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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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.

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Oliver Theyksens | Source: Style.com

Olivier Theyskens On Creativity & Commerce (Forbes)
“Olivier Theyskens’ career is one for the books. The kind they teach you in fashion school about talent and creativity and its flip side, business and commerce. Olivier Theyskens 100: Fashion visionary. Olivier Theyskens 101:A business cautionary tale. His career is a minefield of lessons.”

Victoria Beckham’s fashion line on track to make £60m (Telegraph)
“It has been reported today that Victoria’s eponymous label generated sales in excess of £15 million in the first quarter of 2011, up a staggering 70 per cent on the same period last year. If this trend continues, Beckham will be in line for sales of £60 million by year-end, and with her second, cheaper line ‘Victoria by Victoria Beckham’ going on sale in the New Year, it appears she may have a fully-fledged fashion empire on her hands.”

Luxottica to keep with M&A path in 2012 (Reuters)
“Italy’s Luxottica, the world’s biggest premium eyewear maker, is looking to new acquisitions in fast-growing Latin America next year, as it moves to shield its business from a slowdown in debt-hit mature economies. The owner of Ray-Ban and Oakley brands said on Monday it looked to a positive rest of the year, after strong sales of its high-end sunglasses from Brazil to China offset the impact of a weak dollar and financial market turbulence.”

Is Ready-to-Wear the New Couture? (WSJ)
“As the fashion industry continues to question the relevance of the haute couture collections in a 4G-speed world, ready-to-wear designers are finding that there’s increasing demand for their most exquisite and expensive pieces. The diverse list includes up-and-comers Jason Wu, Rodarte and Prabal Gurung as well as more established houses like Alexander McQueen, Balenciaga, Stella McCartney and Chanel.”

Francisco Costa’s Modern Aesthetic (WSJ)
“Since assuming the mantle at Calvin Klein Collection in 2004, Francisco Costa has modernized the laid-back luxe look known as American sportswear. Working with innovative, luxurious fabrics and using Calvin Klein’s own original, pared-down aesthetic as the base, the Brazilian-born designer has radically re-envisioned the female silhouette.”

Royal Wedding Official Photo | Source: Royal Wedding

The Business Impact of the Royal Wedding (WWD)
“Dressing Catherine Middleton for the royal wedding has catapulted the house of Alexander McQueen from niche designer business into household name, giving management the delicate task of balancing its exclusive reputation with the wider commercial potential now within its grasp.”

Websites blur line between telling and selling (FT)
“A new wave of US e-commerce companies with increasingly editorial leanings is blurring the line between content and commerce, and causing publishers to reassess their own relationships with commercialism.”

Barneys New York tests foreign waters with ecommerce expansion (Luxury Daily)
“Department store Barneys New York is boosting its ecommerce line of attack by offering online shopping and shipping to approximately 90 countries… Although this will undoubtedly move product and rocket sales for the brand, there are still some major facets to consider when expanding worldwide.”

Luxottica sees bright 2011 after strong Q1 (Reuters)
“Luxottica the world’s largest premium eyewear group, is looking to a positive 2011 after a strong start to the year in North America and key emerging markets, echoing optimism among luxury peers.”

20 Odd Questions: Nicola Bulgari (WSJ)
“Despite the changes ahead for the 127-year-old firm, Mr. Bulgari insists the brand’s DNA will remain the same. ‘Our family is not going anywhere… There is a uniqueness and continuity of design that guides everything we do—from jewelry and watches to fragrance and apparel.’”

Prada Prods China’s Elite (WSJ)
“For Prada, in particular, the Chinese market is critical. The company is expected to announce this week plans for an initial public offering on the Hong Kong Stock Exchange. Its valuation would likely be higher in Hong Kong than in other market.”

Chanel swaps pearls and operatic grandeur for T-shirts and flats (Guardian)
“‘This is the way young women dress nowadays,’ pronounced Karl Lagerfeld, explaining why his Chanel haute couture show in Paris was built around T-shirts, slim trousers and flat shoes, with barely a cocktail frock to be seen and not a pearl in sight.”

Social Tribes vs.Social Networks (Fashion’s Collective)
“Social networks allow for the expression of current mindsets, but are not good at moving that mindset into the field of concerted action or conversion. In contrast, if luxury marketers could help gird the formation of tribes, they would gain a larger return on investment.”

Luxottica sales reach record high (FT)
“Group sales at Luxottica, the Italian eyewear maker… reached a record high of €5.8bn ($7.9bn) in 2010 – an increase of 7.1 per cent at constant exchange rates – on growing confidence of US consumers and strong sales of its premium and luxury ranges.”

Giles Goes West (Vogue UK)
“Giles Deacon is teaming up with Nine West to create a new capsule collection, launching for autumn/winter 2011-12. The partnership is part of a new initiative called Shoelaborations, where the footwear brand will work with a range of young designers, artists and musicians.”