The China Edit | L’Oréal Buys Magic, Cath Kidston Expands, Adidas’ Local Strategy, Luxury Handbags as Collateral

The China Edit is a weekly curation of the most important fashion business news and analysis from and about the world’s largest luxury market.

Doutzen Kroes for L'Oréal | Source: L'Oréal

L’Oréal To Buy Magic Holdings International For $843 Million” (Bloomberg)

“The acquisition gives L’Oréal the top-selling facial mask brand in China, where beauty and personal-care product sales will expand 8 percent to $34 billion this year, according to Euromonitor estimates. Magic has 288 distributors in 32 provinces and regions in China, according to its website. ‘This should allow L’Oréal to accelerate the growth of its own brands in China through a greater distribution reach,’ said Chas Manso de Zuniga, an analyst at Société Générale SA.”

Cath Kidston Takes On Its Floral Patterns To China” (Financial Times)

“Cath Kidston, the floral-focused British retailer, has more stores abroad than in the UK after it opened outlets in China. The shift came as the new stores in east Asia helped the private-equity backed group hit the £100m annual sales mark for the first time. Cath Kidston, which sells products from homeware to floral handbags, opened 33 stores over the year, increasing its total estate to 118.”

Adidas Gains On Nike In China By Balancing Performance With Fashion” (Ad Age)

“The company is gaining on Nike’s top spot, reporting 6% revenue growth in Greater China in the first quarter of 2013, following 15% growth there in 2012. Analysts credit Adidas fashion apparel like high-heeled sneakers coming from sub-brands such as Originals, NEO and Y-3. A key part of its strategy is targeting women, an influential group that has been largely ignored by sports brands. There’s great potential in grabbing the ‘unoccupied mind space,’ Jens Meyer, VP-marketing, sport performance for Adidas China, said. ‘There’s no Lululemon in China.’ ”

Asia ‘To Take Over Half Luxury Goods Market’ “ (The Telegraph)

“The continent, which currently accounts for around two-thirds of the market, has seen a slowdown in its luxury goods sales in recent years, which has “alarmed” the high-end brand houses. But a new report from the Economist Intelligence Unit (EIU), Rich Pickings, said there are “strong prospects for a long-term recovery” in Asia and predicts it will account for 50pc-60pc of luxury revenue within 10 years.”

Handbag-Backed Loans Tide Over Hong Kong’s Wealthy” (Wall Street Journal)

“Say hello to the handbag-backed loan. While typical lenders often ask for cars and homes as collateral, Hong Kong’s Yes Lady Finance Co. deals in borrowers’ beloved handbags. The four-year-old company accepts purses on the spot, bringing in assessors from affiliate Milan Station Holdings Ltd., a chain for luxury secondhand purses, to check the bags’ condition and authenticity. Yes Lady provides a loan within half an hour at 80% of the bag’s value—as long as it is from Gucci, Chanel, Hermès or Louis Vuitton. Occasionally, a Prada purse will do the trick. Secondhand classic purses and special-edition handbags often retain much of their retail prices.”

Mango To Launch Clothing Megastore In China” (China Retail News)

“Spanish fashion brand Mango announced a new retailing model focused on megastores around the world, and its first megastore in China will soon be located in Shanghai. The megastore concept features large stores-in-store with areas from 500 square meters to 1,500 square meters in shopping malls. It includes the latest series of fashion products under various brands of Mango, providing one-stop shopping experience to consumers. Apart from promoting the new megastore retailing model, Mango will expand its Chinese businesses by launching H.E. by Mango and Mango Kids brands in the country.”