Fashion Industry News Roundup: 11/13/09

1.) Another One Bites the Dust:
"Luella Bartley announced that her fashion line has shut down after a major supplier closed and her financial backer and distributor withdrew its backing. The announcement was a difficult one for Luella as she had expected to end her worldwide licensing deal with Club 21 and sign a new deal for the production of her ready to wear and accessories label. But the new deal has not materialized, and with her supplier out of business she is currently unable to fulfill orders from the spring collection."

The global economic contraction mows down yet another fashion brand. I'm disappointed to hear the news that the Luella line might be closing down for good, but that said, I'm not surprised. British designer Luella Bartley produces daring, quirky, vibrant pieces with young fits and attitudes that skew towards a narrow market segment. In retrospect, obviously too narrow a market segment.

I picked up a black leather and pony hair Luella handbag a few years ago for the sis. She said she gets stopped in parking lots and asked about where she bought it. I think she gets a kick out of telling people that it's a London designer and not available locally. I messaged her yesterday that the Luella brand might be no more so she might want to hold on to that bag, she replied: "I won't ever part with the Luella. I love it still."

A video clip below of the Luella Spring/Summer 2010 collection, that may never see the light of day if financing doesn't come through:

The Telegraph reports that just last year, Ms. Bartley won the Designer of the Year award at the British Fashion Council's annual awards gala, which makes the announcement of the brand's potential demise even more poignant for her fans. They state that Ms. Bartley "is reportedly actively seeking new backers and while not exactly being 'swamped' with offers, she is hardly high and dry either. Sources says she plans to 'take her time' and is resolved not to rush headlong into any new venture."

Perhaps Luella will live again.

In related news, Fashion industry downsizes: layoffs looming at Zac Posen, Gucci -- "Buzz in Seventh Avenue showrooms is that Zac Posen and Gucci are about to have some major layoffs. As of Monday, Posen vice president of communications Karen Duffy's position was officially "eliminated" ... While a rep for Posen had "no comment," an industry insider dishes that more layoffs are "pending" at the Laight St. offices."

Zac Posen is another label that doesn't particularly surprise me witih the announcement of financial troubles. He designs for a very specific clientele (wealthy, glitzy, sexy), and has nothing to fall back on when that client base shrinks. His accessories have never really taken off as major must-haves, and he has no fragrance available on the market.

Video clip below of Zac Posen's indisputably pretty (the colors) yet not even remotely accessible to the broader market (style and fit) Spring/Summer 2010 collection -- not that I think Posen ever intended to design for a broader market, but that leaves him, like Luealla Bartley, up the creek without a paddle when the client base evaporates:

Gucci, on the other hand, is big enough to take some hits and keep on keepin' on, but the brand is having a rough time of it lately. Their sunglasses licensee is on the edge of default, their handbags became so bling-laden that even the CEO publicly announced that they would be working to dial down the over-the-top nature of their recent designs, and PPR (owner of the Gucci brand) announced in late October that sales for the luxury group were down almost 6% for the third quarter of 2009, with no relief in sight.

The Dallas Examiner notes that: "The lines that seem to be thriving are inexpensive stores that carry a look like Forever 21 whose revenues are in the billions. Cutting labor costs, quality and producing volume are key to their success . . . As much as we hate to see made in China on the label expect to see even more of that now."

2.) Luxury Perfume Houses Expand as Unemployment Rates Increase:
"According to marketing researchers NPD Group, sales of perfumes priced above $100 rose 7% in the US during the first eight months of this year ... Fabienne Mauny, managing director of Diptyque, reports a 20% rise in sales over the past fiscal year. 'Looking at the September and October trends,' she says, 'we see that fragrance sales are growing at an even faster pace, which leads us to be very optimistic for the holiday season' . . . Cheaper, mass-market fragrances, however, are faring less well. Those sold in department stores dropped 10% during the first half of 2009, according to NPD. 'People are not stupid,' says Frédéric Malle, of his French perfume house of the same name. 'They know you're better off spending $100 on something good than $60 on junk.'"

Jean Cassegrain, managing director for French accessories company Longchamp, stated earlier this year: "The customer still wants a sexy, desirable product but is no longer ready to pay $1,500 or $2,000 for a bag that is obviously not worth it" -- and this is true across the board.

Consumers have switched to weighing worth, quality and price on an equal basis, rather than just splurging on the latest fad, though I think the author of the article (as well as a few of those interviewed) were a little disingenuous in not mentioning the recent stock market run-up and how the stimulus money pouring into Wall Street has helped out Madison Avenue just a tad more than it has Main Street.

Amid talk of a record $30 billion in bonuses handed out this year at Goldman Sachs, JP Morgan and Morgan Stanley, I would be surprised if luxury perfume houses *weren't* expanding: "The money, split among 119,000 employees, comes out to $250,400 each - nearly five times what the average American household earns in a year, according to Bloomberg."

Case in point: The Art Market Shows Signs of Life -- "The major fall art auctions may not have sold everything on offer, but collectors showed a renewed willingness to bid up top examples of artists' work. Dealers also said inflation fears and expectations of higher bonuses in the financial markets stoked strong bidding."

I'm assuming the bargain-price perfume buyers aren't getting bonuses this year.

In other perfume chatter, I was stunned to read this tidbit from Chandler Burr in an article about celebrity fragrances published on the Southern California Public Radio website: "Burr says fragrances like (Britney Spears) Midnight Fantasy are the best way to capitalize on celebrity. They're better than clothes, music and even movies. That's because the cost of creating a perfume can be relatively low. The perfume house doesn't have to pay for the 'juice' -- that's industry slang for the stuff inside the bottle. A different company -- a fragrance manufacturer -- develops it for free, then the two firms share the profits."

*sputter gasp splutter*

The fragrance is developed for free by the manufacturer, and then profits are split between the production and distribution houses?!! Suddenly, this tsunami of B, C and D-list celebrity fragrance is starting to make waaaaay more sense.

3.) The Real Jimmy Choo Speaks Out:
"The Malaysian designer sold his stake in the Jimmy Choo label in 2001, amid rumours of creative tension with his now former business partner Tamara Mellon. Choo's concerns about the direction in which the brand was heading could be borne out next week. Mellon is launching a "cheap chic" designer collaboration with high-street fashion chain H&M . . . Does Choo regret ceding control over the company that still bears his name and is now a multi-million-pound global label selling sunglasses, handbags and - with the new and affordable H&M collection - asymmetric dresses and black leather trousers? 'In life, you never know what will happen, but, for me, skill is more important than big returns.'"

Mr. Choo now quietly creates bespoke (custom) only shoes in his workshop, Jimmy Choo Couture, in London. He very diplomatically refuses to criticize the Jimmy Choo + H&M collaboration that will debut on Saturday, November 14th, attributing his newfound calm to regular talks with his spiritual guru.

4.) Smell Scientist Avery Gilbert Takes Video Face Time with Katie Puckrik:

What do you get when you put two drily witty, info-stuffed scent-heads together in front of a camera? Pigs in heat, drug sniffing humans, unicorn underbelly fluff, smelling like cow pats, why perfume companies don't patent their formulae, and more.

Now you know.

5.) Jean Paul Gaultier Answers the Call of Target:
"The next designer to make a splash at Target will be famed fashion designer Jean-Paul Gaultier . . . The line will debut at Target on March 7, 2010 and be available at 250 Target stores worldwide and online until April 11, 2010. The focus of the line will be a tribute to American women celebrating style from the past and present in pop culture. More details and a preview of the line will come in the near future."

Gaultier is not only the designer for his own eponymous line, but also the creative director at Hermes. I was surprised that Hermes would allow their creative director to design a collection for Target, but I doubt the Hermes name will appear anywhere near the official Target announcements -- though the association will likely be noted across the web on sites like this one.

Such an association, no matter how indirect, is definitely good for Target (I can just hear the Target execs now: "We can't officially mention the name Hermes, but that won't stop those pesky bloggers!"), but is it good for Hermes?

Speaking of Hermes (see? Gaultier's name comes up and I can't help it!): "Hermes is optimistic about Christmas after sales of its luxury goods continued to improve in October, the French company said . . . Hermes Finance Director Mireille Maury said wholesale trading, the worst hit by the spending downturn, climbed back, particularly in perfumes and watches."

Luxury conglomerate Richemont is also hopeful of a recovery in watch sales, while LVMH executives report that the destocking of watch supplies (reducing production to match the reduction in consumer demand) may be near an end and that "the worst of the decline in its key US market was behind it."

Tag Hauer is predicting a 5%-10% sales growth next year, and Swatch is also upbeat about its prospects for recovery in the timepiece market: "Universo, Swatch Group's watch hands maker, returned to full employment in November, abandoning original plans to put its 240 employees on a short-time labor regime from September through December."

6.) Industry Quick Hits:

A.) Those ten inch Alexander McQueen heels are a hit: "According to Grazia, McQueen has 'been inundated with calls from women wanting to order the footwear - starting from the day after the designer's incredible catwalk show was streamed live on the web,' which might make him really consider producing the shoes en masse."

If high heels are just a way for male designers to put women in pain and peril, then the women appear to be all for it. You can watch Lady GaGa perform in the towering, improbable claw heels in her new video below:

The shoes make their appearance starting at 3:27.

B.) Marc Jacobs explains the continued sales of all things LV: "I haven't noticed that people's tastes have got more subdued. They may be buying less, but if anything, they want it to be even more special. There's this huge cult following of almost crazy people at Vuitton who just want whatever they buy to be exclusive."

Okay, I can buy that -- Louise Vuitton consumers are crazy. That's as good an explanation as any I've yet heard.

C.) Retailer profits are up, but consumer confidence is not: "Three major retailers -- a discounter, a midpriced department store and an upscale chain -- said their profits were up in the fiscal third quarter, showing significant improvement over last year's dismal fall, but sales figures at Wal-Mart, Kohl's and Nordstrom indicated that consumers still were not ready to spend freely, causing continued concern about the holiday season."

While all three retailers posted profits this past quarter, Nordstrom came across as a bit of a kill-buzz by announcing that "it is looking for a same-store sales decline of 6 to 7 percent for the year." Same-store sales numbers offer a much more accurate depiction of the economy than stores that are newly opened and so may be posting higher sales simply for being new to the area.

For example, Kohl's showed a profit increase of 21% overall, but when looking only at same-store sales, profits were up just 2.4%, which means they're still feeling cautious about the future. In similar news, Macy's is projecting a soft 4th quarter and JC Penney posted a fall in profit of 78%, though American Apparel is reporting a strong quarter with profits up over 70% from last year, even though revenue declined by 3%.

D.) Polo Ralph Lauren to shut distribution plant: "Polo Ralph Lauren Corp. announced Monday it will move distribution operations from Berkeley County to North Carolina in the next nine months, a relocation that will affect '100 or so" full-time and part-time workers.'"

Cost cutting by large companies does not equal a reduction in unemployment numbers. It's no wonder that large retailers are feeling a little nervous about the upcoming holiday season: "'There's an inadequate number of people with free cash,' says Emanuel Weintraub, CEO of apparel consulting group, Emanuel Weintraub Associates. 'People want to fight the numbers, but you have 15 million unemployed - 85% of Americans will spend money, they just won't spend it how they used to.'"