1.) Jimmy Choo Gears Up for the Downturn:
“Better known for its elegant stilettos, Jimmy Choo has been stretching its footwear mix in the past couple of years to include $175 plastic “jelly” sandals and $375 espadrilles . . . By the end of this year, the company … plans to bring out a range of Jimmy Choo scarves; add to its handbag line, introduced in 2003; and expand its eyewear line, begun last year. A Jimmy Choo perfume is under development and the company is exploring branded accessories like jewelry, watches and even swimwear . . . By the end of the year, the brand expects to have 105 boutiques worldwide, a near doubling of the number of stores since (2007).”
The CEO for Jimmy Choo is a former executive with Kenneth Cole (as well as Gucci, YSL and GAP), and it’s easy to see the Kenneth Cole influence in the way the Jimmy Choo brand is rapidly expanding its reach to include a full range of accessory items, not just shoes and bags. After all, once the customer is in the store, you’re missing out on potential revenue if you’re not tempting him/her with more than just shoes and bags: “Need a bottle of perfume, a scarf and a watch to go with that handbag? Don’t mind if I do!”
But there’s a downside to the “We can sell that, too!” mentality, says Milton Pedraza, chief executive of market research firm Luxury Institute: “Luxury consumers have new and different standards for parting with their money these days. Slapping a label on a me-too product, as many so-called lifestyle luxury brands have done, will not work anymore. Consumers are no longer willing to reward jacks-of-all-trades with premium pricing in the luxury world.”
In other words, just because Jimmy Choo has a reputation for good shoes and bags doesn’t mean customers will be dying to buy their perfume or time pieces, especially when other premium (and similarly priced) brands have a much more established reputation in those areas.
For an example of the appeal of Jimmy Choo (and why their CEO is keen on expanding the range of available accessories), take a look at this video clip below of a seemingly never-ending line of bargain-hunting consumers waiting to get into a Jimmy Choo sample sale in New York:
Back of the line, beeeyatch!
Speaking of downsides — Tiffany Posts 30% Drop In 2Q Profit: “The company’s sales have slowed considerably in the past year as cautious consumers keep away from major purchases and Tiffany resisted moving downscale. Luxury brands – typically resilient in economic downturns – have been hit hard by the current recession, in which the richest Americans have lost net worth at a sharp rate. And in the most recent period, international sales provided little support, though they were less weak than those in North America . . . Sales in the Americas region dropped 23%, with U.S. same-store sales down 27% and the New York flagship store down 30%.”
2.) NPD Group Report Shows Hard Times for Department Store Perfumes:
“Prestige (department store) fragrances in the U.S. posted the steepest loss in the first half 2009, declining -10 percent in dollars versus the first half 2008. Women’s and men’s prestige fragrances both posted 10 percent declines from a year ago . . . New fragrance launch sales … dropped -17 percent from the prior year, due to the decline in women’s new launch activity (-31%) when compared to the performance of 2008 launches. On the other hand, men’s new launch activity was up 23 percent.”
Though I find it humorous how the report notes as a positive the new launch activity for men’s fragrances, even though sales declined just as much as the female aisle. It seems like it would be even worse news for men’s fragrances to have more new fragrance launches (percentage wise) but with the same level of sales decline.
The report also notes that while Prestige fragrance sales are down in general, sales for “premium price” Prestige fragrance (scents that are priced at $100.00 and above) increased by 6% in total units sold, while fragrances priced at $75 to $99 increased by 1% in units sold — it’s the lower priced fumes that saw the biggest drop in sales and revenue; unfortunately (for the industry), the under $75.00 fragrances account for 70% of the overall market.
No wonder Jimmy Choo is chomping at the bit to launch a premium priced perfume.
3.) American Apparel Dismisses 1500 Illegal Factory Workers:
“The terminations come two months after the Los Angeles manufacturer and retailer announced that a government inspection had found that about 1,600 of its workers didn’t appear to be authorized to work in the U.S. … All of the affected workers are based at the company’s manufacturing facility in downtown Los Angeles . . . the dismissals amount to more than 10% of American Apparel’s roughly 10,000-employee workforce.”
Okay, a global garment production company that has maybe fifty to one hundred illegal workers in its workforce can be forgiven as perhaps just being fooled by forged paperwork, or maybe not quite so thorough with its document checks, but when 10% of a company’s entire workforce is illegal, it comes across as a deliberate policy choice.
But at least they paid their illegal employees well, and threw in benefits, to boot: “(CEO and company founder) Dov Charney promotes his business as “sweatshop-free,” and to back that up he pays his mostly Latino factory workers nearly twice the minimum wage, throwing in health insurance, subsidized lunches, and paid time off to take English classes on the premises.”
The article goes on to note that American Apparel’s run-in with the Immigration department is just the latest of its woes — sales are down, inventory is backed up, they recently had to settle a lawsuit with Woody Allen over unauthorized use of his image on a billboard ad, and the British Standards Authority deemed one of their latest ad campaigns too overtly sexual (and too potentially offensive) to be shown in the U.K.
But the article forgets to mention the string of sexual harassment lawsuits against Mr. Charney (and yes, that’s lawsuits, as in plural).
For an example of American Apparel advertising, see the video clip below:
Edgy and hip, or sexist and tacky?
4.) BRAND & MERCHANT UPDATES:
A.) As an example of fashion’s “Show Me The Money!” focus shifting t
o the Middle East, perfume brand Miller Harris and jewelry brand David Yurman have recently established perfumery footprints in Dubai — Miller Harris launches in Dubai at Harvey Nichols, and David Yurman announces the Middle East launch of David Yurman Perfumery.
B.) While most brands are downsizing, the rumor is that Oscar de la Renta might be preparing to aim for the even spendier clients of the couture market: “My sources tell me that Oscar de la Renta is stacking the deck of his design studio. It seems he has hired away a pivotal player from the couture studio of John Galliano for Christian Dior. John Galliano is NOT amused . . . Bringing in a couture designer must mean that Oscar has decided to go the other direction and take his design status to another level.”
A video clip of de la Renta’s Fall/Winter 2009/2010 Ready to Wear collection below:
C.) The Mariella Burani Fashion Group could be the next to go under as auditors refuse to sign off on Burani’s books: “The Italian apparel manufacturer, which has sealed licensing deals with A-list designers such as Giambattista Valli and upscale brands like John Galliano and Vivienne Westwood, is working on a debt restructuring that is crucial to its survival . . . The company said its board will meet as soon as possible to approve a plan to cover its losses and is looking for a strategic partner, adding that its creditor banks are currently assessing its request for a debt moratorium to the end of October.”
Burani designs, produces and distributes luxury apparel, shoes, accessories and jewelry under its own in-house brands, while also producing collections under license for more well known names such as the previously mentioned Valli, Galliano and Westwood, but also La Perla, Dirk Bikkembergs and Yohji Yamamoto.
D.) French fashion and leather house Hermes reports a 7% drop in profits for the first half of 2009: “Sales in the (first half of 2009) eased 0.4 percent, reflecting declines in orders for watches, perfume and tableware and ongoing sluggishness in Japan.”
All in all, for the tumult in the financial markets and the global economy, a mere 0.4% drop in sales is actually pretty good. It’s not optimal (I’m sure they would have loved to report a sales increase, if just to rub it in LVMH’s nose), but it seems to showcase a resiliency to recessionary forces that only Hermes presently exhibits within the luxury industry as a whole.
Still, I wonder at how long this might hold . . .
E.) Timberland announces a partnership with Saks Fifth Avenue: “Starting this month, Timberland will be offering a line of hand-sewn boat shoes exclusive to Saks stores in New York, Boston and Chicago … The company also will offer other styles from the Timberland Boot Company and Abington collections . . . Timberland reported a second-quarter net loss of $19.2 million, or 34 cents a share, compared with a second-quarter 2008 net loss of $18.9 million in the same quarter the previous year, according to its last quarterly filing, released on Aug. 8.”
And Saks isn’t doing much better, so both companies have been casting about for opportunities to appeal to a wider consumer demographic than in previous years. This partnership meets that criterion for both companies.
F.) Limited Brands Inc. Reports Slumping Profits: “Limited Brands Inc., which operates Victoria’s Secret and Bath and Body Works, said Wednesday that its second-quarter profit fell 27 percent as sales slipped . . . As reported earlier this month, Limited Brands’ July same-store sales fell 10 percent to $2.07 billion from $2.28 billion a year ago . . . Same-store sales are sales in stores open at least one year and considered a key retail metric. They fell 9 percent for the quarter.”
Who knew the economy would affect the sale of cheese?
5.) Wal-Mart Gives Priority to Green Label Technology:
“Wal-Mart is apparently on a mission to determine the social and environmental impact of every item it puts on its shelves, and it has recruited scholars, suppliers, and environmental groups to help it create an electronic indexing system to do that. Their goal is to create a universal rating system over the next five years that scores products based on how environmentally and socially sustainable they are — and down the road, they hope that other retailers will adopt their green labeling system as well.”
For all that people moan and complain about Wal-Mart, if anyone can pull off a refocusing of the entire retail industry into providing consumers with information on where their products come from and how they were produced, it’ll be Wal-Mart. They’re just about the only ones with enough clout to force manufacturers to cough up the details.
6.) Tech is the New Black:
“A new breed of style-conscious shoppers are opting for technology over clothing for their overall fashion image . . . (the) Microsoft Tech To Impress Report found that nearly half of 1,000 UK respondents said being able to show off the latest gadget is as important to their overall fashion image as an item of clothing . . . Six out of 10 people admitted to leaving their new gadget on the table for envious friends to admire.”
I think that’s hilarious — the “leaving their new gadget on the table for envious friends to admire” bit. It’s not any different from a woman who plunks her new designer python clutch on the table after she breathlessly arrives for a lunch date with the girls. But gadgets and handbags have a lot in common in that they both can offer clues and signals into the wealth, status and trend consciousness of the person sporting either.
Or how much debt they owe on their credit cards . . . something like that.
7.) Don’t Wear Your Stinkin’ Patchouli On My Bus!:
“The (Honolulu) City Council is considering a bill that will make it ille
gal to ‘bring onto transit property odors that unreasonably disturb others or interfere with their use of the transit system, whether such odors arise from one’s person, clothes, articles, accompanying animal or any other source’ . . . Under the bill, a person found in violation may be ordered to leave transit property and issued a summons or citation by a police officer. If convicted, a person could be fined up to $500, spend up to six months in jail, or be both fined and jailed.”
The bill is only in up for proposal at this point, and co-sponsor (and Honolulu City Councilman) Rod Tam realizes it’s a long shot for anything like this to get passed, but he says he thought it was important to at least get a public discussion going on proper behavior for people who are riding public transport on the island: “There are existing city laws and rules covering passenger behavior on city buses. But council members Tam and Nestor Garcia, the introducers of the bill, thought it was important for the city to consider passenger behavior as Honolulu prepares to build its first commuter rail line.”
The main offenders in the councilmen’s eyes appear to be hippie tourists who don’t take a bath and then clamber aboard the city’s buses, but the language can cover all types of situations, from offensive smelling food, dogs that need a bath and/or perfume that’s too strong. Councilman Charles Djou said “the bill raises constitutionality issues. ‘We would like everybody to be polite on city mass transit and I think that’s a good idea … but we’re not a police state.’”
