Meadham Kirchhoff Spring/Summer 2012 | Source: I want you to know

Out of fashion: Designers finding new ways to sell their style (Independent)
“As the autumn 2012 collections are unveiled, more and more designers are questioning the format; seeking something new in an age where digital culture means every image is beamed straight to an audience at home and cloistered, exclusive runways are no longer the most practical way of promoting their labels.”

New York Fashion Week Parades 328 Shows (Bloomberg)
“There was a time when Ruth Finley could easily avoid conflicts while putting together the schedule for New York Fashion Week. This month, the publisher of the pink-paper Fashion Calendar, the trade’s must-read, had to fit as many as eight different runway shows and presentations into one time slot.”

Hugo Boss says good start to 2012 after record 2011 (Reuters)
“German fashion house Hugo Boss said 2012 had got off to a good start as it reported better than expected sales and earnings for 2011, thanks to wealthy Asian buyers snapping up luxury European brands.”

The beauty business (Economist)
“Careers in modelling are typically short-lived, badly paid and less glamorous than pretty young dreamers imagine. Yet the business is changing. For one thing, educated models are in. This may sound improbable. In the film ‘Zoolander’, male models are portrayed as so dumb that they play-fight with petrol and then start smoking. But such stereotypes are so last year.”

Michael Kors: Designer for the Jet Set (WSJ)
“The Michael Kors woman is lightly tanned, toned, polished and pulled together at all times. She loves fur, figure-hugging fabrics and expensive shoes. She may or may not travel by private jet, but she certainly looks as though she does… It could be said that if Oscar de la Renta is the Park Avenue Princess’s couturier of choice, then Kors is their regular tailor. “

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.

Michael Kors | Source: Wall Street Journal

Kors IPO sets US fashion record (FT)
“Michael Kors, an upmarket fashion and accessories brand, has launched the biggest-ever public offering in US fashion, selling more shares than expected in a deal that will value the company at nearly $4bn… The deal was heavily oversubscribed and priced at $20 a share, above the projected range of $17 to $19. Investors in the company sold 47.2m shares, more than the 41m initially offered and raising $944m. The sale valued the company at $3.8bn.”

Hermès family finalises holding to prevent takeover (Reuters)
“The family owners of Hermès said on Wednesday that they had finalised the creation of a holding company with 50.2 percent of the share capital to protect the luxury house from hostile takeover. The creation of the holding, dubbed H51, has been in the works since last autumn when fashion giant LVMH revealed that it had secretly built up a 17 percent stake in Hermès.”

For Fashion Start-Ups, a Bridge to Investors (NY Times)
“Fashion is fickle, making it harder for start-ups to raise capital. But FashInvest, created by David J. Freschman and Karen Griffith Gryga, venture capitalists, is a platform that acts as a kind of matchmaker between seedling fashion companies and investors.”

5 Top Retail Success Stories for 2011 (Forbes)
“Sustainable, savvy, and stylish could best describe the business moves made by certain retailers now winding down the year in stellar fashion.”

Insiders | Susannah Frankel (AnOther)
“Ever since documenting the seminal Fashion-able? shoot by Nick Knight and her close friend, the late Alexander ‘Lee’ McQueen for Dazed’s 1998 issue; Susannah Frankel has forged an ongoing collaboration with Dazed and Confused which led to being appointed as Fashion Features Director of AnOther when it launched in 2000.”

Hermès Store | Source: GQ

Hermès and the secret of luxe appeal (GQ)
“Hermès is a phenomenon: probably the most successful, perhaps the most creative, certainly the most respected and one of the most profitable luxury-goods companies of all time. After a brief blip from 2009-10, the tur­bulent economic times seem to have, if any­thing, accelerated its success.

Putting a Price on Michael Kors (NY Times)
“The fashion designer Michael Kors is seeking a luxury price tag on his stock. His company’s initial public offering, expected this week, would value it at up to $3.6 billion. The metrics are in line with Prada, which listed earlier this year. But Michael Kors Holdings may struggle to sustain the growth needed to stay in style with investors.”

“Tweeting Without Fear (WSJ)
“By now, even the stodgiest companies have found their way onto Twitter. They have discovered it isn’t just another marketing channel with a funny name, it’s more like a conversation they need to join or risk losing influence over how consumers view them or their brands… But there’s a flip side… Ill-considered tweets or hacked Twitter accounts have caused plenty of embarrassment.”

What the Internship Bust Means (Elle UK)
“Her Majesty’s Revenue & Customs has warned London Fashion Week designers that failure to pay interns the national minimum wage could lead to prosecution… Interns are the engines that drive the fashion industry. The framework is so prevalent that most designers, public relations executives, editors and stylists in staff jobs today completed internships at the beginnings of their careers.”

Q&A With Rupert Sanderson (WWD)
“Rupert Sanderson never planned to be a footwear designer. It was only after an ill-fated career in advertising that he decided to pursue the career. But 10 years after launching his eponymous line, he is now firmly planted in the shoe industry. Not only has he established a high-end label, but Sanderson has built a vertical business as well.”

Michael Kors | Source: Life

Michael Kors Seeks to Raise $792.3 Million in U.S. IPO (Bloomberg)
“Michael Kors Holdings Ltd., the luxury-clothing company, is seeking to raise as much as $792.3 million in a U.S. initial public offering as the company’s founder and the biggest investor trim their stakes… Michael Kors, the designer who founded the company in 1981, is planning to cut his stake as retailers of luxury goods outperform mid-priced department stores and discounters this year.”

Gucci sales not slowing yet, has plan B ready (Reuters)
“Luxury brand Gucci has not seen any impact on its business from global economic woes but it would be prepared to react quickly and cut costs if sales slowed, its chief executive said in a newspaper interview. Patrizio di Marco told Le Figaro that Gucci, part of French luxury and retail group PPR, had a ‘Plan B’ that could see it delaying store improvement work while sticking to its store opening programme.”

U.S. retailers tailor fashions to Asian tastes (LA Times)
“As the U.S. market continues to sputter and China’s continues to boom, U.S. retailers are updating business plans to include the world’s second-largest economy as well as the rest of growing Asia. Just as Louis Vuitton, Gucci and Apple have erected temples of capitalism in cities such as Shanghai and Beijing, Western apparel makers are infusing their clothing lines with Asian sensibilities in look, feel and size.”

Future Classic (WSJ)
“At the house of Roger Vivier, the buckle reigns supreme… The buckle, which has adorned Vivier shoes and handbags for more than four decades, is a signature that you recognize without realizing that you have… But Bruno Frisoni, the dashing, bespectacled and asparagus-slim Frenchman who is artistic director of the label, has quietly been masterminding another house signature: the Prismick.”

A glint in his tie (FT)
“‘Clothes maketh the man,’ goes the cliché: but what exactly do they maketh of him? What, for example, to make of the landslide of lads in spangly sweaters at the autumn/winter Prada show?… For many men the latter might seem the most likely answer, except for the fact that those metallic sweaters are currently hitting shop floors and selling out.”

Michael Kors by Mikael Jansson | Source: Interview

Michael Kors By Lauren Hutton (Interview)
“It’s hard to pinpoint when Michael Kors first became a fashion designer. It might have been the moment when Dawn Mello, then-fashion director at Bergdorf Goodman, stopped by Lothar’s, the boutique on 57th Street where Kors was working as salesman/window dresser/in-house designer after dropping out of the FIT, and told him that if he ever went out on his own, she’d love to take a look at his collection.”

Valentino Boost (Vogue UK)
“Valentino has reported a revenue boost of 24 per cent in the past six months, helping it to return to the black. The Italian label posted first half net profits of €2.6 million euros (£2.28 million), compared with a loss of €7.4 million (£6.50 million) during the same period the year before.”

J.Crew settles investor lawsuits for $16 million (Reuters)
“Investors agreed to a $16 million settlement of lawsuits stemming from the buyout of clothing retailer J.Crew Group Inc by two private equity groups, according to an investor attorney. The settlement is based on an earlier $10 million agreement that collapsed in January, according to Stuart Grant of Grant & Eisenhofer PA, which represents shareholders.

Fashion’s Great Confusion (WSJ)
“If looking fashionable is your goal, you can’t go far wrong this season, even if you don’t give a fig for sartorialism. Why? Well, fashion—the designers, manufacturers, marketers and retailers of clothes, and the stylists, editors, commentators and photographers who bring it all to you—don’t seem to have a clue as to what’s going on. There’s a schizophrenic element to this season’s looks and collections.”

Helmut Lang to Put on Its First Fashion Show Since 2005 (The Cut)
“Nicole and Michael Colovos started as creative directors of Helmut Lang in 2006 after Theory bought the label from Prada, but they never put on a fashion show. This spring they’ll do their first one for the label at New York Fashion Week.”

Michael Kors Spring/Summer 2011 | Source: Michael Kors

Michael Kors sells minority stake in deal that values brand at $2.5B (New York Post)
“The New York fashion label — whose black-clad founder and namesake also moonlights as a tough judge on the “Project Runway” TV reality series — has sold a minority stake to a group of investors in a deal that values the brand at a whopping $2.5 billion.”

Surface to Air Comes to New York (IHT)
“In a sense, the business model of Surface to Air was ahead of its time. In the years since, a number of multitasking companies have developed similar approaches and are perhaps better known than the Paris label. Opening Ceremony, for example, operates a showroom in addition to its stores, and its owners were recently named the new creative directors of Kenzo.”

Nordstrom raises profit, sales outlook (Reuters)
“Upscale retailer Nordstrom Inc raised its full-year profit and same-store sales outlook, and reported a higher-than-expected quarterly profit that was helped by more full-price selling… The department store chain said it now expects fiscal 2011 sales at stores open at least one year to rise 4 percent to 6 percent, up from an earlier range of 2 percent to 4 percent.”

Designer Nicholas Kirkwood talks extreme shoes (LA Times)
“After graduation in 2005, he found work with milliner Philip Treacy. It was there that he noticed a void in the market for truly artistic shoes. ‘There were really exciting things going on in ready-to-wear with Alexander McQueen and Hussein Chalayan, and with hats too,’ he said of the London fashion scene at the time. ‘But the shoes were from a different decade.’”

Fabergé: would you shell out for eggs like these? (Telegraph)
“The South African mining entrepreneur Brian Gilbertson purchased it in 2007, with the ambition to build his company into a global jewellery empire. Fabergé was relaunched with great pomp in 2009. Now it is ready to present its first hatching of eggs since the Tsars.”

Anthropologie on London's Regent Street | Source: Styleguide

Retailtainment: the future of shopping? (Independent)
“An extension of previous high-concept… These concept stores provide the kind of entertainment designed to make you – or at least your children – leave the premises grinning from ear-to-ear as you reel from your experiential day out. This is Retailtainment.”

In Nigeria, ‘Lace’ Market Reflects Rising Middle Class (WSJ)
“No longer reserved for the rich, lace today is on the backs of motorcycle-taxi passengers and nightclub goers, part of Africa’s growing middle class… The Nigerian lace industry also opens a window on broader change in Africa as a whole.”

Tommy Hilfiger to Invest in Michael Kors? (The Cut)
“Michael Kors is looking for a half-billion dollars to fund his brand’s global expansion by selling a 25 percent stake in his company… Tommy Hilfiger is reportedly one of the ‘high net worth’ individuals Morgan Stanley recruited, without much difficulty, to invest in the company.”

Italy’s Ferragamo shines in Milan debut (Reuters)
“Shares of Italian luxury shoemaker Salvatore Ferragamo rose in their first day of trading on Wednesday, defying expectations for a muted debut. The Florence-based maker of shoes… trimmed debut gains to be up 6.17 percent at 9.555 euros.”

A Playful Ambition: An Interview Giles Deacon (Jessica Michault)
“For Deacon, who says he would love to someday work on a project with NASA, the most important thing is to always have fun while he is working. Inspired by his travels throughout the world and his love of nature Deacon is a bit of a free spirit.”

Pretty, posh and profitable (FT)
“Even though Jack Wills is a rapidly expanding global business… you could be forgiven for never having come across it before. [The company targets] teens with money… It prides itself on its stealth marketing and its very direct relationship with its consumers.”

Three decades later, Michael Kors’ shows no signs of slowing down (Globe and Mail)
“Optimism is in the spring air, at least as far as the fashion world is concerned. And few manage to encapsulate the current zeitgeist as well as American designer Michael Kors, who’s currently celebrating three successful decades in the business.”

Puma steps into designer sports-gear market (SF Gate)
“PPR is determined to help Puma get a second wind… Rather than focusing on athletic gear targeted at serious sports enthusiasts, the French company envisions a broader universe of consumer goods and apparel that can evoke the sporting lifestyle without all the sweating.”

Anya Hindmarch bags new chief executive (FT)
“Anya Hindmarch, the upmarket British handbag and accessories company that is expanding amid buoyant consumer demand, will on Monday appoint James McArthur, formerly of Gucci and Harrods, as its new chief executive.”

Gathering Photos of Kate Moss (On the Runway)
“Ms. Moss does indeed occupy a unique if not privileged place in the world of model muses… To say that she has endured is not really saying anything about her particular and maybe ultimately elusive quality.”

Jeremy Renner in Esquire's Augmented Reality Fashion Spread | Source: Esquire

Luxury brands focus on digital retail experience (Marketing)
“Brands and high-end retailers, including House of Fraser and Selfridges, are preparing to launch virtual shopping experiences using cutting-edge digital technologies.”

Google wins EU ruling in fake luxury goods case (AP)
“Google Inc. won a key European Union court ruling Tuesday that says it did not violate luxury goods trademarks by allowing counterfeiters to buy brand names as advertising key words that link to their online stores.”

Saks Plans to Cull Weaker Stores (WSJ)
“Luxury-goods retailer Saks said Tuesday it plans to close two Saks Fifth Avenue stores in Portland, Ore., and is considering closing others that aren’t profitable and have leases expiring.”

Indian fashion for the masses (BBC)
“High Fashion has never been in so much demand in India. A growing section of the population is young, rich and not shy of flaunting their wealth and beauty.”

Health Matters: Weight and Wellness in Fashion (Fashionologie)
“Anna Wintour, Michael Kors, and Natalia Vodianova gathered in Boston to participate in a panel discussion entitled ‘Health Matters: Weight and Wellness in the World of Fashion,’ where they addressed current industry efforts to prevent eating disorders.”