Loewe Spring/Summer 2012 | Source: Her World Plus

LVMH Profit Meets Estimates, Sees 2012 Growth (Bloomberg)
“LVMH Moet Hennessy Louis Vuitton SA (MC), the world’s largest maker of luxury goods, reported full-year profit that met analysts’ estimates and said it’s “well- equipped” to maintain growth in 2012. Net income rose 1 percent to 3.07 billion euros ($4 billion) in 2011, the Paris-based maker of Zenith watches said today.”

In cities, clothes maketh the man (China Daily)
“Cosmetics are not the only luxury goods attracting increasing numbers of Chinese men. More than 76 percent of urban males bought clothes in 2010, with 24 percent regarding clothes as ‘important purchases’, according to Chinese market researchers CTR.”

Luxury Flash Sales Sites Regroup After Layoffs (BetaBeat)
“Mass flash sales—deep discounts that expire usually after one to three days—had been touted as the first real innovation in e-commerce in years, and start-ups that applied the flash-sales phenomenon to the luxury market had investors salivating. But the former venture capital darlings suddenly seemed to be hemorrhaging employees.”

Polo Puzzle: What Goes Into a $155 Price Tag? (WSJ)
“Every piece of clothing has a story: There’s far more to a $155 polo shirt than a yard of fabric, four buttons and a length of thread. The tale of a KP MacLane polo shirt offers a rare look inside the planning and global transactions behind the clothes people wear.”

Following A Legend (Vogue)
“The film, entitled Bill Cunningham New York, profiles the visionary 81-year-old taking pictures on an old Nikon camera of its best dressed residents. Directed and produced by Richard Press, the documentary features anecdotes from New York’s biggest names, from Anna Wintour to best-selling author Tom Wolfe.”

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.”

Giorgio Armani Fall 2012 | Source: IHT

Military, Front and Center (IHT)
“Is it the bitter, battling winter following the Arab spring that has created a march of the military in men’s fashion? A soldierly influence was an undercurrent in the winter 2012 Milan men’s show, which closed Tuesday. The idea of smartening up and shaping up may be a response to Europe’s gloomy economic situation”

LVMH fund looks to stitch a deal with Fabindia (Business Standard)
“The last word in luxury is wooing the most marquee ethnic wear chain in India. L Capital Asia, the private equity arm of the world’s biggest luxury conglomerate, LVMH Group, is in discussion with Fabindia, to acquire a minority stake in the retailer.”

French luxury firms seeking Italian menswear – Armani (Reuters)
“French luxury groups are on the prowl for promising Italian menswear brands after France’s PPR bought Italian tailor Brioni this month, fashion doyen Giorgio Armani said on Tuesday adding that his business was not for sale.”

Organizers Settle Dispute Over Fashion Week Dates (On the Runway)
“Just as the men’s runway collections came to a close in Milan on Tuesday, organizers of the shows in New York and London announced that they have settled, for now, a dispute over the dates of the women’s runway shows planned this September. The New York and London collections will not overlap with those of Milan, as had been risked by a standoff between the cities over when the season should begin.”

What it takes to be a teenage editor-in-chief on the web (BBC News)
“Tavi Gevinson started her first blog ‘Style Rookie’ when she was 11. She was shopping at thrift stores, taking pictures of her outfits and writing about music, images and movies that inspired her… Now Tavi is 15 and has started her own web magazine for teenage girls, RookieMag.com, that counts 4 editors and 40 writers, illustrators and photographers.”

Savigny Luxury Index December 2011 | Source: Savigny Partners

LONDON, United Kingdom — While the luxury industry entered 2012 with an overall outlook that remain uncertain, the sector remained resilient.

Big news

• The Savigny Luxury Index (SLI) lost 2.6 percent in December, whilst the general market index MSCI gained 3 percent over the period.  The cause for this divergence was a temporary sell-off in luxury stocks in mid-December.  Two factors contributed to this: the Italian sovereign debt crisis prompting an exodus from Italy-based stocks and the finalisation of Hermès’ defensive structure, which sent its share price down 7 percent in the days following the announcement.

• Despite treacherous capital market conditions, Michael Kors’ listing in New York on 15^th December was a resounding success.  Kors sold more shares than expected, achieving a valuation of close to $4 billion, or 3.8x LTM sales.  Shares jumped 25 percent on their debut and have since climbed a further 8 percent.

• In contrast, the listing of Chinese jeweller Chow Tai Fook in Hong Kong on 9^th December was received with lukewarm interest, which may be attributable to high valuation expectations.

• A Swiss court ruled that Swatch Group can cut down deliveries of watch parts to third parties from next year.  This will create supply issues for a number of watch brands and has already prompted luxury groups such as PPR and LVMH to snap up small watch component manufacturers.

Going up

• Both Hermès and Swatch share prices gaining around 3 percent over the last four weeks as a result of the events mentioned above.

Going down

• Ferragamo continues its downward slide, losing another 12 percent, and now a tad under the sector average, in contrast with its lofty IPO valuation.

What to watch

• The luxury sector has proven resilient to date despite the difficult economic environment, but investors are looking at the year ahead with caution.  Sector growth continues to be highly dependent on the Chinese customer at home and abroad.  Insight into the growing importance of the Chinese tourist versus lacklustre traditional developed markets will be key in shaping our outlook for 2012.

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.

App Icons | Source: Blogversity

Online retailing: The mobile allure (FT)
“The transparency and convenience of ‘mobile commerce’ have given Americans the upper hand over retailers, according to Mr Thompson, who echoes the connect-and-inspire ideology of Silicon Valley when he says: ‘The consumer ultimately holds all the power.’ Indeed, for many traditional retailers, rising competition from the internet has capped sales growth, squeezed profit margins and forced them to re-evaluate how they use their store space.”

LVMH stake in Hermès reaches 22.3 pct (Reuters)
“The world’s biggest luxury group, LVMH, has increased its stake in leather bag maker Hermès to 22.3 percent and now has 16 percent of voting rights, according to a statement from France’s AMF stock market regulator. LVMH, which previously held 21.4 percent of its smaller rival, plans to continue buying Hermès shares ‘according to circumstances and the market situation,’ LVMH said in a filing to the AMF.”

Brand power helps Nike beat estimates (Reuters)
“Nike Inc’s quarterly results beat Wall Street estimates, as its swoosh logo attracted shoppers, especially in emerging markets, despite higher prices. Nike shares were up 3 percent at $96.65 in after-market trade on Tuesday, after closing at $93.63 on the New York Stock Exchange. Worldwide futures orders for the Nike brand, a closely watched measure of demand in coming months, grew 13 percent to $8.9 billion at the end of the quarter.”

Founder with an eye for design (FT)
“One of Mr Totterman’s ideas at the start of the business, was to ask Jean Paul Gaultier, the French fashion designer, if Inspecs could distribute Gaultier-branded spectacles in the UK. ‘At the time we had no design function – we were reliant on other people’s products and we felt we needed a big name if we were to get anywhere. To our surprise [Mr Gaultier] said, ‘Yes.’”

Sophie Theallet on Running a Fashion Business (Thread NY)
“Sophie Theallet worked under masters like Azzedine Alaïa and Jean Paul Gaultier in Paris before decamping to New York City to start her own label, which launched in 2007. Since then, she has racked up acclaim — including the CFDA/Vogue Fashion Fund Award, which she won in 2009 — and has dressed everyone from Jessica Alba to Michelle Obama.”

Hong Kong skyline | Source: Flick River

Across Asia, an Engine of Growth for Luxury Firms (IHT)
“Europe is struggling to contain a spiraling debt crisis, the U.S. economy is beset with high unemployment, and emerging Asian economies are growing less rapidly. But none of this is killing off Asian shoppers’ taste for luxury goods. Companies like Burberry, Hugo Boss and Prada have continued to strike an upbeat tone on Asia in recent weeks, despite the havoc that debt woes in the euro zone have wreaked on investor sentiment.”

Luxury giants battle it out in menswear (Reuters)
“Buoyant demand for luxury menswear, driven by China’s male-dominated market, has prompted big industry players such as LVMH and PPR to step up their investments in the fast-growing market. Consultancy Bain & Co estimates the luxury menswear market, which makes up 40 percent of the global market, is worth 180 billion euros ($240 billion) and growing at about 14 percent a year, nearly double that of luxury womenswear at 8 percent.”

Indian Fashion Expands Online (NY Times)
“Last June, the Web site Exclusively.in debuted in the United States with much fanfare. The concept seemed promising: Indians and Indophiles stateside could choose from a range of India-style clothing, art and home furnishings in a flash-sale format similar to Gilt.com’s… Now its founder and chief executive, Sunjay Guleria, is going back to the drawing board.”

Vogue’s New Archive Site Costs $1,575 for a Yearly Subscription (The Cut)
“Vogue’s much-hyped archive website goes live today, and as promised, it contains every single page from every issue dating back to the magazine’s American debut in 1892… However, accessing the archive is not quite so simple: For now, it’s only available via subscription through WGSN… And an individual subscription costs a whopping $1,575 per year.”

Mencyclopaedia: Oliver Spencer (Telegraph)
“Spencer, now 43 and this month pipped to the British Fashion Award for best menswear designer by Kim Jones (of Louis Vuitton), was born in Coventry and started in the rag-trade selling second hand clothes on Portobello Road… His eponymous label, started in 2002, is the downstairs to Favourbrook’s up.”

LVMH Lecture Theatre at Central Saint Martins, Kings Cross | Source: LVMH

LVMH and Central St Martins Partnership (Vogue UK)
“Central St Martins new Kings Cross building will feature a state-of-the-art lecture theatre sponsored by LVMH. The luxury conglomerate has also announced plans for a scholarship programme to recruit promising designers from the university for its stable of brands.”

Tamara Mellon leaves Jimmy Choo (FT)
“Tamara Mellon has stepped down from Jimmy Choo, the footwear and accessories brand she founded 15 years ago, following its takeover and integration with Labelux, the private Italian luxury goods group… In 1996 Ms Mellon transformed a small business set up by Jimmy Choo, a cobbler from east London. The business has also branched out into accessories such as handbags and scarves, as well as fragrances.”

A new frontier for big brands (FT)
“In Paris, at 23 Place Vendôme next year, Louis Vuitton will open the first boutique dedicated to its fine jewellery. It is a significant move for the industry… As is usual with Louis Vuitton, a decision by the world’s most successful luxury brand to make a decisive step into a new market is a signal of shifts in the industry… But expectations are that jewellery’s switch from a predominantly craft market to a new frontier for big brands is under way.”

Big in Japan: Paul Smith’s focus shifts to the East (Telegraph)
“The designer has, however, recently fixed his gaze eastwards, staging a fashion show in Japan for the first time in his career. Entitled I Love Japan, the show marked the launch of Japan’s first major fashion event since the March 11 earthquake, tsunami and nuclear crisis… In the case of Paul Smith, the designer’s affection for Japan has clearly returned – reflected in both the number of boutiques and department stores across the country and sales figures.”

Fashion retailing catalogs turn a page (LA Times)
“Alluring as print catalogs may be, an increasing number of retailers — Bloomingdales, Nordstrom and J. Crew among them — aren’t just mailing them to their customers. They’re going digital, showing off this season’s lace-trimmed dresses and faux-fur vests in free downloadable apps that mimic the traditional catalog experience, minus the print.”

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

Gilt Groupe screenshot | Source: Gilt.com

Online flash sales less flashy as inventory shrinks (Reuters)
“The flash sales business has lost some of its flash, forcing online luxury clothing merchants such as Gilt Groupe, Ideeli and Rue La La to radically change their business models. These businesses burst onto the fashion scene during the recession to try to move a mountain of unsold clothes. Now there is less luxury inventory and flash sales sites are bigger. That has forced these companies to pay more or find other ways to get their products.”

Storm Clouds Loom Over China’s Red-Hot Luxury E-Commerce Market (Jing Daily)
“With China’s luxury industry expected to become the world’s largest by 2015, and the country’s online population swelling, dozens of companies have jumped on the high-end online retail bandwagon… With online shopping moving up the value chain, more competition looking to crack the market, and more individual brands expressing interest in adding e-commerce functionality in China, there’s plenty to be optimistic about. But as an extremely young and untested market, full of similarly young and untested companies, storm clouds may be looming.”

LVMH confident on 2011 as Q3 sales rise (Reuters)
“LVMH , the world’s biggest luxury group, posted forecast-beating third-quarter sales growth on Tuesday and said it was confident for the rest of 2011, showing no signs of a slowdown in the luxury industry despite the slowing economy… The company said like-for-like sales rose 15 percent to 6.01 billion euros ($8.27 billion) in the three months to Sept. 30.”

India’s Luxury Market Up 20% in 2010 (Forbes)
“It’s not just the new wealthy in China that is enjoying a life of luxury. Its neighbor India is showing that it has a taste for the good life as well. The luxury market in India is grew 20 percent to 5.8 billion in 2010 and this growth is expected to continue into the near future, according to a survey by the Confederation of India Industry andA.T. Kearney Ltd.”

London To LA (Vogue UK)
“The British Fashion Council has taken the cream of British design talent to Los Angeles for the first time, as part of its London ShowRooms series… The initiative, which regularly takes the country’s most promising designers to Paris and New York to meet with potential stockists, will allow London-based names… To meet LA’s key press and buyers at a showroom.”

Hermès sari collection | Source: Luxpresso

Hermès sees sari as way in to India (FT)
“It’s perhaps not surprising that the first offer of a sari from a western company comes from Hermès, which last year launched a bespoke Chinese brand, aimed at winning more Chinese customers while resuscitating China’s craft tradition… India’s luxury market has recently captured the attention of European and American fashion houses, as the increasingly affluent elite shrug off years of socialist-inspired austerity.”

Battle of the catwalks update: Milan and Paris refuse to budge (Telegraph)
“So, as things now stand, New York fashion week will begin on September 13 next year, followed by Milan on September 19, London on September 21 and finally Paris on September 25. Milan decided to go ahead with its controversial calendar (that sees it run concurrently with two days of New York and four days of London fashion weeks) despite a last minute plea from its British and American counterparts.”

eBay VP Steve Yankovich: En Route To $4B In Gross Mobile Sales (TechCrunch)
“eBay is on its way to process around $4 billion in mobile sales (= gross merchandise volume, not revenue) in 2011, double the number it logged last year. The company’s mobile apps for iPhone, iPad, Android, WP7… Have been downloaded over 50 million times, and its Marketplace app alone has seen about 20 million downloads. Furthermore, three purchases are made through eBay’s mobile applications every second.”

From Rags to Riches (T Magazine)
“With big-name museums increasingly relying on fashion, it was only a matter of time before corporate brands saw the advantage of creating their own exhibitions and ‘museums,’ where they could set their focus without any intervention from pedantic historians and where they could make or break their own rules… But with so many more museum exhibitions scheduled to open and an audience that adores fashion displays, no one would dare to dismiss a heritage piece as ‘this old thing.’”

LVMH: In the lap of Luxury (Telegraph)
“If you have ever wondered how big the Moët & Chandon cellars are, what the inside of the Christian Dior haute couture house looks like or how long it takes to make a bespoke Chaumet tiara, then you are in luck. Next weekend the luxury group LVMH – whose portfolio also includes Louis Vuitton, Givenchy Couture, Dom Pérignon and Glenmorangie – is opening the doors of some of its private inner sanctums.”