1.) Christian Lacroix Marches On (But For How Long?):
“On Tuesday, Christian Lacroix, the incarnation of frivolity and joie de vivre in high fashion, will show a collection — but only thanks to the benevolence of embroiderers, feather suppliers and shoe makers working for free . . . And on Friday the financial authorities announced that all but 12 of the 124 staff members would be laid off, unless one of three possible investors comes through.”
Lacroix’s final (?) haute couture gasp below:
Meanwhile, the House of Valentino is struggling with its own mounting financial issues: “Valentino Fashion Group’s lenders are seeking to renegotiate the Italian luxury group’s debt by the end of the summer amid falling sales across the luxury-goods industry . . . UniCredit SpA, Mediobanca SpA and Citigroup Inc. are pressing Valentino Fashion Group and its owner, the U.K.-based private-equity fund Permira, to agree to new lending terms that will allow the Italian fashion company to avoid defaulting on debt payments in 2009.”
Video clip below of the fringed, feathered, ruffled and beaded Valentino haute couture Fall/Winter 2009/2010 collection:
The Valentino Fashion Group owns the Hugo Boss label, among others, and was counting on sales of the sportier Hugo Boss brand to carry the Group through the downturn: “For years, the Italian firm counted on German fashion house Hugo Boss, which is controlled by Valentino Fashion Group, to generate a steady cash flow, offsetting lackluster sales at the group’s namesake Valentino brand. Hugo Boss, which makes up about 75% of Valentino Fashion Group’s sales, posted a 27% decline in net profit in 2008.”
But global recession aside (or maybe because of?), LVMH fashion house Dior is reporting a rise in sales in the UK due to the falling value of the British Pound, but the news was tempered with the admission that sales in the U.S. are flat to down: “Chief executive Sydney Toledano said on Monday the couture company was enjoying double-digit sales growth in Britain . . . ‘With the weak pound, all the tourists of the world are in London, the shops are full,’ Toledano told Reuters . . . However, Dior was not seeing signs of recovery in the United States where it makes about 15-18 percent of total sales, Toledano said, noting that mark-downs at U.S. department stores last autumn had ‘killed luxury’.”
For Dior’s Haute Couture Fall/Winter 2009-2010 collection, head designer Galliano decides to showcase . . . the undergarments? I guess if you’re afraid that there are far too few clients now left willing to spend $30,000.00 on a dress, then spotlighting the relatively less expensive stockings, corsets and bras exhibits a certain kind of desperate logic:
And since we’re on the subject of the haute couture shows in Paris, American Vogue editor and fashion industry powerhouse Anna Wintour went awol for the whole thing — perhaps this is a not so subtle indication that haute couture’s influence over the larger and more infinitely profitable ready to wear industry is on the wane: “The real headline-grabber is a certain infamous editrix’s absence from the shows. That’s right, Anna Wintour herself has so far chosen to sit couture week out. The move is no doubt controversial given fashion’s tumultuous state. While Wintour was nowhere to be found, ‘her minions Grace Coddington and Sally Singer sat front row while Hamish Bowles and Lauren Santo Domingo sat right behind them,’ says Fashion Week Daily.”
2.) Designer Giambattista Valli Scores Lucrative Distribution Deal:
“Italy’s Mariella Burani Fashion Group said it has signed a five-year contract to make and distribute the ready-to-wear collection of Italian fashion designer Giambattista Valli, a deal aimed at growing both companies as the luxury goods industry suffers through the economic crisis. The licensing deal would give the 43-year-old Mr. Valli a stronger industrial and marketing base on which to build his five-year-old namesake brand . . . Mr. Valli, who until now has produced and distributed clothes via another Italian company, made 20 million euros in sales last year on his ready-to-wear line and other business, including wedding dresses and furs . . . the two sides are also considering the possibility of starting an accessories line under the Giambattista Valli name.”
Valli became widely known in fashion-blog circles for his sky-high platform pumps (a particular favorite of Victoria Beckham‘s), and can arguably be said to have near single-handedly fueled the pre-recession craze for dangerously towering heels.
The deal between Mr. Valli and Burani is said to be a major blow to Burani’s distribution rival, the Gilmar Group. The Gilmar Group had been distributing Valli’s collections since 2004, and they considered Valli one of their most important creative assets (Valli also designed for Gilmar’s Iceberg brand). For his part, Giambattista Valli stated that the new lucrative partnership with Burani will allow him to stay creatively independent as the licensing & distribution deal will give him the cash he needs to stay afloat without resorting to financing from an outside investment company.
From the same article: “Mr. Valli said that smaller companies such as his may be able to emerge from the economic crisis strongly because they don’t have too many overhead costs such as factories and expensive boutiques around the world. ‘Small independent houses are going to surprise,’ Mr. Valli said. ‘They are the ones that have the potential to really jump as they are more agile,’ he said.”
Roberto Cavalli has been rumored to give up family control of his company when he was forced to accept badly needed financing from a private equity group:
“Italy’s fashion industry was on the brink of another private equity deal after the designer Roberto Cavalli signed a letter of intent this month to sell a 30 per cent stake to Italy’s Clessidra Capital Partners, the Milan-based buy-out house.”
A look below at Valli’s dramatic 2009-2010 Fall/Winter collection, which kicks off the partnership between Valli and Burani:
3.) And Prada Just Keeps on Keepin’ On:
“After opening 34 stores in 2008 and with plans to continue at a similar pace over the next three years, a Prada spokeswoman confirmed Thursday the Italian luxury firm was set to unveil at least two boutiques this month — in Paris and Prague — and remodel and expand others . . . Prada aims to generate more than 70 percent of consolidated turnover from directly operated stores by 2011, from around 53 percent currently, a company spokesman said last month. At the close of 2008, Prada’s directly operated store network totaled 238 boutiques worldwide.”
Prada has an established name and image, and unlike, say, Valentino, Gucci and Versace, they’ve been careful not to price themselves completely out of reach of the aspirational consumer, producing slightly more affordable items such as leather trimmed nylon handbags, logo sunglasses and even cell phones to keep themselves mainstream friendly. They seem to now be counting on the consumer’s conflation of luxury with a more utilitarian (i.e. functional) vibe to get them through the extended downturn.
In other news, Versace appears to have seized upon the idea of using Michael Jackson’s memorial service as a free global PR blitz: “Janet, LaToya, the Jackson brothers and Michael’s children will all be wearing custom-made Versace in honor of Michael, who had a long love affair with the Italian fashion house. Michael was often seen wearing Versace both on and off stage and was a huge fan of the late Gianni Versace’s designs.”
I’m sure Gucci executives are kicking each other up and down the hallways of the PPR headquarters about right now . . .
4.) Retailers Squeeze By With Less Inventory On the Shelves:
“Inventory levels at many chains are down 15 percent or more from a year ago, but instead of simply going on the defensive against stock gluts and consequent markdowns, stores quickly are learning to make their existing inventories more productive, bringing merchandise into stores closer to when it’s needed and being more selective in what they buy and replenish based on actual sales results.”
I’m giggling a little at the idea that making inventories more productive and being more selective in what they buy and replenish is somehow a grand new idea rather than just good common sense for running a business. No wonder the big chains are hurting — they were behaving as if profits simply materialized out of thin air instead of having to actually plan out a strategy and work hard at maintaining customer interest and loyalty.
The same article goes on to note that, for Saks Fifth Avenue, “same-store sales fell 26.6% in May following declines of 32 and 23.6% in April and March, respectively” (ouch!) and that analysts expect a decline of 20% for the full Fall season. That ought to batten a few hatches.
5.) PETA Gets a Downgrade From the Catwalk Club:
“Naomi Campbell, one of the previous faces of the ‘I’d rather go naked than wear fur’ campaign by PeTA, is allegedly back in fur . . . The model was famously dropped by the animal rights group shortly after the mid-Nineties ad campaign launched after wearing fur in a fashion show. The supermodel claimed, however, that she defected from the PeTA campaign stating that they “went too far” in their attacks on Anna Wintour and Karl Lagerfeld.”
Campbell will be featured in the Fall/Winter 2009-2010 ad campaign for designer Dennis Basso, who built his reputation on the use of furs.
6.) Companies Turn to Core Values As They Struggle to Survive the Downturn:
“It turns out, we have lived through the End of Excess before–luxury firms hope that excess is like a zombie that you can’t really kill–and so we have some idea how luxury firms survive. Luxury brands today, one after another, are making this ‘flight to quality’ . . . ‘We are seeing the consumer move away from the prestige purchase, the blingy, the flash, to quality,’ says Mary Beth Whitfield, senior vice president of the consulting firm Retail Forward . . . The brands refuse to admit this, but they are all looking at tweaking not just the message but also the product, considering where they can lose the buckles, zipper, or extra pleat or where they can switch from alpaca to cashmere.”
Tiffany & Co. is touted as an example of a luxury brand that survived the Great Depression based on its long history of producing quality goods for discerning customers. While they went the flashy, bling-laden route as much as anyone else during the last few decades, they also have a heritage to fall back on, a name that might actually stand for something in the mind of the public, as opposed to numerous super-luxe brands that only just appeared at the height of the global hype.
A video clip below showing exactly how Tiffany is using its heritage and history to convince today’s wary consumer of the company’s product value and its focus on craftsmanship:
“Everything is very classy, very timeless . . . “
Another way to view the “flight to quality” syndrome would be to compare two of the latest haute couture shows from this last week in Paris. First, the House of Chanel, founded in 1910 — the show was all about classic shapes, timeless fabrics and understated sensuality:
Now, we’ll compare that to the haute couture show of Giorgio Armani. The House of Armani was founded in 1975. It has no real heritage to fall back on during troubled times, as Armani rose to prominence during the excessive, expansive decades of the late 1900′s and early 2000′s. His 2009/2010 haute couture display is a near note-perfect encapsulation of what the above article discussed when the author mentions that many fashion houses are in denial, still slinging glitter-trash down the runways as if nothing has changed:
Even though the tailoring is superb, when placed side by side against Chanel, it becomes obvious that the House of Armani has no heritage or history to fall back on, and so must continue to rely on what now seems an untoward amount of bling, glitter and skin.
And as long as we’re on the topic of Chanel, Cathy Horyn at the NYT writes: “I asked Mr. Lagerfeld … about those blog reports that he would leave Chanel and be replaced by Alber Elbaz of Lanvin. Mr. Lagerfeld said to forget about it. He was going to die with his boots on. He also mentioned that Alain Wertheimer, whose family owns Chanel, said he would sell the house when the designer leaves. This might not be the case, Mr. Lagerfeld said, but it was a nice thing to be told.”
In other words, when Lagerfeld goes down, he’s taking the House of Chanel along with him. I believe him, too!
And even more Chanel! A copy of a letter Chanel paid to publish in the back of an edition of WWD:
So, a jacket is not a Chanel jacket unless it’s made by Chanel, got it? ‘Cuz it makes Chanel angry, and you don’t want to see Chanel when it’s angry . . .
7.) CEO of World’s 3rd Largest Luxury Group Predicts a Grim 2009:
“Richemont, the world’s third largest luxury goods group behind LVMH and Hermes, will earn less this year than last year, chief executive Norbert Platt was quoted as saying . . . Platt said he did not see a turnaround in the U.S. market and was not sure whether the recession in Europe had reached a trough yet, and a worsening of the crisis was still possible . . . “Everybody hopes for a change at the end of the year or even in autumn, but we bracing ourselves for the status quo until the end of the year and will be happy if we are wrong,’ he said.”
The CEO mentions that demand for expensive watches has fallen off a cliff for 2009 (Richemont owns Cartier, makers of the famous Cartier Tank watch), and that the Swiss watch market as a whole is hard hit. The one bright spot for Richemont is China: “The Chinese market was holding up well and would become Richemont’s biggest single market in two or three years, overtaking Japan, he said.”
8.) ‘The Lipstick Effect’ Now Applies to the Men’s Counter, Too:
“Cosmetics companies have also realised there is money to be made in a recession by catering to the other half of the market: men . . . potions, lotions and creams for vainglorious men now compete for space with rouge and nail polish at the cosmetics counter. One of the successes of winter has been the launch of Diesel’s Only The Brave fragrance for men . . . Businesses such as L’Oreal, Clinique, Clarins and Nivea are pumping out a catwalk of male-specific cleansers, moisturisers and after-shave products that have extended the options for retailers and customers.”
‘The Lipstick Effect’ refers to when sales for smaller items, such as cosmetics and perfumes, remain strong despite weakening in other areas of the retail sector: “Lipsticks aren’t inferior goods, economists say, but they could be small indulgences, an inexpensive treat meant to substitute for a bigger-ticket item. Or lipsticks could also be morale boosters, like Charlie Chaplin films were during the Depression. A warm shade that perfectly matches your skin tone might make you forget how far your 401(k) has tanked.”
Lipstick is like Charlie Chaplin:
8.) Don’t Wear This T-Shirt in Dubai:
“A T-shirt showing Victoria Beckham in the nude caused Raffi Nernekian, a Lebanese national, to be jailed in Dubai . . . The skin cancer awareness T-shirt features a naked Beckham, who is discreetly hidden by the phrase “Protect the skin your in.” Nernekian, whose brother says he bought the shirt during a visit to New York, got into an argument with a local over the shirt and was jailed for a month for “offending public decency,” according to the U.K. Telegraph.”
Well, just *look* at the darn t-shirt — anything with Victoria Beckham’s nude body splayed across it is obviously a fashion crime, right?
And speaking of Dubai: “Despite the fact that French President Nicolas Sarkozy proposed a ban on burqas in France last week, saying the body coverings imprison women, Paris held a fashion show showcasing specially made designer abayas, the black overgarments worn by some Muslim women . . . John Galliano, Nina Ricci, Blumarine and Alberta Feretti were among the 21 designers who created black body coverings adorned with sequins, fringe, and more for the show. ‘It is an obligation to wear the abaya there, but let them feel good about it,’ said Dania Tarhini (a general manager of Saks Fifth Avenue in Saudi Arabia).”
9.) 55 People in China Become Millionaires Each Day:
“Dan Sontag, president of the global wealth management group at (the former) Merrill Lynch, along with Capgemini global financial services managing director
Bertrand Lavayssière … suggested that the market will fully recover by 2013, using the post-dot-com crash in the early part of this decade as a model; however, where in the world that wealth comes from will change. Currently, the US leads with 2.5 million HNWIs (High New Worth Individuals), but Asian countries like Japan and China are nipping at its heels. By 2013, the report suggests that the Pacific Rim region will boast more millionaires than North America. According to Sontag, 55 people in China become millionaires each day.”
It’s no wonder that while market share is falling in the U.S. and Europe for luxury companies such as Louis Vuitton, Givenchy and Marc Jacobs, sales numbers are up 24% in Asia.
