The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
LONDON, United Kingdom — China's appetite for luxury goods is still strong and featured prominently in this month's results announcements from major luxury players. Kering posted record 2018 profits on the back of a 29 percent increase in sales for the year, with chief executive François-Henri Pinault stating, "In terms of the momentum with Chinese clients, it's very strong."
Hermès' organic sales growth topped 10 percent in 2018, as the group remained impervious to any slowdown in China. The same sentiment was echoed by Moncler, which confirmed that trading in China was strong through the beginning of 2019, and by Estée Lauder in its quarterly results, which prompted the beauty group to upgrade its forecasts for the full year.
In other news, Italian fashion label Marco De Vincenzo, — whose eponymous founder is also head designer of leather goods at Fendi — sold a 35 percent stake to Marco Panzeri, a private Italian investor with holdings in fashion. Marco De Vincenzo received investment from LVMH in 2014 (the luxury group will retain a 45 percent stake in the business).
Elsewhere, JAB Holdings, the Reimann family’s investment vehicle, announced plans to increase its stake in Coty from 40 to 60 percent with a share tender offer worth $1.7 billion. The management team of Italy-based luxury leather goods manufacturer Bottega Manifatturiera Borse SpA bought out the company from German mid-market private equity group Halder.
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The Savigny Luxury Index (SLI) continued its ascent in February, ending the month just over 7 percent up, whilst the Morgan Stanley Capital International index (MSCI) gained 3 percent. Nevertheless, the SLI has not recovered the ground lost since its peak last June: our index is still 8 percent in the red, versus a flat performance for the MSCI over the same period.
SLI versus MSCI
SLI Graph February 2019 | Source: Courtesy
Going Up
Going Down
What to Watch
The industry's ethics are under increasing scrutiny, a shift that is bolstered by the current reality of trial by social media. This season, Coach stopped using fur and Victoria Beckham Ltd banned exotic skins from its collections. LVMH also announced it would boost measures to ensure responsibly sourced crocodile skins, having faced criticism by PETA for its supply practices in the past.
There have nevertheless been a series of blunders in recent months, from Dolce & Gabbana's insulting "eating with chopsticks" videos to Prada and Gucci's blackface fiascos and, most recently, Burberry's "noose" hoodie. In response to backlash, Prada set up a diversity council to "elevate voices of colour within the company and fashion industry at large."
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Sector Valuation
SLI Table February 2019 | Source: Courtesy
The Swiss watch sector’s slide appears to be more pronounced than the wider luxury slowdown, but industry insiders and analysts urge perspective.
The LVMH-linked firm is betting its $545 million stake in the Italian shoemaker will yield the double-digit returns private equity typically seeks.
The Coach owner’s results will provide another opportunity to stick up for its acquisition of rival Capri. And the Met Gala will do its best to ignore the TikTok ban and labour strife at Conde Nast.
The former CFDA president sat down with BoF founder and editor-in-chief Imran Amed to discuss his remarkable life and career and how big business has changed the fashion industry.