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

Crocs store Holland | Source: Open Travel

How Crocs Moved from Fashion Trend to $1 Billion Phenom (Forbes)
“If they weren’t exactly running out to buy a pair of those bulbous bright resin (please don’t say rubber) clogs sprinkled with holes, investors sure are clamoring to snap up stock in Crocs Inc (CROX). The company whose fugly footwear has been the foundation of its business just announced it expects its full-year revenue to exceed $1 billion for the first time in its 10-year history. The news made share prices jump 17 percent this morning.”

Tiffany loses lustre amid sluggish sales (FT)
“Shares in Tiffany & Co fell 10.5 per cent to $59.94 as the luxury retailer it cut earnings guidance after reporting anaemic holiday same-store sales growth in the US and a decline in sales at its New York store.”

The Pre-Autumn Leaves Start Changing Color (NY Times)
“Now that the presentations of pre-fall collections are being treated as a major event and not just a warm-up for the fall runway shows, the idea that these are supposed to be more commercially friendly designs seems to have gone out the window, and no one seems quite sure what to make of them.”

Moschino Cheap & Chic moves to London Fashion Week (Telegraph)
“Moschino’s diffusion line Cheap & Chic is to move its catwalk show to London for the autumn/winter 2012 shows. Rumoured to be showing on Saturday February 18 at a mystery location, this will be the collection’s first show outside of its usual slot on the Milan Fashion Week schedule, where the Moschino mainline remains.”

Straight Talk: A New Breed of Fashion Bloggers (NY Times)
“Not every fashion blogger is a 15-year-old girl with an unhealthy obsession with Rei Kawakubo. Some are older. And some are men… Some are old hats who have embraced the digital age to spread their dandy message. But many more are fashion newbies — videographers, publicists and everyday retail hustlers who speak for a new generation of style-conscious men.”

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.

Going up

• Luxottica’s share price is the only one to have risen during November, attributable to recent M&A activity.  The world’s leading eyewear group continues to expand geographically its successful vertical integration model to emerging markets, namely Latin America.

Going down

• Tiffany’s candid statement that trading was starting to be difficult in Europe and on the East Coast in the US caused its share price to tumble, taking US luxury peer Ralph Lauren down with it.

• At nearly 12 percent down, Ferragamo’s share price performance for the month ranks near the bottom of the sector, despite strong third quarter results and sales momentum.  Investors’ concerns seem to centre around the Italian’s group relative lack of scale compared to most of its peers and on Ferragamo’s already large Chinese presence, potentially signalling a lesser upside.

What to watch

• Investors are hanging on to every piece of news in anticipation of the Christmas results. Sector outlook has rarely been so uncertain.

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

Dior Couture by Patrick Demarchelier | Source: Mama's Rolling Stone

Opening the Doors of Dior (NY Times)
“Saint Laurent, Chanel, Dior: the names of the most famous Paris houses sort of dance off the tongue. Their histories defeat the idea that younger generations might be bored with old things. And a stream of books and films helps to assure that they won’t be. “Dior Couture” (Rizzoli), by the photographer Patrick Demarchelier, is far and away the most gorgeous book on the house…What Mr. Demarchelier offers is a personal view of fashion from a great Paris house.”

Prada profit surges 75% in third quarter on Asia sales (BBC News)
“Profits at Italian fashion house Prada soared in the third quarter boosted by increased sales in the Asia-Pacific region. Prada said it made a net profit of 273m euros ($364m; £234m) in the three months to the end of October, a 75% jump from year earlier.”

Tiffany sales growth shows signs of slowing (Reuters)
“Concerns about slowing sales momentum took some of the luster off Tiffany & Co’s stock amid signs that European and U.S. economic distress are weighing on luxury consumers, and shares fell 9 percent. The upscale jeweler, a stock market darling for how fast its international business has grown, reported third-quarter.”

Hall of Fame: Patricia Field (WWD)
“Patricia Field has always done things her way. With a career spanning 45 years and counting, the designer, stylist and boutique owner built her reputation by creating her own blueprint. ‘If you asked me who I looked up to from the beginning of my career, I would say no one,’ Field said. ‘I didn’t see fashion that way. I felt fashion.’”

Rise: Sean McGirr (Dazed Digital)
“It’s no coincidence that Candy Nippon in Tokyo and Immense in Taipei – two of Japan’s most closely watched boutiques – have Sean McGirr’s A/W 2011 collection hanging from the clothes hangers. Titled ‘The Adolescent Years’, it draws from the Oriental kimono silhouette and shares a sensibility with Japanese fashion that gives it an uncanny autonomy.”

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

Screen Shot Style.com/Print | Source: Style.com

Finally, the Web at Hand (NY Times)
“Next week, the first issue of a glossy magazine from the editors of Style.com, with the puzzling name of  Style.com/Print, will hit newsstands… Aside from the novelty factor of its origins, it is a surprisingly effective product, one that reads with a swiftness that is not unlike the experience of clicking through multiple screens at a time. The first 100 pages can be read in five minutes.”

PPR Q3 beats forecasts, sees no slowdown (Reuters)
“French luxury and retail group PPR on Wednesday said it saw no sign of a slowdown as it posted third-quarter sales that comfortably beat expectations, pulled by strong growth at brands Gucci, Bottega Veneta and in big markets such as China. The group’s luxury sales soared 24.6 percent at constant exchange rates in the three months to Sept. 30.”

The Overcoat as Object of Design (NY Times)
“The temperatures across Europe dropped last week from Indian summer to shivering winter, just as MaxMara, coat maker par excellence, celebrated its 60 years in style. The iconic camel cover-ups from the Italian company went on show at the State Historical Museum in Moscow on the last leg of a five-year roving tour… ‘The coat is an icon in fashion — a little bit more than a fashion element — more an object of design,’ Mr. Maramotti said.”

Tiffany enters Louboutin vs YSL stand-off (Independent)
“A legal dispute between fashion labels Christian Louboutin and Yves Saint Laurent took a new turn yesterday when the jeweller, Tiffany, came in on the side of the shoe designer. It filed an amicus curiae to support Louboutin’s case that a colour can be trademarked and its use prohibited.”

Rankin Is Starting A (Fourth) Magazine So He Doesn’t Get Bored (Forbes)
“Next month the British photographer and Dazed & Confused founder will publish The Hunger magazine, the fourth of his print-based efforts out just on the heels of his current collaboration with Damien Hirst and a book due out Nov. 8. It’s a move against a consumer culture in mass media that has created apathy about art.”

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

Ascher London designs | Source: Ascher Studio

Ascher London is relaunched (Telegraph)
“The once-legendary scarf brand Ascher was famous for its collaborations with the 20th century’s most illustrious artists. Now the founder’s grandson is setting out to revive the tradition.”

Galeries Lafayette in Beijing return (FT)
“The group said it expected its first store to open in Beijing in 2013… The announcement comes three years after Galeries Lafayette set up a joint venture agreement with IT Limited, the Hong Kong-based retailer, to open stores in China.”

A Luxury Leader Shies From an Unwelcome Suitor (NY Times)
“In the world of luxury brands, Hermès International has cultivated an image of purity… Lately, however, it has been attracting attention less for its expensive silk scarves… and more for the unwelcome approach of [LVMH]the luxury goods giant.”

Tiffany Raises Earnings Forecast (Bloomberg)
“Tiffany & Co., the world’s second- largest luxury jewelry retailer, raised its full-year earnings forecast after third-quarter profit rose 27 percent, helped by new stores and sales of handbags.”

Swiss Brands Start Turning to Latin America (NY Times)
“The strength and sophistication of the Latin American market for high-end timepieces may come as a surprise to casual observers of the Swiss watch business… the region is now home to a thriving collector community that is attracting Switzerland’s serious attention.”

Dolce and Gabbana Summer 2010 | Source: Dolce and Gabbana

Keeping it Masculine (WSJ)
“Men have more style than ever to choose from. Luxury labels from France’s Hermés to American icon Ralph Lauren are opening stores dedicated to men…  — Gucci, Prada, Dior, Chanel, Burberry — dress men too.”

India Innovates, China Makes, America Buys (WSJ)
“Anyone whose daily commute includes the clogged roads of Mumbai would be temporarily enthralled by the butter-smooth roads and highways of China… it is not hard to marvel at the infrastructure built by the Chinese to boost their economy and support their factories.”

Tiffany reiterates 2010 expansion plans (Bloomberg)
“Fernandez affirmed Tiffany’s plan to open 16 stores in 2010, including six in the Americas, eight in Asia-Pacific and two in Europe. Tiffany now operates 223 stores in 22 countries.”

Department store pushes the envelope (Inside Retailing)
“[Canadian] department store, The Bay (formerly known as Hudson Bay), has pushed the envelope on department store retailing when it comes to its Toronto designer fashion space, The Room.”

Fashion Spawn for Sale (NY Times)
“Styletrek will start officially on Sept. 7, when 50 designers will have clothing and accessories for sale. Candidates must be in business at least three seasons and submit to a review process.”

Jean Schlumberger for Tiffany's | Source: Tiffany & Co.

Shine returns as Tiffany’s sales rise (FT)
“Tiffany, the US jeweller, raised its profit outlook yesterday as strong holiday sales brought some shine back to an industry that cash-constrained consumers shunned during the worst of the recession.”

Tony Blair could help LVMH’s forays into new markets (Reuters)
“Tony Blair’s expected appointment as adviser to LVMH… could help it penetrate tough yet promising markets such as India… The former British Prime Minister, a friend of LVMH boss Bernard Arnault, is now free to pursue other commitments having been passed over for the EU presidency in November.”

Italy fashion to exit crisis first, body says (Reuters)
“Italy’s fashion sector will emerge from the financial crisis before others but the government needs to help companies be more competitive, the head of an industry body said on Tuesday.”

Have the Wealthy Changed their Values? (WSJ)
“A new survey from PNC aims to show how the wealthy have changed their values because of the recession. According to the survey, of more than 1,000 people with net worths of at least $500,000 in investible assets, 88 percent agreed with the statement that it is ‘more important than ever to live within my means.’”

Fashion on the web: Le click, c’est chic (Independent)
“Ten years ago, you had to head to the city to buy designer threads. Then a clutch of new websites changed the way we shop for ever.”