Zimmermann’s journey from a Paddington market stall to $1.75 billion valuation

Founded by sisters Nicky and Simone, Zimmermann started as a stall at the Paddington Markets in 1991. While studying design at East Sydney Technical College, Nicky designed Zimmermann’s first garments from her parents’ garage.

The whimsical, romantic, hyper-feminine designs struck a chord with the affluent women of Sydney’s eastern suburbs. The stall’s success emboldened the sisters to open a permanent store in Darlinghurst in 1992. 

Over the last 30 years, the sisters have scaled the business to 56 stores across Australia and the world – with boutiques in iconic fashion locations such as Madison Avenue, St Tropez, Shanghai, and Milan.

Last week, leading global private equity fund Advent International put in an acquisition offer that valued the fashion house at $1.75 billion. The last time Zimmermann was traded in 2020, Milan-based Style Capital acquired a 70% stake in Zimmermann from General Atlantic, in a transaction valuing the company at $600 million. 

Various reports have put Zimmermann at $400 million in annual revenue and $125 million in EBIT. At over four times annual revenue and fourteen times net earnings, Advent’s bid represents a premium valuation for a fashion retailer – and assumes significant growth potential.

But when it comes to investing in luxury retail brands, Advent International is no novice. Between 2005 and 2009, Advent turned a $74 million investment in cult athletic brand Lululemon into nearly $600 million at exit. Lululemon helped launch athleisure as a category and rode its popularity to soaring heights. 

Just last month, Advent took a stake in Parfums de Marly – a fragrance house inspired by the splendour and decadence of 18th century France. The niche perfumer sells its concoctions in ornate bottles for $549. Its intense popularity on #perfumetok – a corner of Tiktok where perfume aficionados describe their favourite scents in painstaking detail –  is evidence enough of its newfound cult status. But for those who prefer financial figures — Parfums de Marly’s retail sales grew 51% in 2022 to €262 million.

To have piqued Advent International’s interest, Zimmermann must represent an equally compelling prospect.

So why is Zimmermann special? What has allowed this label to enjoy rocketing sales and international renown, when its fellow homegrown brands such as Tigerlily, Bardot, and Alice McCall have floundered and fallen into voluntary administration?

Let’s dig in.

A slice of Australia

In 1996, Zimmermann was part of a small clutch of designers who showed at the inaugural Australian Fashion Week. Simon Lock, a marketing guru and serial entrepreneur, founded
Australian Fashion Week to propel Australian brands onto a global stage. Of the Zimmermann collection, the Sydney Morning Herald wrote:

“The Bondi Beach babe is renowned around the world, but it took Zimmermann to see an opportunity in the sexy, sporty stereotype. When the label launched its swimwear line at fashion week, spiderweb swimsuits were teamed with Fedora hats and heels in a show that set the brand on its way to global success with its sophisticated and seductive vision of a long, hot Australian summer.” 

Australian Fashion Week was a success. Soon, Zimmermann was picked up by the London department store Harvey Nichols and stocked by Net-a-Porter, an early online global retailer of high-end fashion founded in 2000.

Another inflection point came when one of Zimmermann’s screen-printed bikinis was featured in a Victoria’s Secret catalogue. Internationally, Zimmermann was one of the first brands to have swimwear and clothing in the same collection — featuring bikinis and jackets that shared a fashion print. 

This playful – yet elevated – approach to resortwear came to epitomise Australian fashion on a global stage — with an aesthetic that evoked the effortless charm of an Australian belle walking along one of our sunny beaches.

An immediately recognisable aesthetic

Zimmermann’s clothes are famous for their generous use of tulle, flowy chiffon fabrics, and abundance of ruching. But whether it’s a simple white shirt with a scalloped hem or a dramatic black ball gown, there’s something undeniably Zimmermann about all their clothing.

In a recent interview with Harper’s Bazaar, Nicky Zimmermann was asked to define Zimmermann’s DNA. She said, “I think ultimately it’s optimism. That sense of fun, femininity, colour. For me to be able to try and really connect with the person and make them feel something with the garment that they’ve bought is really important”.

It’s true — whether it be in one of their iconic embellished dresses or in a denim jacket, Zimmermann uses delightful details — an interesting hem or a pop of colour in the inner lining — to imbue all of their garments with a little bit of magic and delight. 

Tenacious and inspired founders at the helm

Nicky Zimmermann’s continued involvement as the driving force behind Zimmermann’s creative vision is another place where Zimmermann stands apart from other Australian brands.

For example, Sass and Bide’s founders Sarah Jane Clarke and Heidi Middleton departed the business in 2014 after the brand was acquired by Myer. Tigerlily’s founder Jodhi Meares, a fashion designer and glamour model, swiftly departed the business after selling it to Billabong in 2007. Despite numerous attempts from parent companies and even private equity firms to turn around these businesses, both have fallen far short of Zimmermann’s success. Sass and Bide’s revenue has stagnated since it was acquired, while Tigerlily entered voluntary administration in 2020 — despite the best efforts of local PE fund Crescent Capital to overhaul the business.

Perhaps, at the end of the day — the ingredients for success in a fashion business are not so dissimilar to that of a technology business — a powerful brand that stands for something larger than itself, a distinctive product that connects with customers, and a passionate founder with a vision that stays true across decades.

Jessy Wu is an Investment Principal at AfterWork Ventures, a venture capital fund that invests in early-stage technology companies.