Savigny Luxury Index November 2011 | Source: Savigny Partners

LONDON, United Kingdom — As the luxury and fashion sector enters the critical holiday shopping period on the back of strong results for the first half of the year, there are growing signs that executives are worried about what the future holds for the luxury market in 2012.

Big news

• This has been another month of record results for the luxury sector, with Hermès, Richemont, Ferragamo, Burberry, Tiffany, Prada and Ports all posting outstanding numbers for their first half or third quarter period.  Buoyant growth in Asia continued to lift sales; Richemont in particular shone with revenues in the region soaring by 60 percent in its first half report.  Growth was also present in mature markets, notably in the USA where Burberry’s first half sales and Tiffany’s third quarter revenues rose by 25 percent and 17 percent respectively.  This was confirmed by recent news of a very strong Thanksgiving weekend, with US retail sales estimated at a record $52.4 billion.

• Yet worries are growing over 2012.  The global markets rebound which took place towards the end of November following news of concerted action to solve the eurozone debt crisis did not happen for the luxury sector, with our Savigny Luxury Index resuming its downward slide.  Some market participants have issued thinly veiled warnings over next year, notably Richemont and Tiffany (see below).  Retailers are keeping inventories low into the end-of-year season; we have heard reports of some of them asking leading fashion brands not to deliver too early, a shocking role-reversal mode.  Industry CEOs are hoping for the best but quietly making contingency plans.  Overall, the SLI has lost 4.9 percent over the month of November, compared to an increase of 1.8 percent in the MSCI general index.

• The long-rumoured acquisition of Italian tailor Brioni by PPR finally crystallised, evidencing the importance of the menswear segment for the sector’s growth expectations, especially in China.

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São Paulo skyline | Source: Museyon

Exactly How Hot Is Brazil? (IHT)
“Compared with the other so-called BRIC countries — Russia, with historic department stores rising from gray streets; India, with its chaotic New Delhi markets; or China with its sprawling, often empty, shopping malls — São Paulo seems like a hive of glamorous commerce… Compared with China, Brazil has had far less attention from the big brands, although their stores are present in São Paulo, lining the streets in the upscale Jardins area.”

The Three Musketeers of Condé Nast Ride Again (WWD)
“Graydon, Anna and David have their other projects, of course.For the last few years, these three have been targets of some whispered criticism in the media world: How much time do they actually devote to editing their magazines anymore? Are these editors, a combined 55 years into their jobs, starting to get a little bored? Are their best days behind them?  Apparently not. The three are having career years — or at least years that should go down as All-Star seasons on their Hall of Fame plaques.”

PPR and Brioni: After the deal, the implications (FT)
“So it all came true, and PPR did, indeed, buy Italian men’s wear luxury brand Brioni. So far, so rumoured. But what does it mean? It seems to me there are two main implications to the deal… Given the state of the rest of the Italian economy, you’d think the government might not be so thrilled about the prospect of yet more foreign ownership, but then again, maybe in the short-term, they need the tax money.”

An Eye on Sustainable Fashion (NY Times)
“There is a new luxury fashion consumer in Brazil. And it’s not just the lower middle-class shopper with greater purchasing power, as seen everywhere in the country’s media in the last couple of years. These consumers are seeking products that go beyond modern design and new runway trends — looking for an eco-friendly kind of “quality seal” and now, thankfully, they can find what they are looking for. In the last couple of years, some Brazilian brands have begun to invest in collections whose manufacturing is less harmful to the environment.”

Meet Carmen Dell’Orefice, the 80-year-old supermodel (Telegraph)
“That point is 80. And the life is extraordinary; a film waiting to be scripted. Impoverished immigrant parents (mother a Hungarian ballerina, father an Italian violinist; she was born in New York); foster homes; rheumatic fever at 12, which put paid to her own balletic ambitions; modelling at 13 (she made her first Vogue cover by the time she was 15); three husbands of varying unsuitability; numerous spectacularly catastrophic financial scenarios, of which depositing most of her life savings with Bernie Madoff is merely the most recent.”

Brioni Autumn/Winter 2011 | Source: Luxos

PPR set to buy men’s wear brand Brioni (FT)
“PPR, the French luxury goods group, has confirmed it will acquire Brioni, the Italian high end men’s wear group that has dressed Vladimir Putin and the fictional character James Bond in several movie outings. In a statement on Tuesday, PPR said it would be buying 100 per cent of the family owned group for an undisclosed sum… PPR is reorienting and expanding its business in two segments: luxury, which includes Gucci, Yves Saint Laurent and Bottega Veneta; and lifestyle, which consists mainly of a majority stake in Puma, the German sportswear company.”

H&M Sets Versace Goddesses of High Fashion to Low Prices: Retail (Bloomberg)
“Hennes & Mauritz AB, the world’s second-largest clothing retailer, next week starts selling apparel and accessories designed by Gianni Versace SpA, including floor-length ‘goddess’ gowns, dresses dotted with Grecian buttons and fluorescent micro-minis. The Versace for H&M line, the latest partnership between the Swedish retailer and a luxury designer that boasts high fashion at low prices, will give the Italian label ‘global visibility’ as it targets sales of about $700 million by 2014, Versace Chief Executive Officer Gian Giacomo Ferraris said.”

Hugo Boss ups 2015 targets on Chinese growth (Reuters)
“German fashion house Hugo Boss sharply raised its earnings outlook for 2015 on Tuesday as it increases its network of stores and eyes strong growth from China. The group… Said it now expects sales of 3 billion euros ($4.1 billion) in 2015, and earnings before interest, tax, depreciation, amortization and special items (EBITDA) of 750 million. That compares with a previous target for sales of 2.5 billion and core earnings of 500 million euros. Hugo Boss said it expected sales in Asia to almost triple by 2015 compared with 2010, mainly thanks to China.”

Upcoming Zappos iPad App Mimics a Fashion Magazine (All Things Digital)
“The new black this fall: Retailers producing content alongside their products, like an online version of a glossy fashion magazine. Zappos expects to launch its first attempt at recreating the catalog experience on the iPad in early December, just in time for the holidays… Instead of being generally available in iTunes, the Zappos app will be found on Apple’s Newsstand, which organizes magazine and newspaper subscriptions for those who use iOS 5. It will be free; a new edition will appear monthly.”

Alber Elbaz wants dramatic fashion (Belfast Telegraph)
“Alber Elbaz has announced plans to ‘bring back real drama’ to the fashion industry. The Lanvin designer staged a presentation of his Spring/Summer 12 collection at Carondelet House in Los Angeles recently. He’s already put on a similar event in Paris and explained he’s keen to get people interested in style again. ‘Geoffrey Beene told me that fashion is not show business, it’s just business,’ he said. ‘These days there are too many reality shows, and I watch many of them, but I am trying to bring back real drama to fashion.’”

Savigny Luxury Index September 2011 | Source: Savigny Partners

LONDON, United Kingdom — The seemingly unflappable luxury market continues to waver, with growing worries that China’s booming economy — the driver for much of the rapid growth of luxury brands in the past few years — is beginning to slow down. As a result, every major luxury brand has been hit, and hit hard.

Big news

• Luxury stocks suffered a steep sell-off in the last ten days of September as hedge funds moved out of the sector en masse due to growing concerns over the Chinese economy. The SLI took a real beating losing 13.6 percent over the month of September compared to only 3.8 percent for the benchmark MSCI.

• Prized assets are nevertheless still changing hands, as demonstrated by the recent sale of heritage leather goods brand Delvaux and a healthy interest in Italian tailoring brand Brioni, fronted by PPR.

• Hermès’ plan to create a controlling family holding company was cleared by French market authorities, boosting its defences against LVMH and consequently resulting in its inflated share price easing off.

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L-R Ohne Titel, Rodarte, Vera Wang | Source: Style.com

The Volume Stays Up (NY Times)
“There seems to be no escape from the orgy of prints and color consuming the runways. It continued on Tuesday at Rodarte and Vera Wang, with runny floral patterns. It struck on Monday with ice-cream pastels at Preen, tribal prints at Donna Karan and blazing red at Ohne Titel… But if you look at many of the prints that have appeared this week, and the way they were handled, you don’t find that human dimension of wit and vulnerability. They don’t make you smile.”

Style as Seen Through Rose-Colored iPhone App (WSJ)
“Fashion enthusiasts—an image-obsessed group—are enamored with how Instagram turns a low-quality image into a moody composition. At the tents in New York this week, editors, bloggers and publicity people are donning Instagram’s digital rose-colored glasses and uploading images by the thousands, to the chagrin of some professional photographers.”

PPR confirms eyeing Brioni (Reuters)
“French retail and luxury group PPR confirmed it was in talks to acquire family-owned Italian tailor Brioni and added there was a risk the recent drying up of the debt market could affect the disposal of its mail order business Redcats… The deal this summer carried a price tag of about 350 million euros ($480 million)… If it went ahead, the acquisition would allow PPR to make progress on its pledge to strengthen its position in the luxury market and get out of retail.”

Rising cost of clothes could signal end to ‘cheap chic’ (Guardian)
“The days of “cheap chic” and throwaway fashion could be numbered, because the cost of clothes is rising at its fastest rate for nearly 15 years. The “fast fashion” trend, where T-shirts sell for £2 and jeans are priced at less than a fiver in supermarkets, is being battered by big increases in the cost of cotton, labour and transport.”

A Duo Clashes for Fashion (WSJ)
“Messrs. Hernandez and McCollough, both 33 years old, are considered leaders of a new school of designers in their 20s and 30s representing the next generation of big American fashion designers. This new breed is known for its willingness to experiment with fabrics and its ability to reinterpret classic designs for a contemporary audience.”