Europe's fastest growing fashion company is targeting luxury brands

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Europe's fastest growing fashion company is targeting luxury brands

PRAGUE GDANSK Reuters - With celebrities such as Rihanna, Justin Bieber and Billie Eilish wearing its designs, Hungarian fashion house Nanushka has stardust many designers can only dream of.

Yet the company is just one of a number of high profile designers from central Europe elbowing their way to the top international fashion, highlighting their collections on the runways of London, Paris and New York as they target lucrative markets such as China and the United States.

Once a struggling local brand, Budapest-based Nanushka has seen annual revenue grow 33 - fold to 33 million euros $38.32 million since a private equity firm came aboard in 2016.

She has focused on sustainable designs, including its vegan leather garments, Nanushka is the fastest growing fashion company in Europe, according to the annual FT 1000 list of European companies.

Other ready-to-wear designers that have emerged from the east coast on the global scene include Slovakia-based Nehera, worn by the Hollywood stars Keira Knightley, Tilda Swinton and Marion Cotillard, and Poland's Magda Butrym, which was worn by Megan Fox and Hailey Bieber among others.

The creation of a niche in high fashion has been facilitated by Facebook Inc's Instagram and other social media channels that help younger, independent designers outside of international fashion centres to be seen by an international audience hungry for something different.

Without social media it would have been almost impossible to build a global fashion house from 19 years ago, told Nanushka CEO Peter Baldaszti - who is married to founder and designer Sandra Sandor - tells Reuters.

The brand - which opened another new store in London in 2019 and, despite the pandemic, a New York store in 2020 - counts the United States as its biggest market, but says China is the future. Parent company Sunnei, whose CEO Baldaszti is also CEO, snapped up Italian fashion brand Vanguards for $7 million in 2020 as part of a strategy to build a fashion portfolio across Europe.

Central Europe boasts a long tradition of workmanship in the textile industry dating back to the First Republic era between the two World Wars when the region was an epicentre of culture and design.

After the fall of communism in 1989, West European luxury brands and fashion houses put up shop to produce bags, scarves and clothes in the region, capitalizing on the proximity to western markets, lower costs and skilled workforce.

Now global luxury brands in those markets are moving in the opposite direction to tap into a local luxury goods sector pegged to grow to around $383 billion this year from $309 billion in 2025, helped by demand in China and among millenials, according to Hamburg-based statista.

We started with showing in Paris but Instagram is something that really opened the doors for brands from countries that are not really on the fashion map at all, Polish handbag maker Zofia Chylak told Reuters.

A Chylak handbag, made of Italian leather, costs around 200 - 250 euro and the brand’s popularity among some Polish influencers who live abroad has helped it become a global name.

We are aiming to re-enter the U.S. and Italian markets, Ladislav Zdut, founder of the brand who opened an international showroom last month in Milan and is in early talks with local investors to help fuel expansion plans, told Reuters.

However, we significantly increased orders to South Korea and China and were increasing in the pandemic. A younger generation of designers from small countries - many of whom worked abroad or studied abroad - have accumulated the contacts and knowledge to serve an international luxury market, said Achim Berg, the global leader of McKinsey's garment and fashion group.

The big-name luxury brands dominate the trends in the market, but there is a desire for new brands for curation and authenticity, said he told Reuters.

Danish brands like Acne Studios, Ganni and Toteme show how firms established themselves from a small region outside the fashion capitals, according to Berg.

In central Europe, rising incomes have also created a stable local customer base able to afford luxury items that help fledgling designers establish themselves before looking abroad, designers and companies say.

Magda Butrym embraced the global-first approach when starting up in 2014 before moving local, Chief Executive Jakub Czarnota told Reuters.

Lady Gaga was seen wearing a Magda Butrym dress in one recent Instagram post and the brand, also favoured by social media influencers, is now present in 40 markets. Asia and the Middle East offer strong growth opportunities in the future, but the company will continue to scour its regional roots to create something different, Czarnota said.

Global consumers are eager to discover newness and this gives brands an opportunity.

Eastern European designers can look for inspiration to their distinct culture and heritage and translate them into regional products and collections, he said.