Designer's death exposes risk to fashion investors


The sudden death of designer L'Wren Scott on Monday shocked the fashion and retail worlds.

But it also brought to light a concern for the future of publicly traded labels that are led by the names branded on their products—in particular, Ralph Lauren and Michael Kors.

In an article on The Street, Belus Capital Advisors analyst Brian Sozzi asked the question, "Who takes over the reins from the creative visionary and founder that is helping to drive the financial statements?"

L'Wren Scott leaving the British Fashion Awards 2013 on December 2, 2013 in London, England.
Niki Nikolova | FilmMagic | Getty Images

Sozzi said investors should "look no further" than Ralph Lauren's annual report, in which it listed the loss of the designer's services as a key risk. Kors, who shot his label to fame by serving as a judge on the TV show "Project Runway," has also given no clear signal of a successor, Sozzi said.

In Scott's case, her loss will be most felt at her eponymous label, which was shown during London Fashion Week. Her death will not have as large of an impact on Gap's Banana Republic business, which created a capsule collection with the designer for Holiday 2013.

Still, the company was rocked by the news.

"We are stunned and saddened to learn of the loss of L'Wren Scott. Our hearts and prayers go out to her friends and family," a Gap spokesperson said.

To read the full article on The Street, click here.