Savigny Luxury Index January 2012 | Source: Savigny Partners

LONDON, United Kingdom — It’s been a strong start to 2012 for the luxury good sector, as equity markets made significant gains in January.

Big news

• The Savigny Luxury Index (‘SLI’) outperformed the benchmark MSCI World Index (‘MSCI’) by 6 percentage points, gaining 11 percent over the month of January, relative to an increase of close to 5 percent for the MSCI.

• Investors have been exposed to continued good news.  Indeed almost all luxury groups have announced outstanding Christmas trading and 2011 year-end results driven mainly by growth in Asia excluding Japan.

• However, uncertainties have not dissipated.  Although the US market seems much better, Europe remains a concern, with sector sales highly dependent on tourist spending.

Going up

Benetton Unhate campaign | Source: Foto Telegraf

Benetton to make decision on delisting (FT)
“The Benetton family will decide at a board meeting on Wednesday whether to delist the Italian knitwear group known for its brightly coloured jumpers after the company posted another plunge in profits as it struggles to compete with Inditex and H&M.”

Luxury Companies That Can Bring You Closer to the Good Life (Money Morning)
“A lot of consumers are hurting right now, but you wouldn’t know that looking at the earnings of major luxury companies. Many luxury companies like LVMH Moet Hennessey Louis Vuitton, Burberry, Hermès, and Coach Inc had a stronger-than-expected 2011 campaign.”

Bright Young Things (Vogue)
“The British Fashion Council has announced the launch of International Fashion Showcase – a platform for international emerging designers – which will take place during London Fashion Week. Nineteen embassies and cultural institutes across London will display work from over 80 rising designers, spanning the world from Belgium to Botswana.”

The Finnish Fashion Blogger Who Landed A Deal With Diesel (Business Insider)
“Sandra Hagelstam, 24, is the founder of the hot fashion blog 5inchdesandup.com. She started blogging to create a daily log of what she wears… ‘(The blog) has opened up doors for me I never would have imagined in terms of being able to design my own collection and collaborate with others.’”

Divided they stand: the new extremists (Telegraph)
“This may look like a classic case of Roundhead versus Cavalier. Or Minimalist meets Maximalist. But that’s too simplistic.Neither Mary Katrantzou or Osman Yousefzada can be that easily pigeonholed.”

Thanksgiving Weekend Sales Increase to Record $52.4 Billion (Bloomberg)
“U.S. retail sales during Thanksgiving weekend climbed 16 percent to a record, as shoppers flocked to stores earlier and spent more, according to the National Retail Federation… The number of people shopping online and at stores on Thanksgiving Day jumped to 28.7 million from 22.2 million last year. About a quarter of all shoppers visited stores by midnight of Black Friday, up from just 3.3 percent two years ago.”

Coach to list shares in Hong Kong (BBC News)
“US luxury leather goods firm Coach plans to list shares in Hong Kong on Thursday, as it seeks to raise its profile among Asian consumers… Coach said the move ‘would demonstrate Coach’s commitment to, and focus on, Asia’. It is the latest international brand to list in Hong Kong after successful flotations by Italian fashion house Prada and luggage maker Samsonite.”

European Luxury Group Calls on India to More Than Halve Duties (Bloomberg)
“The group that represents luxury- goods companies and other creative businesses in Europe called on India to reduce duties on their products by more than half. A ‘significant’ cut in duty from more than 34 percent is necessary for full foreign ownership of single-brand stores to be effective, the European Cultural and Creative Industries Alliance, or ECCI, said.”

Newspaper launches online luxury store (Inside Retail)
“The International Herald Tribune has teamed up with a seasoned online fashion retailing expoert to launch its own online store to sell products to its readers. The IHT – the global edition of The New York Times – has partnered with Couturelab.com to launch a luxury goods store IHTGiftStore.com.”

The world of Louise Wilson, fashion professor (Telegraph)
“Louise Wilson OBE, 49, is the director of the Central Saint Martins fashion MA course, whose former students include Alexander McQueen, Hussein Chalayan and Mary Katrantzou. Ninety per cent of her students either go on to work for a fashion house or start their own label, and she has been described as the most influential person in British fashion.”

Savigny Luxury Index October 2011 | Source: Savigny Partners

LONDON, United Kingdom — The market roller coaster continues, but the luxury sector has once again outperformed the general market. While questions remain about the ability for China to sustain the growth of luxury brands, investors seem to be on side again, at least for now. Analysts remain divided about the future of the luxury sector in 2012, amid much macroeconomic uncertainty.

Big news

• Renewed confidence in the sector prompted the SLI to recover the ground it lost from the mass sell-off in September.  The SLI posted an impressive increase of 21.9 percent over the month of October, versus an increase of 7 percent in the MSCI.

• Positive newsflow has boosted the sector, with LVMH, Burberry, PPR and Coach’s quarterly results beating market expectations.  Swatch announced that September was a record month for the group and that 2011 promised to be its best year ever.

• Investor concerns over a slowdown in China were addressed as all major sector players confirmed the Chinese market’s resilience.

Going up

• Up more than 35 percent, Tiffany’s share price rise over the last month is the strongest in the field.  Surely some savvy investors took notice of the termination of the Swatch partnership, which now makes Tiffany a more palatable target for the big luxury conglomerates?

• Prada posted the second strongest gain for the month underpinned by an 18 percent increase in the Hang Seng Index.  Its China-led growth strategy also appears to have regained favour with investors.

Going down

• With the whole sector bouncing back up, Hermès, Safilo and Luxottica look like they have been left behind.  Hermès’ newly implemented defensive structure has taken the bid-spec wind out of its sails, whilst the two eyewear companies’ share price performances were marred by lacklustre growth expectations.

What to watch

• The all-important holiday season is just around the corner.  Early signs will come from the USA as trading over the Thanksgiving weekend beginning 24 November is usually a bell-weather for Christmas sales.

Sector Valuation

Pierre Mallevays is a contributing editor at The Business of Fashion and founder and managing partner of Savigny Partners, a corporate advisory firm focusing on the retail and luxury goods industry

Black Crown Diamond watches by Pandora | Source: Pandora

Pandora loses its shine after profits warning (FT)
“Shares in Pandora, best known for the charm bracelets that it sells in 55 countries, fell 65 per cent after it slashed its full-year earnings outlook and parted company with its chief executive less than a year after it came to market in one of the biggest IPOs in Europe in 2010.”

Coach profit boosted by sales, margins a concern (Reuters)
“Upscale handbag maker Coach Inc saw margins decline in its fourth quarter, hurt by higher labor costs, sending its shares down in premarket trading on Tuesday, despite earnings that beat analyst expectations… Shares of New York-based Coach have risen 18 percent since the beginning of the year, while the S&P 500 index has climbed just 2.3 percent.”

An Interview with Margareta Van Den Bosch (Huffington Post)
“Since joining Hennes & Mauritz (better known as H&M) in May 1987, this designer has supervised all the collections that reach some 2,000 shops in 38 countries on a daily basis, overseeing the creative direction of a richly diverse and profitable fashion empire that in 2009 alone employed 76,000 people and generated sales worth €13 million.”

Colourful characters (FT)
“This summer, risk has moved from the financial world to the fashion world courtesy of “colour-blocking” for men… ‘Recent seasons have seen a trend towards austerity in the luxury market because of the economic crisis,’ says Elisabetta Canali, communications director at Canali.”

Caesar Stovall, Army Medic Turned Givenchy Model (On the Runway)
“Then, in one of those twists of fate that abound in fashion, it was Mr. Stovall, the total unknown, who was chosen. Before he realized what was happening, he was walking a runway in Paris in last month’s men’s wear presentations. He was wearing an olive drab suit reminiscent of his military uniform, except that the bottom half was a skirt.”

Savigny Luxury Index May 2011 | Source: Savigny Partners

LONDON, United Kingdom — As luxury stock valuations continue to roar ahead, even as the overall market has stalled, and luxury brands go to private and public investors to finance further expansion, we take our monthly check of the Market Pulse to understand the key drivers.

Big news

• The Savigny Luxury Index continues its upward trend led by the bullish outlook for the sector in terms of both organic growth and acquisitions

• Continued good news flow with Hermès announcing outstanding Q1 results despite its exposure to Japan, which remains its largest market (representing almost a fifth of its revenues).  Burberry also posted stellar full year (end March 2011) results but signaled further investment in order to capitalise on the brand’s momentum

• There has been a flurry of M&A activity during the last month despite high valuations.  Puig acquired the fashion house Jean-Paul Gaultier from Hermès.  Labelux went on a shopping spree bagging Jimmy Choo from TowerBrook and Belstaff from the Malenotti family.  Department store group Coin was acquired by BC Partners.  French leather goods brand Le Tanneur was acquired by Qatar Luxury Group, owned by the Emir of Qatar’s spouse.  Chinese conglomerate Fosun bought a minority stake in the Greek jewellery brand Folli-Follie

Going up

• Hermès’s valuation continues to climb higher despite lack of clarity over Japan

• Strong Q1 results and bid speculation have fuelled Coach and Tiffany’s share prices

Going down

• Ralph Lauren’s share price dipped after the company announced disappointing Q4 results due to higher operating costs

What to watch

• Strong growth potential in China is fuelling competition amongst brands who all want a slice of the pie.  This may drive overheads and rental costs up and put pressure on margins

Luxury Sector Valuation, May 2011

Pierre Mallevays is a contributing editor at The Business of Fashion and founder and managing partner of Savigny Partners, a corporate advisory firm focusing on the retail and luxury goods industry

Make your own jeans | Source: Makeyourownjeans.com

Designed by You, Made by … Who? (NY Times)
“Do-it-yourself Web sites are making it easy for fashion buffs to design and order custom outfits: all you need is an Internet connection and a credit card. But are the sites any good? Can design-your-own jeans rival designer jeans? Is the shoe of your dreams mere mouse clicks away?”

The investor’s dilemma: etail vs the brand (Material World)
“An announcement of a partnership with Vente-Privee… will be the third in a rash of investment in the latest fashion fad that began at the end of April with Ideeli’s raising $40 million of Series C funding, which was followed Tuesday by Gilt Groupe’s raising $168 million… And you know what they say: three examples of anything is a trend. Welcome to the new internet investment bubble: shopping!”

Coach eyes China men’s market (FT)
“The company [is] eager to capitalise on men’s untapped enthusiasm for its products in China… Coach said men account for 45 per cent of spending on handbags and luxury accessories in mainland China, whereas they make up only 25 per cent of spending across Asia and just 15 per cent worldwide.

Macy’s Jumps After Raising Profit Forecast (Bloomberg)
“[Macy’s] jumped the most in a year after boosting its 2011 profit forecast… sales in the first quarter exceeded its expectations as online revenue jumped 38 percent and spring fashion sold strongly. Consumers have ramped up spending as the job market has improved.”

Rock on Tommy: remembering a Savile Row legend (Telegraph)
“Almost 20 years after his death… Nutter is still talked about in the most reverential tones by fashion people and survivors of the whole 1970s scene. What’s more, that tailored look – ironically itself a revival (of 1930s and 1940s menswear) – is enjoying something of a comeback right now.”

Savigny Luxury Index March 2011 | Source: Savigny Partners

LONDON, United Kingdom — This month’s Market Pulse shows a continuing upward trend for luxury and fashion stocks versus the MSCI World market benchmark, erasing any lingering doubts about the return of the luxury consumer.

Big news

• Luxury brands have had an excellent start to the year reporting strong Q1 results. Double digit sales growth has been fuelled by continued strong growth in China and economic recovery in the US and Europe

• The Savigny Luxury Index made a big jump mid-April when Burberry and bellwether LVMH announced better than expected results, prompting share price increases amongst their European peers

Going up

• Burberry jumps to the top of the valuation leaderboard as its retail-led strategy continues to pay dividends and its share price surges on bid speculation

• US luxury companies share prices have rebounded as concerns over exposure to Japan eased after strong results announcements; Tiffany and Coach both gained over 10 percent

Going down

• Luxottica and Safilo have lost some ground in valuation terms as a weak US dollar weighs on revenues outlook

What to watch

• Whilst market concerns over the Japan earthquake have eased, potential long-term consequences for the sector are still unclear

• Word going round is that many brands have been experiencing very high double-digit like-for-like growth in the last 6 to 8 weeks, prompting views that the luxury consumer is back and is spending without shame again

Luxury Sector Valuation, April 2011

Pierre Mallevays is a contributing editor at The Business of Fashion and founder and managing partner of Savigny Partners, a corporate advisory firm focusing on the retail and luxury goods industry

Olivier Rousteing | Source: Balmain

Olivier Rousteing Named New Designer at Balmain (T Magazine)
“The new era at Paris’s sex-charged fashion house Balmain is beginning to take shape, with Olivier Rousteing being tapped as the label’s new designer. Rousteing, who joined Balmain in 2009 and is currently in charge of women’s wear.”

Savile Row tailors on dressing the royal groom (Telegraph)
“Last week, David Cameron briefly stole the limelight from Kate with his fashion indecision… At least it got everyone talking about men’s fashion, for once. Retail analysts estimated that the wedding will generate £620 million for the British economy: surely Savile Row should be getting a slice of that (wedding) cake?”

Fashion Companies Go Green, Cut Costs (Thread NY)
“It may be socially responsible for fashion companies to be eco-conscious, but many are finding that thinking in terms of sustainability also produces major cost savings.  Finding ways to cut costs internally has also become increasingly important for fashion companies as the cost of commodities like cotton rises and labor costs increase.”

Coach profit rises 18 percent, boosted by U.S., China (Market Watch)
“To spur growth for the company, Frankfort… also is expanding in stand-alone men’s shops and in the U.K. and other European markets. The company also plans to introduce mobile commerce in North America next week and continues its roll out in China, its fastest growing market.”

Q&A: Franca Sozzani (WWD)
“Vogue Italia editor in chief Franca Sozzani doesn’t shy away from controversy. Some might argue she courts it. She isn’t afraid to speak her mind, and her blog on vogue.it has helped the site jump to more than one million unique users a month.”

Hobbs Designer Womens Clothing | Source: Hobbs

Equity turns fashionable (Fashion United)
“Investing in something more than a covetable wardrobe is turning to be a trend that arrived to stay. Even more equity and investment firms are looking for opportunities to enter the fashion business, which is proving to be resilient to crisis and financial turmoils.”

Coach to Move Production From China (WSJ)
“Leather-goods maker Coach plans to gradually move some production out of China, where labor costs are rising, and into lower-cost countries, such as India and Vietnam. At the same time, China is proving a boon to Coach’s sales… comparable-store sales grew by double digits in China.’”

How long will Burberry’s success last? (CPP Luxury)
“The ‘democratic luxury” positioning, although it may have a very possitive message during the current recession, it remains to be seen how the consumers will regard it once most of the international market will have recovered from the recession.”

Selfridges: Bright Young Things (Dazed Digital)
“The windows of Selfridges will feature some of the biggest upcoming stars in British fashion and art… 25 young designers and artists [will] create their own displays and showcase their work to millions. They will also design limited edition pieces.”

Vivienne Westwood’s jewellery extravaganza (Telegraph)
“Dame Vivienne Westwood, the high-priestess of punk, will mark the opening of London Fashion Week next month, with an extravagant launch of her precious jewellery at the Wallace Collection.”