Forget flip-flops or 3/4 length cargo shorts, the worst thing to be seen wearing this summer is the milkshake. Engulfing the political canvasing of the European elections recently, everybody from Tommy Robinson to Nigel Farage has been getting the cold bukkake treatment. The traditional egg and flour method of showing political figures what we think has been getting the youthful makeover of a thick and icy McDonald’s milkshake. (Or Five Guys subject to budgets and neighbourhoods).
Is it milkshake weather yet? Expect to see a spike in sales. Showing the generational divide of this election, the milkshake treatment is a sloppy anti-establishment reminder of an expression that goes back centuries. Here’s how to style it in:
1. Dress to match. Go for the Colonel Sanders or Tom Wolfe option of milky white tailoring. Let’s just hope you don’t get covered in a chocolate shake.
From Right - Colonel Saunders looking finger licking good, Tom Wolfe in his trademark white tailoring
2. Pretend it’s vintage Maison Margiela and the paint effect is all part of the look. Distressingly distressed.
3. What came first? The egg or the milkshake. Prempt a strike and go for a Tough Mudder or a wet Glastonbury chocolate brown covering.
Right - "Corbyn, Corbyn, Corbyn" Glastonbury the new political opportunity?
4. Get on the shiny PVC/rubber trend. A quick hose down and you’re ready to go.
5. Who cares? Own it. Wipe your face and move on. You’re a political soldier.
6. Layers. Be a human post-it. Pull it off and start again.
7. Opt for a clear mac. Business underneath a see-through mac.
8. Go full on Leigh Bowery. Get that drippy look and make it look like performance art.
From Right - Boy George as Leigh Bowery, Leigh Bowery
If all else fails, make a swift Brexit. Soz.
Some of Britain’s best known, mid-sized fashion brands are up for sale. French Connection, Pretty Green and Anya Hindmarch are all rumoured to be looking for new owners. Put LK Bennett into the mix, which recently when into administration, closing five stores and making 55 redundancies, and you have a slew of established British brands trying to forge the next chapter of their existence.
While Anya Hindmarch is more in the luxury pricing category, the others are all premium high-street; asking consumers to stump up more cash for their products in a mid-market squeezed between fast-fashion and ‘luxury’ brands. This is an area that has suffered the most over recent years. Hooked on sales and discounts, many of these brands operate an unsustainable retail network, flabby business model and have suffered due to the demise of the traditional department store.
Putting themselves up for sale is timely. If you’re a foreign investor, British companies have never been so cheap, due to the weakness in the pound and Brexit, but there’s also a watch and wait attitude for most of the retail market at the moment, with many companies, particular private equity, being burnt, over the last few years, and only investing in strong, bankable billion dollar brands.
Left - Anya Hindmarch bag with her quirky sticker designs, but does the brand need to make more conservative product?
French Connection has been on the block for a while now. A brand that reached its zenith in the late 90s, thanks to their provocative and attention seeking FCUK slogan, it had lost its way. It recently went into the black, thanks to an ambitious store closure programme. Recently reported, French Connection made a slim profit of £100,000 for the year to January 31, 2018, compared with a £2.1million loss the year before. Revenues edged up 0.2% to £135.3million but its same-store sales fell 6.8%. French Connection said it will continue to close stores, having shut down more than half of its sites in the past five years. Mike Ashley’s Sports Direct has a 26% stake in the business with founder Stephen Marks, who is also chairman and chief executive, owning almost 40% of it and they say talks were “ongoing” with several potential buyers.
French Connection has done the correct and drastic decision to close the majority of it stores and department store concessions. Truly international, it is not wholly reliant on the UK market, but needs to remind people of their USP and make people feel good about paying more. It needs to decide what the sustainable size of the business is.
Liam Gallagher’s menswear brand Pretty Green, which is named after a song by The Jam, has called in Moorfields Advisory to help look at options for the company. Founded in 2009, Pretty Green channels British Mod culture into branded basics, linking the brand to music heroes and a strong Made-in-England feeling for its more premium ranges. The company said that it was “not immune to the challenges currently facing the UK high street as customers migrate from purchasing in store to online.”
It currently has 14 standalone UK stores and numerous concessions within House of Fraser department stores. The brand lost £500,000 when House of Fraser feel into administration in August 2018. “The growing overall demand for the brand, coupled with a strong online customer base, position the company well to navigate these changes and we are therefore considering all options,” they said with regards to a sale. In the 16 months to January 2018, turnover at Pretty Green rose to £38.2 million and pre-tax losses narrowed to £1.5 million following a £5.6 million loss the year before. Private equity company, Rockpool, invested £11m into Pretty Green in 2017 for a minority stake.
Pretty Green has a very distinctive British look, and, while it has its core Mod audience, it needs to develop and reintroduce itself into the larger men’s market. It has to define what it sells and make men more aware of this. Its small retail network will probably be trimmed further and it’s good they are starting to narrow their losses, but they need to tap into that rich vein of cult British style that Fred Perry and Dr Martens do so well. This cool also translates internationally. Any investor would probably want Liam Gallagher to have a more prominent role at the brand and increase his visibility in it.
Right - Liam Gallagher in Pretty Green
The British luxury goods brand, Anya Hindmarch, has been put up for sale. Mayhoola, the Qatari royal family’s investment fund, which also owns Pal Zileri, Balmain and Valentino, has decided to sell the brand it started buying into in 2012. The fund has grown its stake from 39.9% in 2012 – Mayhoola bought a controlling stake in the company for £27million - to at least 75% by the middle of last year.
Founded in 1987, Anya Hindmarch has become known for her quirky and colourful designs. The brand lost £28.2 million and reported a 10 percent decline in revenue to £37.2 million for the year in 2017, the latest year for publicly available accounts. The selling decision is said to be “mutual”.
Anya Hindmarch has plenty of fun ideas, but, they, as a brand, just need to establish who the customer is. It has a lot of potential, but, unusually for a leather goods company, it needs to focus on more conservative product. Sometimes it’s hard to find a plain, elegant black bag, which means they are missing out on a huge amount of sales. The prices are premium, so the high-fashion, seasonal and quirky fashion product has a limited audience, while more classic and trans-seasonal product would sell well too.
Their £40 stickers were a surprise hit, but, as an example, their candle range has a strange disconnect between customers. I don’t think many of the older women carrying the bags want cartoon eyes and rainbow decorated candles on their coffee tables. It needs to balance the fun with the sophisticated.
This brand would sit well with Burberry - there are rumours they are looking to buy something - or maybe a Mulberry, and drill down into that affordable luxury market more. I think they will have plenty of interest, possibly from the Americans - Tapestry, Capri Holdings - growing their brand portfolios.
If retailers can survive 2019, there is a strong chance they’ll be okay. Investors will want to see that losses are stabilising, or reducing, and there is a clear strategy for the future. Skeleton retail networks, offering enough brand awareness while pushing people online with good product will be the future for these brands. Being less reliant on the department store model and taking your quality product direct to consumers will be the only way to make these brands profitable. You need a point of difference to make people pay more and a feeling they can’t get what you offer anywhere else. The days of chucking huge amounts of money at growing brands is over and private equity will opt for more realistic, tidy returns rather than huge growth.
These brands have that problem of being too big to be nimble and streamlined, while not big or glamourous enough to catch the eye of the big investors to take it somewhere big. Mike Ashley can’t buy everything. Or can he?!
Read more of TheChicGeek's expert comment here
The darling of British online retail, ASOS, today, issued a statement saying it saw “significant deterioration” in trading in the run-up to Christmas. Blaming the weather and a high level of discounting and promotional activity across the market, it said it lead it to increase its own special offers, which typically eat into profit margins.
November 2018 is set to go down as one of the worst retail months in recent memory. Mike Ashley, the Sports Direct boss, was recently quoted as saying, “November was the worst on record, unbelievably bad”. He said “No one could have budgeted for that. Retailers just cannot take that kind of November. It will literally smash them to pieces.”
Left - ASOS' HQ - Black cats for Black Friday?
While ASOS only saw a slowing in sales growth - it now expects sales growth of 15% for the year to August 2019, down from 20% to 25% - it also shows the chill running through the entire retail sector.
A perfect storm of lower footfall, Black Friday discounts, Brexit shaking consumer confidence and a highly competitive market in general, is making things very dicey for the retail sector. Retailer, Stuart Rose, formerly of Marks & Spencer, told ITV News, “I sense this is a very slow Christmas … You have the uncertainty of Brexit, people are uncertain about what the future is going to look like next year. [Consumers] have their hands in their pockets. Car sales? Down. House sales? Down. Big ticket sales? Down. I suspect there will be some uncomfortable trading statements in the early part of January.”
Even the juggernaut of Primark is reporting a slowdown. It has warned of “challenging” trading conditions. John Bason, the finance director of Primark’s parent Associated British Foods (ABF), said “I think it is a call on quite mild weather during November and I think it’s affected footfall.” This is important to Primark because it doesn’t sell online. Bason told Reuters that while sales at stores open more than one year were “just positive” in September and October, they had turned negative in November.
On a brighter note, overall consumer spending rose 3.3% year on year in November, but it was the lowest growth since March, despite the boost from Black Friday, according to Barclaycard. Clothing spending contracted by 2.9%, the biggest fall since October 2017, while spending on household appliances was down by 14%.
One thing interesting to note is ASOS mentioning its slowdown in Europe. It said trading conditions across Germany and France, which account for 60% of the retailer’s EU sales, have become significantly more challenging, which means this is a wider problem than Brexit. ASOS said “The current backdrop of economic uncertainty across many of our major markets together with a weakening in consumer confidence has led to the weakest growth in online clothing sales in recent years. We have recalibrated our expectations for the current year accordingly.”
So, let’s look at this weather. According to the Met Office, “November began with relatively cold quiet weather, but from the 3rd to 14th it was mild with a predominance of southerly winds. It was cold with easterly winds from the 19th to 26th, with frequent rain or showers for the east and south-west. It turned very mild, wet and windy in all parts of the country from the 27th onwards. The provisional UK mean temperature was 7.3 °C.” This up and down weather isn’t particularly unusual for November and we had two decent cold spells to help shift more seasonal, colder weather stock. The weather is always an easy excuse for retailers reporting bad figures.
Right - Primark is opening its largest store in the world in Birmingham this month
Black Friday, though, is wiping out profit margins for retailers with consumers expecting huge discounts and it’s stopping people from hitting the high-street. UK retail endured the biggest drop in footfall for the month of November since 2009. It also marked the 12th consecutive month of footfall decline. Discounts were made for online; no pushing and shoving to then leave disappointed. If they’ve got it, it’s in the basket, and you probably don’t buy anything else while you’re there unlike if you’d gone to the high-street or a shopping centre.
Laura Ashley just announced it was closing a further 40 stores and, last week, Bonmarché issued a profit warning and Blue Inc fell into administration.
Many retailers will be praying for a good Christmas, but to make up these sales in the three weeks to Christmas will be tough, especially with so many factors working against them. Primark and ASOS are strong retailers and will weather this storm, but many will not. To continue the weather metaphors, this could be the hardest frost to hit the retail sector in many years and anybody small or not hardy enough will be dead before the winter is out.
Remainers cover your ears. One of the world’s strongest fashion brands is moving its headquarters to London despite Brexit. Yes, Brexit hasn’t put them off. Chanel has decided to close its global headquarters in New York and move it to London.
Until now, Chanel did not have a single holding company for its operations and functions were located in a number of cities. In a statement from the French company, they said, “We wanted to simplify the structure of the business and London is the appropriate place to do that for an international company. London is the most central location to our markets, uses the English language and has strong corporate governance standards with its regulatory and legal requirements.”
Left - Even London's lampposts are Chanel!
‘Chanel Limited’ became the holding company of most Chanel entities in the summer of 2017 and this is why the majority of the global functions are now located in London.
“Brexit's economic and geopolitical impacts remains a challenge for the London economy. London is still dealing with a hangover from Brexit.” says Brandon Rael, Operations Strategy & Innovations Leader & Retail Digital Strategist. “We should expect that London will experience an upswing when the economy stabilises. Moving the Chanel HQ to London is very much a long-term strategy.” he says.
Chanel could have chosen Paris, but instead chose London, and this goes against the anti-Brexit rhetoric of companies leaving in their droves. In July, Chanel revealed its financials for the first time in its 108 history. It generated nearly $10 billion in global sales in 2017, making it one of the world’s biggest luxury fashion brands. This new openness is Chanel positioning itself and facing up to the dominance of the likes of Kering and LVMH. This is for the next, digital chapter in Chanel’s history.
Brexit is so close, now, it is time to start looking beyond it and, Chanel’s decision would have been a long term decision from this globally revered company. While one company moving its headquarters to London doesn’t prove anything. In the same vein, one company moving out, doesn’t either. The major reasons companies move or stay in London won’t change post Brexit. They move to London because of geography, language, law and talent pool. This is about London competing with New York or Hong Kong and it is the only truly world city within Europe.
“London remains the world‘s most promising city for luxury retail growth, despite troubles faced by the Brexit vote,” says Rael. “A new report conducted by CBRE and Walpole has found that compared to other major luxury destinations across the globe, London still holds the greatest long-term potential,” he says.
The newly christened Capri Holdings - formerly Michael Kors - has its principal executive office in London and Condé Nast International recently choose London to cope with the new demands of its digital future. Everything catwalk related: photography, video, social media and features will be lead by Vogue International, an editorial hub established last year to lead content for the 25 editions of the magazine.
In an interview in the New York Times with Wolfgang Blau, Chief Digital Officer of Condé Nast International, he said two-hundred editorial and engineering staff members had been hired, and next year, he wants to have a Vogue presence at about 900 runway shows all feeding back to London. This is Condé Nast cutting costs and becoming more efficient while focussing its global fashion content in London. This will only get bigger. Its travel magazine, Condé Nast Traveler has moved onto a new single platform, and it too would be overseen not from its birthplace of New York, but from London.
Right - London, not New York, is the global centre for all digital content
We were told that "Brexit would make us poorer”, but since the vote, and with a background of caution and underinvestment, Britain has a joint record high employment rate of 75.6% with 32.39 million people now in work according to the latest official statistics. (June 2018). There were 488,000 unemployed people aged from 16 to 24 for May to July 2018, the lowest figure since records began for youth unemployment in 1992. Overall, unemployment fell by another 55,000 between May and July to 1.36 million. Wages saw faster than expected growth in the three months to July. Excluding bonuses, wages grew by 2.9%, according to figures from the Office for National Statistics (ONS), well above the inflation rate.
Business is doing well. UK Trade benefitted from a goods export boom in July. Official figures showed the deficit in goods dropped to £10 billion in July from £10.7 billion the previous month. Including service, the overall trade gap fell to just £111 million, one of the best monthly results in the past 20 years. In the three months to July overall goods exports grew by £4.3 billion while imports rose by £3.7 billion. This came largely from trading with countries outside the EU.
“It looks like Brexit is going to be a good thing for luxury fashion as people in the US and China take advantage on preferential tariffs coming from the UK.” says Fleur Hicks, Managing Director of onefourzero, a data analytics and digital research agency.
Eurotunnel recorded its best ever August for freight traffic and the number of passengers passing through Heathrow’s terminals jumped to 7.5 million last month, boosted by new services to China. Europe’s biggest airport, said August customer numbers were up 2.6% from a year earlier and cargo volumes were up 1.2%. Asia saw the biggest increase in passenger numbers, up 6.3%, with new services from Hainan Airlines, Tianjin Airlines and Beijing Capital. Gatwick also saw a 0.4% rise in passenger numbers to 4.9 million and its cargo traffic soared a whopping 22.3%.
Irina Bragin, from Made of Carpet, who specialises is making luxury carpet bags, says “I think I have one advantage of Brexit in mind. Today selling to the EU as retailer (to the end buyer) we pay VAT, same as we sell in UK. After Brexit, it will be the same as selling to US, or Canada, or Australia - no VAT to pay.”
I know it’s fashionable not to be positive about Brexit, but, it’s 6 months away and it’s time to turn the negativity into optimism. Global businesses are looking past Brexit, for the longer term, and what makes London great to do business in hasn’t really changed. Brexit is something new and unknown, but, in Britain’s true entrepreneurial spirit, we can do this!
To call it a recession is maybe a little extreme, but let’s call it a contraction. Menswear is struggling. Some are mouthing the word #brexit but this was coming way before that and affecting international markets too, most notably America.
Like everything that goes in cycles, you have your ups and you have your downs. We’re definitely in a down cycle as brands merge their men’s and women’s and reduce the amount of labels within their brands.
Left - Inside menswear is screaming
Many are private companies so they don’t disclose profits, but when you have menswear giants like Armani and Ralph Lauren losing labels - Collezioni and Armani Jeans in the case of Armani and store closures - in the case of Ralph Lauren - then things are clearly unsustainable.
Why is this happening? The first big answer is a saturated market. Do we need much more ‘stuff’? When Ikea’s head of sustainability, Steve Howard, said we’d reached “peak stuff”, he hit the nail on the head. We’ve seen expansion online and offline and our wardrobes are bursting with clothes at every price point.
Designer fashion isn’t coming up with many new ideas and this has lead to the high-street bringing the new ideas and offering improved quality that many men are happy with. I think companies like ASOS are doing well because people are trading down to cheaper and more fun fashion and don't really wear it long enough to care about the quality.
Brands like Topman have got more and more expensive and are not reactive enough to trends and the latest gimmicks and fashions. They’ve believed in their own ‘cool’ which is dangerous for any brand. Arcadia, Topman’s parent company, has seen many high profile departures lately. Craig McGregor left his role as retail director at Topshop/Topman, after eight years, and Topshop/Topman global commercial director Matt Brewster is leaving the company. Wesley Taylor left his role as managing director of Burton and Yasmin Yusuf left as creative director of Miss Selfridge, both after more than 10 years at the business. Which all suggests the epic growth Arcadia has experienced over the last few decades has now ground to a halt. They are no longer the darling of the British high-street.
Another reason for the men’s downturn is competition is fierce and this had lead to a discount environment. People know they can wait for the sale or search the internet for a discount code. This makes margins smaller for companies which then need to sell even larger volumes. We’ve also seen growth in companies like TK Maxx that offer people the brands they want, but with heavy discounts.
Fashion has changed too. It’s very sportswear/dress down driven. These are cheap or old clothes. Looking ‘expensive’ has gone out of fashion. Brands like Balenciaga and Gosha Rubchinskiy have pioneered this style of fugly fashion and while not cheap they have prices that are more realistic and attainable.
Millennials are all about ‘experiences’ and are less materialistic, or so we’re are told. All those selfies tell a different story, but I think they want to eat out and wear something new, which ultimately means spending less. This big group of young consumers is squeezed by rents, student loans and low wages and this isn’t going to change for the foreseeable future.
In the Evening Standard on Monday, Net-a-Porter/Mr Porter boss, Alison Loehnis, said when they measured “zeitgeist buying” in the Mr Porter team they discovered the number one item was socks. “Followed by Ray-Bans and trainers.” Socks?!! Now, that is worrying. Unless Mr Porter is selling hundreds of millions of dollars worth of socks, which I doubt, then it’s a signifier of the market. It’s too expensive and they are the cheapest things they sell. It’s also one of the main gifting items and something you don’t need to try on.
Online is still only 10% of the retail market so has huge potential, but that still means 9 in every 10 pounds is spent on the high street.
Net-a-Porter/Mr Porter call their top customers ‘EIPs’, (EXTREMELY IMPORTANT PERSON) and these EIPs are the two per cent of customers who account for 40 per cent of NAP revenue. It’s dangerous to have all your eggs in a few baskets, particularly a fickle customer which many others are chasing. They’re now offering a service where the driver waits while these EIPs try things on. It’s a gimmick, but at least it shows they’re trying. These EIPS are the people shopping in Selfridges and Harrods too, while the rest of us have seen our wage packets shrink or not go as far and designer prices continue to rise. #Brexit will make imports to the UK more expensive, temporarily, but fashion will just find somewhere cheaper to make it, but it’s true the weakest wont survive this price hike or margin cut.
Brands have been trimming the fat over the last few years and many are down to the bare bones. The recent christmas was good for retailers and I think that kept many afloat, for now.
Jaeger just announced its bankruptcy. I don’t think there’s much hope for it to survive as it is, but it’ll become a brand within Edinburgh Woollen Mill or the like. It’s the sign of the times and also the cycle of brands. There are times when a brand runs its course and no matter how much investment or time, it’s just time to let it go.
Okay, enough doom and gloom. On a positive note from a down you have an up and when a gap appears something new will come into fill it. But, our addiction to cheap clothes isn’t going anywhere which will make it very difficult for new, smaller brands or labels to compete. I think short term we’ll see more closures and less choice or a choice masked by the fact it’s a sub brand from a big retailer. H&M is just about to launch Arket.
One thing is for sure, fashion is unpredictable and that’s why I love it.