Michelle Obama in J.Crew, courtesy of Vogue (US)

Fashion Forward (Portfolio)
“Moving ahead in the current economy will require fashion companies to be as flexible and innovative as they’ve claimed to be all along.”

S&P cuts Barney’s credit rating, warns on liquidity (Reuters)
Standard & Poor’s on Monday cut its ratings on Barney’s New York Inc to a deeply distressed level and warned that vendors may tighten terms or limit shipments to the luxury retailer as its liquidity declines.

Bergdorf Expands the World of Bottega Veneta (WWD)
“While the Italian brand and its signature “intrecciato” weave cast an understated aura, there’s nothing subtle about the Bergdorf presentation. The Fifth Avenue store has created a ‘World of Bottega Veneta’ showcasing the brand’s burgeoning assortment.” (Subscription required)

Trovata, Forever 21 Case Set for Trial (WWD)
“After two years of legal wrangling, Trovata’s lawsuit alleging that cheap-chic retailer Forever 21 copied its designs is headed to trial next month, and the outcome could have implications for both vendors and retailers in this age of fast fashion.”

In economics, arbitrage is the practice of taking advantage of a price differential between two or more markets by buying something for a lower price in one market and selling it for a higher price in another market, preferably instantaneously, to avoid the risk that price gap will close.

With the plummeting US dollar, many European brands have decided to take a hit on margins instead of lifting prices to reflect the current exchange rate. They want to stay competitive with their American counterparts and don’t want to turn off American consumers with astronomical prices.  But the resulting lower US prices have led to an opportunity for some seriously lucrative fashion arbitrage. For example, a New York Times article published this week reveals that the Yves Saint Laurent Downtown bag costs $1495 at Bergdorf Goodman in New York, but costs £910, about $1796, at Harvey Nichols in London.

Savvy consumers can make money by buying bags and other fashion products in the US and then flogging them in Europe and Asia — at prices higher than in the US, but lower than the International price.

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