Fashion Industry News Roundup: 04/01/09

1.) And you thought we had it bad:
"Moscow ... is taking a massive hit as recession bites. The Russian capital is (was) the world's fourth-largest luxury goods market, buying more than 80% of Russia's luxury branded goods . . . Donatella Versace and Tom Ford jetted in just last year to talk of their expansion plans in Russia to enthusiastic crowds and those plans are now history . . . A single sheet of paper taped on the whitewashed windows of Vivienne Westwood's sole Russian store says it is closed for 'repairs'."

Designers talk off the record about former high-flying Russian clients scaling back on new purchases, but both Chanel and Louis Vuitton are continuing with expansion plans in Russia, reporting steady sales for their accessories, especially their logo handbags.

In related news, Lanvin opens a new U.K. boutique, Chloe expands to Los Angeles and Gucci unveils its newly renovated London digs.

Speaking of Gucci, the $3.7 million dollars they supposedly co-raised with Madonna at a lavish February 2008 fundraiser for her pet Malawi charity is as yet unaccounted for. Neither party would comment. Madonna also courted recent controversy by touring an impoverished Malawi school in a $2800.00 Chanel tracksuit.

2.) Topshop Makes Its U.S. Debut April 2nd:
"Following (March 30th's) sneak peek at the new Kate Moss collection, the (Topshop) brand releases its latest collections by two British design houses; Jonathan Saunders and Preen . . . The collections are both released in selected Topshop stores and online at www.topshop.com on April 2."

I think H&M is about to get some seriously stiff competition here in the U.S., while Target can probably kiss its designer collaborations goodbye, especially since Topshop will be offering their goods online in the U.S., as well.

Below is a video clip of the kind of edgy but surprisingly affordable fashion goods (especially in comparison to straight-up high fashion brands) Topshop offers:

3.) Designers Grudgingly Lower Prices for U.S. Retailers:
"Retailers that have lost a lot of money in the downturn, including Saks, Neiman Marcus, and Nordstrom, are asking designers to lower prices . . . Many have slashed budgets by up to 30 percent, and with the exception of a handful, designers are obliging and lowering prices ... Oscar de la Renta CEO Alex Bolen said they didn't want to lower prices, but had no choice ... Chloé has already marked down prices -- its pre-fall collection was about 35 percent less than a year ago."

Some brands are not budging on prices, however: Chanel, Prada and Versace (though Prada has announced a 10% price discount for Japanese retailers).

Meanwhile, Versace sees 2008 profits fall 30%: "In a statement, Versace said the results 'coincide with the strategic goal of making the Asian market [Versace's] second largest after Europe in terms of sales, as forecast by our industrial project.' As reported, Versace has invested 45 million euros, or $57.5 million, in 11 new stores."

No wonder they don't want to cut prices.

In response to the economic upheaval, global luxury behemoth Richemont is moving and shaking: "Cie. Financiere Richemont SA, the second-biggest luxury company, said it will hire Martha Wikstrom (a former Nordstrom's Inc. and Harrods executive) to develop its leather, fashion and accessory brands as it seeks to eliminate losses . . . 'Dunhill and Chloe are well-known brands, but not as strong as others, such as Gucci or LVMH or Hermes,' said Thomas Deitz, an analyst at ABN Amro Bank NV. 'So they need a multi- year phase of significant investment. Managing that crucial phase will be Wikstrom's hardest task. This involves as well attracting top designer talent and re-positioning the brands in order to attract the desired clientele.'"

Below is a video clip from the Chloe Fall/Winter 2009/10 runway show. Chloe has been floundering ever since designer Phoebe Philo left the company in early 2006 (Philo has recently signed on with LVMH to revive their struggling Celine label). Fun factoid -- Karl Lagerfeld used to design for Chloe back in the 60's and 70's :

4.) Oscar de la Renta Gets His Moment On Stage:
Remember when our dear Oscar got his designer knickers in a fashionable twist over the decision of the New York Met to choose European designers over American designers for some of their big productions? Well: "Forget what you know about frilly tutus and pink tights and get ready to travel back to a time when cocktail was chic. The Alabama Ballet will trade traditional attire for gowns and tuxes by famed designer Oscar de la Renta in its upcoming performance of Twyla Tharp's Nine Sinatra Songs."

It figures it takes a performance group in Alabama to grasp the big picture first.

5.) Marc Jacobs Lemon to Launch April 1st:
"Created by perfumer Stephen Nilsen of Givaudan, this citrus fragrance invigorates with an energizing blend of bucchu leaf, crushed mint leaves, verbena and pettigrain citronnier orpur. At the heart of the fragrance is iced Italian lemon . . . Available from selected department stores from 1 April."

Accompanying the release of Lemon will be the rereleases of his Cucumber (originally released in 2007) and Rain (originally released in 2000). Fragrances are cheap to manufacture and the profit margins are high, so expect to see a lot of fragrance rereleases and new launches as the market for clothing and accessories continues to cool.

As if to underscore the point: Men's colognes lighten up for spring -- "this season, some of the biggest names in men's clothing are rolling out new entries -- so even if the recession has kept their clothes out of your closet this season, you can still maintain an air of luxury."

6.) But Will It Match My Shoes and Bag?:
" The Hyundai Genesis Prada model ... is reportedly modified to suit the tastes of Prada's CEO, Patrizio Bertelli . . . External changes include a matte midnight-blue paint ... accentuated by a brushed titanium finish . . . The Genesis' grille, emblem, and door handles (are) plated in a matte gold finish (with) titanium-finish 20-inch wheels and roof antenna . . . Most of the Genesis' interior, including the seats, center console, and dashboard, is bathed in Prada's signature Saffiano leather."

Only three examples of the Hyundai Genesis Prada were manufactured. One will remain at the Hyundai showroom (to tease customers with what they can't have?) while the other two will be auctioned off for charity. You can find exterior and interior shots of the car here.

7.) Ted Baker Profits Fall 19%:
"Fashion chain Ted Baker... revealed a 19.5% drop in annual pre-tax profit . . . Commenting on the current retail environment, founder and chief executive Ray Kelvin said, 'The economic climate remains uncertain and our expectations for the year ahead reflect this. However, we believe the group is well placed to weather this difficult environment. We have a strong balance sheet and will continue to invest in the development of the Ted Baker brand.'"

Well, yes, of course, they do have to present that stiff upper lip -- the good of the shareholders and all.

In related news, Laura Ashley Profits Plunge, Hugo Boss cuts expansion plans by 50% as net income drops 27%, Nike cuts 1400 jobs and Indian Exporters face serious challenges as major economies slow down: "Exports declined in February for the fifth straight month, and the fall was the sharpest in more than a decade . . . "The result is unwelcome, but not surprising. The current global economic environment is perhaps the worst in decades. Businesses and consumers around the world have cut back on spending, and international trade has therefore slumped in recent months."

Even street-smart, fast-fashion giant H&M is struggling: H&M Reports First Drop in Quarterly Profit Since 2003.

Meanwhile, Banana Republic has decided to fight falling profits and slow clothing sales by opening an accessories only store: "Called Edition, the new concept will sell limited-editions of handbags and jewelry as well as accessories sold at Banana Republic--much of it priced below $100.00."

I noted back in January of 2008 that Burberry was taking similar action.

A little glimmer of good news, Hogan and Tod's are reporting a rise in profits: "Luxury goods maker Tod's SpA (on) Tuesday said full-year 2008 net profit rose slightly but it is hard to give guidance on 2009 due to current retail sector turmoil . . . Hogan sales surged 19.6%, while Tod's, its signature brand, rose only 2.6%."

But that's so much nicer than a 27% drop, right? Tod's has been increasing its market share ever since designer Derek Lam was signed on to inject a fresh, sporty look into the brand. Video clip below of a Vogue.TV interview with Derek Lam and his thoughts on designing for Tod's:

UPDATE:

French fashion conglomerate PPR (owner of Gucci Group) is planning to lay off 1200 workers. Angry employees held PPR CEO François-Henri Pinault near hostage in a taxi as they protested the layoffs. But demand across the globe for luxury goods is shrinking, so what else is he supposed to do? Magically create sales where there are none?