The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
LONDON, United Kingdom — The Savigny Luxury index ("SLI") lost ground again this month, dropping almost 3 percent, whilst the MSCI World Index ("MSCI") gained nearly 1 percent. The aftermath of the terrorist attacks in Paris and Brussels weighed heavily on the sector's first quarter results as tourist flows to Europe dropped.
Big news
Results announcements have been more glum than glam this month. LVMH set the tone with flat growth in its fashion and leather goods division, driven by a slump in tourist flows to Paris post terror attacks, compounded by weakness in Asia ex-Japan. This was echoed by Prada, Burberry and privately-owned Versace, who also confirmed that 2016 was proving to be a challenge. Luxottica highlighted additional challenges in the USA, where tourist spend is still low. To add insult to injury, retail tax-refund services company Global Blue announced that spending by Chinese tourists fell 24 percent in March, leading to the worst ever monthly result for the luxury goods industry's tourist sales.
There were some pockets of good news in leather goods. Hermès continued to impress at the top end. At the more affordable end, Coach seemed to be turning around and finally clawing back some market share, whilst privately-owned MCM, proving that logos still have a space in the market, disclosed 15 percent sales growth in 2015 and forecasted 20 percent growth for the current calendar year.
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The game of musical chairs in creative direction continued this month with Hedi Slimane leaving Saint Laurent to be replaced by Anthony Vaccarello, who comes from Versace. The fashion calendar's shake-up also continued with Gucci announcing that it would merge its menswear and womenswear shows in an effort to streamline its show efforts.
Corporate activity ground to a halt in April although at the time of print, Farfetch announced a further fundraise of $110 million purportedly at a $1.5 billion valuation. The funds will be used to expand the company’s technology platform and increase its presence in Asia.
Going up
Going down
As the French luxury group attempts to get back on track, investors, former insiders and industry observers say the group needs a far more drastic overhaul than it has planned, reports Bloomberg.
After growing the brand’s annual sales to nearly €2.5 billion, the star designer has been locked in a thorny contract negotiation with owner LVMH that could lead to his exit, sources say. BoF breaks down what Slimane brought to Celine and what his departure could mean.
Balenciaga’s deputy CEO Laura du Rusquec will replace Andrea Baldo as the Danish brand aims to elevate its image.
This week, more luxury brands will report first-quarter results, offering clues as to how broad and how deep the downturn is going to get.