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.
Gucci seemed to spare no expense when it stopped traffic on Hollywood Boulevard this week for its first in-person show since the pandemic began.
Like other Kering brands, Gucci broke free from the traditional fashion calendar in the spring of 2020, and creative director Alessandro Michele has since experimented with showing his collections via everything from an online film festival to his version of a pop-music video.
But while smaller stablemates Saint Laurent and Balenciaga returned to fashion week this September, heavyweight Gucci has thus far stuck to its guns, opting to launch a new online concept store and focus on its Los Angeles extravaganza in lieu of staging a Milan Fashion Week show this season.
If the brand’s primary goal in mounting off-schedule presentations was owning the news cycle by showing outside noisy fashion weeks packed with competitors, then its Los Angeles “Love Parade” seems to have been a success.
There was certainly no shortage of conversation-starting celebrities among the 500 guests that attended the show and in the subsequent media coverage. Gwyneth Paltrow arrived in Michele’s recreation of the red velvet Tom Ford-era Gucci suit she famously wore to the 1996 VMAs, while Macaulay Culkin made a rare appearance as a runway model in a Hawaiian-style shirt and bomber jacket.
Early data from Tribe Dynamics showed Gucci’s earned media value increased five-fold on the day of its Los Angeles show, while on the day of its last pre-pandemic show in February 2019, it only grew three-fold. (Gucci is also sponsoring the tenth annual LACMA Art + Film Gala on Saturday, meaning its Los Angeles media moment isn’t over yet.)
The decision to show in Hollywood specifically may also have been driven by the upcoming premiere of Ridley Scott’s “House of Gucci” film, starring Lady Gaga. (Gucci opened its archives to the production and allowed Scott to shoot at one of its stores, though the brand has no creative or financial role in the film.) Whether or not the movie, which centres around the 1995 murder of Maurizio Gucci, leaves audiences with a positive view of the brand, it will no doubt boost Gucci’s visibility in mainstream culture. The brand’s move to reassert its links to cinema with a Hollywood show gives present-day Gucci a more prominent place in the conversation around the film.
The off-schedule show strategy has also helped Gucci optimise some of its behind-the-scenes operations, allowing the brand to cut down on the time between when a collection is shown and when it hits stores, while also extending how long a collection has on the shop floor before the next show.
Continuing with the approach as the world re-emerges from the pandemic has come at considerable expense, however. Even though megabrands like Gucci have the heft to attract attention whenever they hit the runway, there is no doubt the cost of assembling key attendees was much higher than it would have been for a traditional Milan Fashion Week show.
The elaborate production comes at a critical juncture for Gucci. Almost seven years after Michele and chief executive Marco Bizzarri executed one of the most successful turnarounds in the history of the modern luxury business, Gucci’s growth has slowed.
The label has rebounded from the pandemic less quickly than rivals, ceding its position as luxury’s fastest-growing megabrand to Dior and most innovative luxury label to Balenciaga. And it’s unclear whether a spectacle of any scale will reverse that decline without new creative content.
This week, Michele and his team presented more than 100 new looks, but there was little evidence of new creative evolution. Can Gucci find a way to deliver its novel productions but fill them with fresh creative content? This combination could drive the kind of growth investors are looking for.
THE NEWS IN BRIEF
FASHION, BUSINESS AND THE ECONOMY
Chanel and Dior entice Gulf clients to shop locally. In a bid to excite locals who were restrained from shopping abroad during the pandemic, luxury brands made a push this week in the Middle East. Chanel re-showed its cruise collection in Dubai, Giorgio Armani showed at the foot of the Burj Khalifa and Dior opened its first exhibition in Qatar, “Christian Dior: Designer of Dreams.”
Chanel hikes handbag prices in run-up to Christmas. The move comes at a time when consumer demand is strong and stock is low ahead of the holiday shopping season. The price of Chanel’s Small Classic handbag has gone up by 16 percent to €7,300 ($8,429) since the end of September. The hike, first reported by French news channel BFM TV, was confirmed by Reuters using the Internet Archive, a repository of past web pages.
Lockdowns hit Harrods’ bottom line. Sales and profit at the famed London department store plummeted in 2020 as a result of strict lockdown measures that forced its Knightsbridge location to close for much of the year, according to business accounts filed with the UK’s Companies House.
Amina Muaddi among winners at Fashion Trust Arabia 2021 Prize. Winners included Zaid Affas for ready-to-wear design, Benchellal for eveningwear design, Port Tanger for accessories design, Alia Bin Omair for jewellery design and El Tayeb Nation, who won the Franca Sozzani Debut Talent award. Amina Muaddi was also the first recipient of the new Entrepreneur of the Year award, celebrating young Arab creative entrepreneurs making an impact globally.
COP26 takes place in Glasgow. World leaders and policymakers descended on the Scottish city to kick off the 26th edition of the Conference of Parties (COP), a two-week convention of talks and negotiations on critical climate targets. Many countries have upped their climate ambitions, pledging to phase out coal in the coming decades, and stop deforestation by 2030. The UN Fashion Charter will be discussed at the convention on Nov. 8.
Capri holdings waves off cost fears with profit forecast raise. The Michael Kors owner forecast fiscal 2022 earnings per share of about $5.30, compared with a prior forecast of $4.50. Analysts on average expect annual profit per share of about $4.57, according to data from Refinitiv.
Sneaker brand Allbirds tops IPO goal to raise $303 million. The San Francisco-based sneakers start-up priced shares Tuesday at $15, above its target range, which then surged over 90 percent to end the day at a price of $28.89, for a market capitalisation of more than $4 billion.
Ralph Lauren expands market share in its latest quarter. The apparel company’s strong sales and price increases in the last quarter did little to assuage investor concerns that it is recovering too slowly from Covid’s drag — as shares fell 6.7 percent in New York trading on Nov. 2. Second-quarter revenues increased 26 percent to $1.5 billion, beating estimates.
Matchesfashion suffers $50 million loss over pandemic period. The luxury fashion retailer was hit hard by the adverse impacts of the pandemic, while Brexit added “additional cost and complexity,” according to business accounts filed with the UK’s Companies House. Matchesfashion’s performance stands in contrast to that of rival e-commerce players like Farfetch and MyTheresa, which saw revenues surge during lockdown.
Nike files for ‘virtual goods’ trademarks, increases Vietnam investments and forms new partnership with Dick’s Sporting Goods. The sportswear giant filed four requests for digital items on an intent-to-use basis, and made plans to increase its reliance on its Vietnamese subcontractors, who restarted production following Covid-19 slowdowns. Additionally, Nike deepened its relationship with Dick’s, its leading retail partner, amid a culling.
Athletic wear demand drives a forecast rise for Under Armour, shares jump. The athletic apparel maker, whose revenue increased 8 percent to $1.55 billion in the third quarter ended Sept. 30, expects 2021 revenue to increase about 25 percent. Analysts’ average estimate is a 22.7 percent rise.
Zalando’s profit falls as in-store sales rebound. The German online fashion retailer saw third-quarter adjusted operating profit fall to €9.8 million ($11.35 million) from €118 million a year ago, while sales rose 23 percent to €2.3 billion, slightly ahead of analysts’ average estimate of €2.24 billion. Meanwhile, British retailer Next beat guidance with a 17 percent rise in third-quarter full-price sales compared to 2019.
Report: 88 percent of China’s luxury growth driven by new consumers. China’s luxury fashion market in 2021 is being propelled by a cohort of 1.5 million consumers who each spend more than 40,000 yuan ($6,255) per year on fashion-related luxury products, according to a new research report from consulting firm Oliver Wyman.
THE BUSINESS OF BEAUTY
Estée Lauder cuts annual sales forecast. The Clinique cosmetics maker now expects net sales to rise between 12 and 15 percent in fiscal 2022, down from its prior estimate of a 13 to 16 percent increase. The move signals a bigger hit to demand for its products as the Delta variant spurs fresh lockdowns in key markets. Net sales rose $4.39 billion in the first quarter, above analyst estimates of $4.25 billion, according to Refinitiv.
Boy Smells opens its first pop-up as it eyes category expansion. The gender-neutral candle and fragrance brand has its sights set on permanent stores, as well as product expansion and international growth.
Glossier names new chief financial officer and chief commercial officer. Seun Sodipo, who was previously the head of product finance and strategy at Stripe, will take over as chief financial officer next spring, Glossier said Tuesday. Kyle Leahy will join as chief commercial officer from Cole Haan, and Lululemon’s Kristy Maynes was named senior vice president of retail.
Vestiaire Collective shakes up its leadership team. The secondhand fashion company named Klemen Drole — who previously managed data, internal systems and security teams at e-commerce group Lazada — chief technology officer, product and data officer; digital marketing veteran Arnaud Collin chief revenue officer; and Bernard Osta, who worked at Lazard and Goldman Sachs, chief strategy officer.
Hugo Boss reorganises its senior management team. In a bid to revamp the German brand, Daniel Grieder, who took over as chief executive in June, named Swarovski’s Judith Sun managing director for Greater China; former Ralph Lauren executive Luigi Boiocchi lead for a newly created emerging markets and Russia unit; and Christopher Koeber head of shoes and accessories operations after his arrival from Tommy Hilfiger last month.
MEDIA AND TECHNOLOGY
Fifteen Percent Pledge launches database of brands backed by Google. The online index, designed to connect Black entrepreneurs with retailers, includes more than 1,200 Black-owned businesses, the organisation said Wednesday. Google signed on to back it for two years and will offer “digital training and workshop events” to the founders and provide marketing support.
Tencent to acquire stake in Japanese media firm Kadokawa. The Chinese tech giant, which operates super app WeChat, will take on a 6.86 percent stake in media conglomerate Kadokawa for $264 million in a deal that will take place between Nov. 15 and 26, Kr Asia reports.
From splurge to ‘common prosperity’: Alibaba tones down Singles Day. After expanding what it calls the world’s biggest online shopping festival from a one-day Nov. 11 event to an 11-day extravaganza with celebrity performances and $74 billion in orders last year, the Chinese e-commerce giant said this year it will encourage “eco-friendly consumption” and “supporting vulnerable populations” amid new regulatory intensity.
Compiled by Joan Kennedy.