a lot of problems.

  In a note, Cowen analyst Oliver Chen wrote that,“Based on our conversations, investors became less constructive on the deal when Arkhouse/Brigade settled for one board seat, which effectively left them with minimal ability to effect change.” Also, on the real estate stuff, Chen said that “there was uncertainty around potential plans to monetize Macy’s real estate footprint given a number of legal, economic, and logistical hurdles, such as local rezoning laws, lack of redevelopment demand amid low office occupancy levels, and the significant diligence required.”

  In a statement, Macy’s said it’s going to focus on doing what it can do: streamlining its stores (hey, they finally closed the most depressing store ever in my own neighborhood last year), bulking up on accessible luxury (Bloomingdale’s, which it also owns, is better off), and genuinely trying to create shareholder value. My assumption is that someone else will buy it, but perhaps it’ll simply continue to shrivel.

  The lesson here is not for Macy’s—Tony Spring, the C.E.O., is a good executive and will do his best. It’s for Saks and Neiman Marcus Group. Department store square footage is going to keep shrinking—that’s inevitable—and perhaps Macy’s would be in this situation regardless. But, in the last 20 years of consolidation, when every store became a Macy’s, too much was lost when all those local institutions—Marshall Field’s, Lazarus, Kaufmann’s, Strawbridge’s, Filene’s—went away. The only thing that sorta works in multibrand retail is a few, really well-done stores that cater to a local customer. That’s truer now than ever.

I do know that Travis’s departure was not supposed to be announced just yet, and when the news leaked to WWD, Meridith Webster, the company’s executive vice president of global communications and public affairs, went into “triage mode” with her deputies to get a press release out that night. This is pretty crazy because WWD, where I worked for many years (Hi, Jim!), has always had a close relationship with Lauder and usually works with the company. Anyway, the board thinks the leak came from the boardroom, and inside the GM Building they’re scrambling to keep the name of Travis’s successor under wraps. Webster, who previously worked in the Obama and Biden administrations, has also endured a learning curve. I’m told her Beltway prowess hasn’t been as welcome at the maker of Black Honey lipstick.

Nonetheless, the leak came at a fascinating time. The board met that same day to discuss strategy for the next year. But early last week, before Travis’s departure was made public, she and Michael O’Hare, executive vice president of global human resources, sent out an internal memo detailing a “Profit Recovery and Growth Plan.” The initiative, according to their announcement, would be led by Jane Lauder, granddaughter of Estée and the company’s chief data officer and executive V.P. of enterprise marketing, and Stéphane de La Faverie, an executive group president. There was no mention of Travis’s impending exit.

Meanwhile, ELC employees have been calling and texting me from their partner’s or children’s phones, or even burners, to question the timing of Travis’s retirement. “People are saying that at any other company, Fabrizio would have been gone by now,” one current executive told me. (The Lauder family owns 38 percent of the common stock and 86 percent of the voting stock. The decision to keep Freda is up to them.)

I’ve previously reported that tension between Freda and Travis stemmed from Freda’s bullishness on “daigou,” the grey-market practice where buyers purchase products outside China and resell them inside the country. While this strategy lifted Lauder’s topline China sales in the short term, the love affair with daigou was short-lived. In January, a class-action lawsuit was filed alleging that ELC misled investors about revenue guidance in 2023. Travis, I’m told, felt “complicit” and didn’t like cleaning up Freda’s mess. “They have been clashing since things started going downhill,” a senior employee said.

Some blamed the rift on Travis’s other commitments, which include sitting on the boards of Meta, Accenture, and Columbia Business School. “The problem some are having with Tracey is that she’s really busy,” said a source inside the company, noting that some senior leaders, including Freda, “think she’s not showing up.” The source explained, “Fabrizio has been very clear that it’s go time, and that this is the make-or-break moment for us.”

Of course, there are theories floating around about Travis’s departure, each of which may or may not contain a kernel of truth—the most plausible being that she just really was ready to retire, wanted to be with her family for personal reasons, had enough money to do whatever she wanted, and simply didn’t want to deal with the same old bullshit anymore.

At the brand level, positions in marketing at Smashbox and Too Faced were among the first layoffs. Additionally, an entire corporate marketing team was eliminated, which was one of several marketing groups “that had yet to differentiate its value add,” according to a senior employee. I’m told that approximately half of those employees were retained within the company. “The intention is to de-layer and speed things up,” said a person familiar with the situation.

The next batch of layoffs, I hear, will be in creative. Indeed, many of Lauder’s problems are rooted in relevancy—a delicate and mission-critical issue that requires talented marketers, creatives, and leaders who are given the latitude to question the status quo. And yet, this is a material challenge at a business like ELC, which one family built into a $23 billion behemoth through brands and trends that no longer define the marketplace as they used to. Indie upstarts Rhode and e.l.f. Cosmetics differentiate on brand for the modern consumer in a manner that no testing or R&D can compete with. Lauder’s ability to rebound from its current malaise will have to address this issue one way or another. Alas, Travis won’t be there for it.

Until tomorrow,
Lauren