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 — LVMH and Kering are a gift that keeps on giving to investors. Both companies posted yet another set of strong results, this time for the first quarter of 2018. Share prices went up across the board: 90 percent of the Savigny Luxury Index's ("SLI") constituents by market cap posted gains this month and the SLI recorded its biggest monthly increase in over three years.
Big news
Trade war tensions took a breather this month as Xi Jinping promised to cut import tariffs, ease restrictions on foreign investment in China as well as crack down on IP infringements. This is music to the ears of luxury brands, which suffer from punitive import duties as well as endemic counterfeiting. New channels also seem to be opening in the market, with JD.com pushing hard for luxury brands to be featured on its digital platform, thereby extending their reach beyond the main metropolitan centres in China. The e-commerce giant, which recently opened an office in Paris and will soon open one in Milan, launched Topfile last year, a platform which aims to woo luxury buyers with same-day deliveries and premium services, including extra clean and secure warehouses with special air filters.
Net-a-Porter launched The Fine Jewellery and Watch Suite this month, which features an extensive fine jewellery collection from more than 40 brands, including Piaget, Cartier, Tiffany and Buccellati, and select items priced at over €100,000. The luxury e-tailer had woken up to this opportunity in 2017 when, on the first day of selling Cartier on its site, a customer bought a €130,000 watch. The company expects to generate sales of 100 million euros by 2020 from watches and jewellery, which is currently one of the fastest growing categories in luxury.
ADVERTISEMENT
The game of musical chairs moved from the design studio to the boardroom this month. Eraldo Poletto, who left Ferragamo earlier this year, joined Stuart Weitzman as CEO, whilst Ferragamo appointed Gucci executive Micaela Le Divelec as general manager, postponing the selection of a new CEO. Estée Lauder appointed two new board members — Jennifer Hyman (chief executive and co-founder of Rent the Runway) and Jennifer Tejada (chief executive of cloud computing company PagerDuty) — as a clear sign of the importance of digital in the beauty group's mind-set. Finally, the last piece of jigsaw in the overhaul of Burberry's leadership team, Sir John Peace, stepped down as chairman; former Kingfisher boss Gerry Murphy will replace him.
Kering’s move to become a pure-play luxury group was further cemented by shareholder approval of the Puma spin-off, which was shortly followed by the announcement of the group’s intention to sell skatewear label Volcom. Korean fashion and cosmetics group Nanda selected l’Oréal as the preferred bidder for a 70 percent stake in the company (valued at around $375 million). Also in beauty, UK-based Elixir Cosmetics acquired US-based Babe Lash.
The SLI broke records this month with a 12 percent gain, on the back of LVMH and Kering’s first quarter results. This compared to a subdued performance for the MSCI, which fell short of a 3 percent gain and had been affected by the fear of interest rate rises, specifically in the USA.
SLI vs. MSCI
Going up
Going down
What to watch
The stakes in eyewear are getting higher and higher. Thélios, LVMH’s joint venture with Marcolin, could triple its production of glasses over time as its portfolio of brands expands. Whilst LVMH’s brands will have freedom in their licensing choices (as evidenced by Hublot’s recent signing of an eyewear license agreement with Italia Independent), Thélios will nevertheless become a “privileged partner” for LVMH brands. A number of important licenses from within the LVMH stable of brands are due to expire in 2020 and the following two years. According to LVMH managing director Antonio Belloni, this timeframe is consistent with Thélios’ learning curve. Whilst Luxottica has hedged its bets by teaming up with Essilor as well as building a retail presence, other groups (especially Safilo) will have to think hard about their future.
Sector valuation
From analysis of the global fashion and beauty industries to career and personal advice, BoF’s founder and CEO, Imran Amed, will be answering your questions on Sunday, February 18, 2024 during London Fashion Week.
The State of Fashion 2024 breaks down the 10 themes that will define the industry in the year ahead.
Imran Amed reviews the most important fashion stories of the year and shares his predictions on what this means for the industry in 2024.
After three days of inspiring talks, guests closed out BoF’s gathering for big thinkers with a black tie gala followed by an intimate performance from Rita Ora — guest starring Billy Porter.