Nike, Adidas and Uniqlo Face Off at the US Open

Hello BoF Professionals, welcome to our latest members-only briefing: The Week Ahead. Think of it as your 'cheat sheet' to what everyone will be talking about on Monday.

THE CHEAT SHEET

Tennis Has its Fashion Moment

Roger Federer | Source: Uniqlo

Roger Federer signed a 10-year, $300 million deal with Uniqlo in July
The US Open starts on Aug. 27 in New York
Nike and Adidas dominate sponsorships of men's and women's players

Tennis tournaments increasingly double as fashion shows. Serena Williams will be wearing a Virgil Abloh-designed Nike kit when she takes the court at the US Open this week. On the men's side, Roger Federer will play in a red Uniqlo polo and matching shorts intended for wear both on and off the court, offering some hints as to where his blockbuster deal with the Japanese brand will go. At a press event last week, Federer said he would bring his "very classic, nice style" to Uniqlo, while Uniqlo president of creative John Jay said Federer's reach will ideally extend well beyond tennis and into the mix-and-match high-performance basics the company calls Lifewear. Uniqlo needs a famous face. If anything, it was early to the red-hot athleisure trend, but has struggled to grow brand awareness with Western consumers. Federer, 37, is nearing retirement, but has the potential to be a rare athlete who resonates in the public consciousness long after his playing days are over. Williams may loom larger in the American public's imagination, and she's only just begun to flex her muscles in the fashion industry, introducing her own line in May as well as custom sneakers for Nike and other gear. Adidas is also very much in the mix, outfitting young stars like Alexander Zverev, 21, who some see as Federer's heir.

The Bottom Line:Federer may provide the signal boost Uniqlo needs, though it remains to be seen whether the halo effect will carry over once he's no longer a fixture on the court.

Shopping Malls: Not Dead Yet

Southcenter Shopping Mall in Tukwila, Washington | Source: Shutterstock Southcenter Shopping Mall in Tukwila, Washington | Source: Shutterstock

Westfield Southcenter outside Seattle | Source: Shutterstock

Unibail-Rodamco-Westfield, which owns 102 malls in Europe and the US, reports half-year results Wednesday
US mall vacancy rate hit 8.6% in the second quarter, the highest since 2012
Mall anchors, including Macy's and Nordstrom, reported growing in-store sales

Reports of the mall’s death were greatly exaggerated. Instead, shopping centers’ fates are playing out along the same bifurcated tracks as their retail tenants. Malls anchored by struggling department stores like J.C. Penney and Sears (which said Thursday it would close 46 more stores), are seeing declining foot traffic and rising vacancies, creating a negative feedback loop as it becomes harder to attract investment to modernise. By contrast, high-end shopping centers around the world are getting expensive makeovers centered around luxury retail and “experiences,” ranging from rock climbing to restaurants. Unibail-Rodamco-Westfield operates mainly on the luxury end of the spectrum and has invested in fast-growing airport retail, likely shielding the company from the worst of the mall bust.

The Bottom Line: One key difference between retailers and mall landlords: stores are starting to benefit from online sales; to malls, the rise of e-commerce is only a threat.

J. Crew Waits... and Waits for a Preppy Comeback

J. Crew | Source: Flickr/Mike Mozart

Privately-held J. Crew reports quarterly results Tuesday
Same-store sales have dropped every year since 2014
The company narrowly avoided bankruptcy last year

It’s been a tough few years for J. Crew. Sales are slipping, despite some success with its millennial women-targeting Madewell brand. The chain is introducing a loyalty program and cutting prices to win back customers, raising questions about whether management will sacrifice margins or product quality — or both — to compensate. The insurmountable problem is preppy clothes have been out-of-fashion for years. Other chains, most notably Abercrombie & Fitch, were reinvigorated when they backed away from prep to chase trends. J. Crew’s strategy, however, seems to be to wait out streetwear and ride the inevitable comeback of its signature style (GQ says that time is nigh; to the dismay of some).

The Bottom Line: J. Crew is hoping to disprove the economics adage that the market can remain irrational longer than you can remain solvent.

Retail Health Check: The Sequel

Source: Shutterstock

About a dozen major US retailers report earnings this week
Most retailers have reported strong sales
A few struggling names (J.C. Penney, Gap) continue to slump

A number of mall retailers appear to be on the mend. The winners have followed similar playbooks: update their style, slim down inventories and, perhaps most importantly, wait for weaker competitors to shrink or fold. This week brings some fresh data points, including a resurgent Abercrombie; Tiffany & Co., fresh off announcing it would renovate its New York flagship; and PVH, which has seen strong sales for Calvin Klein and Tommy Hilfiger.

The Bottom Line: Some iconic retailers aren't going to make it, but the survivors are increasingly well-positioned to thrive.

Fashion and beauty earnings calendar

Aug. 28 - Tiffany, J. Crew

Aug. 29 - Unibail-Rodamco-Westfield, PVH, Express, Guess?

Aug. 30 - Ulta, Abercrombie, Lululemon, Burlington Stores

COMMENT OF THE WEEK

Helmut Lang Spring/Summer 2018 | Source: InDigital

"When a brand is bought and then the figurehead leaves is there any real authenticity? With so many amazingly modern cool brands out there I think consumers tend to walk away from brands if there is no creative leader there that they can identify with."

-@lanetabb on layoffs at Helmut Lang.

SUNDAY READING

Professional Exclusives You May Have Missed:

Indie beauty brands fight to stand out.
Helmut Lang rethinks its strategy.
It's always resort season somewhere.
Farfetch registers for what's likely to be the biggest fashion IPO in years.

From Around the Web:

Fast-fashion's buyer beware culture. (Fashionista)
South Korean military an unlikely nexus for the skincare boom. (Wall Street Journal)
Who's rooting for a Marchesa comeback? (Garage)
Rihanna to New York Fashion Week's rescue. (Vanity Fair)
How Gucci won China. (Jing Daily)

Editor's Note: Last week's newsletter misstated that 600 brands will exhibit at Indie Beauty Expo. This is incorrect. The event featured 250 brands.

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.

Was this BoF Professional email forwarded to you? Join BoF Professional to get access to the exclusive insight and analysis that keeps you ahead of the competition. Subscribe to BoF Professional here.