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Friday, 16 October 2020 12:21

Can Raf Kickstart Prada to Growth?

can raf simons kickstart Prada to growth

When designer Raf Simons was announced as the new ‘co-creative director’, working alongside Miuccia Prada, at Prada, it was welcomed as a meeting of two intellectual fashion minds. His first show, SS21, shown last week in Milan, in a digital format, was a return to Prada’s minimalist carpeted and matching curtained 1990s aesthetic. It was the most anticipated show of the new womenswear season.

Left - Prada SS21

Prada has had a growth problem in recent years, so, will this new creative impetus make a difference to a luxury group that is in danger of being left behind within the luxury segment?

The Prada S.p.A. group owns the Prada, Miu Miu, Church’s and Car Shoe brands and produces and distributes luxury leather goods, footwear and apparel, benefitting from a supply chain which includes 22 owned industrial sites. It also operates in the food sector with Marchesi 1824 and in the eyewear and fragrance industries under licensing agreements. The group employs nearly 14,000 people and its products are sold in 70 countries worldwide through 641 directly operated stores as of December 31, 2019.

Prada has been trying to inject growth in recent years by reducing wholesale and discounting, but it is trailing its rivals. For example, Prada and Gucci were once neck and neck as brands, both creatively and financially. They were the juggernaut fashion phoenixes of the 1990s. When one was name checked, the other wasn’t far behind. What changed?

In the 12 months ended Dec. 31, 2019 revenues at Prada S.p.A. totalled €3.22 billion, up +2.7% compared with €3.14 billion in the same period a year earlier. Retail sales grew +4.1% to 2.63 billion euros. This is for the entire Prada Spa group which also includes Miu Miu, Church’s and Car Shoe.

amber valletta 1997 prada glen luchfordFor the same year, 2019, Gucci revenue was €9.63 billion, revenue climbed by +13.3% on a like-for-like basis (+16.2% reported) and operating income leapt by +19.8%. The brand now accounts for over 60% of it owner Kering's revenues.

Right - Prada 1997

All of Gucci’s growth stems from 2016 when it was comparable in size to Prada in terms of revenue. Over the past 4 years, Gucci has grown its revenues to be three times that of Prada. Admittedly, Gucci has had unusually meteoric growth, but the Prada brand has been pretty much flat over these past 4 years.

While the Prada share price, listed in Hong Kong, has increased recently, it has bobbed along the 24HKD- 35HKD range over the past 5 years. Its highs were back in 2013, when the stock hit around 75HKD. During the five years over which the share price declined, Prada’s earnings per share (EPS) dropped by 18% each year. The TSR (Total Shareholder Return) gives a more comprehensive picture of the return generated by a stock. In the case of Prada, it has a TSR of -23% for the last 5 years. While the Prada share price has struggled to rise, Kering’s and LVMH’s has soared.

can raf simons kickstart Prada to growth adidas

Prada is in that predicament where it is big, but isn’t quite big enough. It’s luxurious, but not luxurious enough and, while it was once a leader, it hasn’t produced much that has stuck in recent years. It felt like Miuccia Prada had checked out, creatively, of the brand years ago. The last show by Miuccia Prada, AW20, before Simons arrived, put the signature triangular logo centre stage and was its most commercial for years.

Above -  A sign of things to come? adidas Consortium + Prada Superstar 450 Leather Sneakers - £400 from MRPORTER.COM

In a statement up to June 30th 2020, Prada CEO, Patrizio Bertelli talks of ‘growth trajectory temporarily interrupted’ due to COVID 19. He said, “The first half of 2020 saw a temporary interruption of our growth trajectory which, in a situation of progressive control of the pandemic, we are confident will gradually resume from the second half of 2020, when our store network will again be fully operational. The excellent response of local consumers after the re-openings, confirms the desirability of our products and the strong relationship with our customers, which has been further strengthened by our continued focus on digital technology. The recent positive trends in all markets, combined with our solid balance sheet and financial position, allow us to look to the future with confidence today.”

On average, 40% of Prada’s retail network was closed from February to May 2020, reaching a peak of 70% in April. Its wholesale channel was heavily reduced, following the strategic decision taken in 2019 to strictly control all distribution channels to protect brand positioning and discounting. Prada said e-commerce had delivered triple-digit sales growth during and after the global lockdowns, while retail sales were down 32% and wholesale sales were down 71%.

Prada has seen double-digit sales growth since April in Mainland China, while South Korea and Taiwan, which didn’t experience store closures, showed a consistent double-digit trend throughout the period. Thanks to the contribution of these markets, the entire Asia Pacific region reported double-digit growth in June. The rest of the world was negative. In April 2020, Prada’s Board of Directors withdrew its recommendation to pay a dividend for 2019.

Prada’s difficulties during the COVID lockdowns aren’t unusual and will have been replicated by other luxury brands, but it doesn’t help its desirability and also the inability for Raf Simons’ new show to make an impact during this difficult time. According to the Business of Fashion, just 10,000 viewers tuned into the Prada Instagram live feed of the SS21 show and, according to analytics firm Tribe Dynamics, the show’s earned media value in the first 48 hours, an industry measure of third-party social media engagement, was 59 percent lower than the Spring/Summer 2020 show a year ago.

Many people have switched off from fashion, currently, and this will not have helped Prada make a splash with Simons’ collection. His first collection received warm reviews in a season without much competition. But, his return to the pared pack 90s Prada doesn’t answer the problem of growth. One good shoe is not enough, you need hundreds, and they need to roll over many seasons like the Gucci model. Gucci’s lack of seasons and huge choice of product shows how maximalism in fashion increases venues. Looks that have more accessories than a Christmas tree are going to generate more sales. More choice is the answer for growth. It also appeals to more customers.

can raf simons kickstart Prada to growth

Prada has followed this model too, previously. Prada only really started to make money and get bigger when it moved from mink trimmed nylon to colourful striped fox fur scarves and crystal embellished dresses in the noughties. When the ‘Pradasphere’ exhibit opened in Harrods in 2014 it illustrated what really sold to the contemporary Prada customer and it wasn’t minimalism. Minimalism hasn’t really made big money for any fashion business. Less isn’t more revenue.

Unfortunately for the brand, the planned Design Museum exhibition in London, planned for 2020, has been cancelled, which would have given it a boost. Details of a new collaboration between the Design Museum and Prada will be revealed in 2021.

Simons is a good designer and an influence, but his track record at Dior and Calvin Klein shows a limited understanding of what is commercial. When commercial, as illustrated with the collab with adidas above, it verges on the repetitive and boring.

Prada CEO, Bertelli’s relationships with past designers, such as Helmut Lang and Jil Sander, once owned by the Prada Group, was turbulent and Simons won’t hang around if the going gets tough (again).

Prada was once one of the world's coolest brands, but it didn’t innovate when the likes of Michael Kors started copying its famous saffiano leather. Simons is undoubtedly cool, but will he be enough for Prada to catch up with its rivals?

Buy TheChicGeek's new book FashionWankers - HERE

Published in News
Tuesday, 29 September 2020 15:18

Can Raf Kickstart Prada to Growth?

can raf simons kickstart Prada to growth

When designer Raf Simons was announced as the new ‘co-creative director’, working alongside Miuccia Prada, at Prada, it was welcomed as a meeting of two intellectual fashion minds. His first show, SS21, shown last week in Milan, in a digital format, was a return to Prada’s minimalist carpeted and matching curtained 1990s aesthetic. It was the most anticipated show of the new womenswear season.

Left - Prada SS21

Prada has had a growth problem in recent years, so, will this new creative impetus make a difference to a luxury group that is in danger of being left behind within the luxury segment?

The Prada S.p.A. group owns the Prada, Miu Miu, Church’s and Car Shoe brands and produces and distributes luxury leather goods, footwear and apparel, benefitting from a supply chain which includes 22 owned industrial sites. It also operates in the food sector with Marchesi 1824 and in the eyewear and fragrance industries under licensing agreements. The group employs nearly 14,000 people and its products are sold in 70 countries worldwide through 641 directly operated stores as of December 31, 2019.

Prada has been trying to inject growth in recent years by reducing wholesale and discounting, but it is trailing its rivals. For example, Prada and Gucci were once neck and neck as brands, both creatively and financially. They were the juggernaut fashion phoenixes of the 1990s. When one was name checked, the other wasn’t far behind. What changed?

In the 12 months ended Dec. 31, 2019 revenues at Prada S.p.A. totalled €3.22 billion, up +2.7% compared with €3.14 billion in the same period a year earlier. Retail sales grew +4.1% to 2.63 billion euros. This is for the entire Prada Spa group which also includes Miu Miu, Church’s and Car Shoe.

amber valletta 1997 prada glen luchfordFor the same year, 2019, Gucci revenue was €9.63 billion, revenue climbed by +13.3% on a like-for-like basis (+16.2% reported) and operating income leapt by +19.8%. The brand now accounts for over 60% of it owner Kering's revenues.

Right - Prada 1997

All of Gucci’s growth stems from 2016 when it was comparable in size to Prada in terms of revenue. Over the past 4 years, Gucci has grown its revenues to be three times that of Prada. Admittedly, Gucci has had unusually meteoric growth, but the Prada brand has been pretty much flat over these past 4 years.

While the Prada share price, listed in Hong Kong, has increased recently, it has bobbed along the 24HKD- 35HKD range over the past 5 years. Its highs were back in 2013, when the stock hit around 75HKD. During the five years over which the share price declined, Prada’s earnings per share (EPS) dropped by 18% each year. The TSR (Total Shareholder Return) gives a more comprehensive picture of the return generated by a stock. In the case of Prada, it has a TSR of -23% for the last 5 years. While the Prada share price has struggled to rise, Kering’s and LVMH’s has soared.

can raf simons kickstart Prada to growth adidas

Prada is in that predicament where it is big, but isn’t quite big enough. It’s luxurious, but not luxurious enough and, while it was once a leader, it hasn’t produced much that has stuck in recent years. It felt like Miuccia Prada had checked out, creatively, of the brand years ago. The last show by Miuccia Prada, AW20, before Simons arrived, put the signature triangular logo centre stage and was its most commercial for years.

Above -  A sign of things to come? adidas Consortium + Prada Superstar 450 Leather Sneakers - £400 from MRPORTER.COM

In a statement up to June 30th 2020, Prada CEO, Patrizio Bertelli talks of ‘growth trajectory temporarily interrupted’ due to COVID 19. He said, “The first half of 2020 saw a temporary interruption of our growth trajectory which, in a situation of progressive control of the pandemic, we are confident will gradually resume from the second half of 2020, when our store network will again be fully operational. The excellent response of local consumers after the re-openings, confirms the desirability of our products and the strong relationship with our customers, which has been further strengthened by our continued focus on digital technology. The recent positive trends in all markets, combined with our solid balance sheet and financial position, allow us to look to the future with confidence today.”

On average, 40% of Prada’s retail network was closed from February to May 2020, reaching a peak of 70% in April. Its wholesale channel was heavily reduced, following the strategic decision taken in 2019 to strictly control all distribution channels to protect brand positioning and discounting. Prada said e-commerce had delivered triple-digit sales growth during and after the global lockdowns, while retail sales were down 32% and wholesale sales were down 71%.

Prada has seen double-digit sales growth since April in Mainland China, while South Korea and Taiwan, which didn’t experience store closures, showed a consistent double-digit trend throughout the period. Thanks to the contribution of these markets, the entire Asia Pacific region reported double-digit growth in June. The rest of the world was negative. In April 2020, Prada’s Board of Directors withdrew its recommendation to pay a dividend for 2019.

Prada’s difficulties during the COVID lockdowns aren’t unusual and will have been replicated by other luxury brands, but it doesn’t help its desirability and also the inability for Raf Simons’ new show to make an impact during this difficult time. According to the Business of Fashion, just 10,000 viewers tuned into the Prada Instagram live feed of the SS21 show and, according to analytics firm Tribe Dynamics, the show’s earned media value in the first 48 hours, an industry measure of third-party social media engagement, was 59 percent lower than the Spring/Summer 2020 show a year ago.

Many people have switched off from fashion, currently, and this will not have helped Prada make a splash with Simons’ collection. His first collection received warm reviews in a season without much competition. But, his return to the pared pack 90s Prada doesn’t answer the problem of growth. One good shoe is not enough, you need hundreds, and they need to roll over many seasons like the Gucci model. Gucci’s lack of seasons and huge choice of product shows how maximalism in fashion increases venues. Looks that have more accessories than a Christmas tree are going to generate more sales. More choice is the answer for growth. It also appeals to more customers.

can raf simons kickstart Prada to growth

Prada has followed this model too, previously. Prada only really started to make money and get bigger when it moved from mink trimmed nylon to colourful striped fox fur scarves and crystal embellished dresses in the noughties. When the ‘Pradasphere’ exhibit opened in Harrods in 2014 it illustrated what really sold to the contemporary Prada customer and it wasn’t minimalism. Minimalism hasn’t really made big money for any fashion business. Less isn’t more revenue.

Unfortunately for the brand, the planned Design Museum exhibition in London, planned for 2020, has been cancelled, which would have given it a boost. Details of a new collaboration between the Design Museum and Prada will be revealed in 2021.

Simons is a good designer and an influence, but his track record at Dior and Calvin Klein shows a limited understanding of what is commercial. When commercial, as illustrated with the collab with adidas above, it verges on the repetitive and boring.

Prada CEO, Bertelli’s relationships with past designers, such as Helmut Lang and Jil Sander, once owned by the Prada Group, was turbulent and Simons won’t hang around if the going gets tough (again).

Prada was once one of the world's coolest brands, but it didn’t innovate when the likes of Michael Kors started copying its famous saffiano leather. Simons is undoubtedly cool, but will he be enough for Prada to catch up with its rivals?

Buy TheChicGeek's new book FashionWankers - HERE

Published in Fashion
Tuesday, 15 September 2020 14:07

ChicGeek Comment Fashion Weeks: September's Issues

fashion weeks during covid 19 chic geek expert commentSeptember is fashion’s month. Once bulging fashion magazine issues - remember those?! -  the start of fashion’s most important selling season, and, of course, fashion weeks makes September the most important month of the year for the, estimated, global $1.5 trillion fashion industry.

Above - Louis Vuitton's COVID LV Shield hitting stores in October

Fashion week is the canary in the mine and the biggest to suffer from the pandemic. Events which combine travel and vast numbers of people aren’t going to work right now, and, therefore, puts the traditional idea of fashion weeks into a strange predicament. While many fashion councils are trying to push ‘business as usual’, it is far from it.

New York has started, but few would have realised. Designers sitting out New York Fashion Week, this season, include Marc Jacobs - its biggest draw - plus Ralph Lauren, The Row, Pyer Moss, Michael Kors, Telfar, Oscar de la Renta and Brandon Maxwell. Those still taking part can have a socially distanced crowd of just 30 people, while, before, traditional shows ranged into the multiple of 100s. London's fashion week runs from 17th September - Tuesday 22nd September 2020 with the same strict controls.

Fashion weeks is the fashion business in an event and drives focus and attention from outside its bubble to retail and the idea of purchasing something ‘new’ to consumers. They are also extremely old fashioned and had less and less relevance way before COVID 19.

While the majority of fashion shows are pointless, a few images, brands, designers will emerge that stick and steer the fashion industry into that direction for the next six months. It’s also a coming together of people and a temperature test of the industry. But, they have become bloated and drawn out exercises in wasting time and money when fashion can no longer afford either. Limos driving groups of pampered people all over town for 10 mins feels dated and indulgent.

The major of women’s fashion weeks - New York, London, Milan & Paris - managed to scrape through COVID in February and March at the beginning of the year. This will be the first test of how major fashion weeks will run with a global pandemic hanging over it. Some brands, like Louis Vuitton and YSL, have done separate shows over the past few months, but nothing like previous years.

BFC fashion weeks during covid 19 chic geek expert comment

Left - LFW's Digital Schedule home page

This season, the London Fashion Week the schedule has been split into three sections and includes brands showing digitally, physically or both - ‘phygital’. The gender neutral showcase will run from Thursday 17th to Tuesday 22nd September 2020 and include both digital activations on www.londonfashionweek.co.uk and physical events, adhering to government guidelines on social distancing. The schedule will host over 80 designers including 40 womenswear, 15 menswear, 20 menswear & womenswear and 5 accessories brands. There will be a total of 50 digital only activations, 21 physical and digital, 7 physical only and 3 designers who will activate through a physical evening event only. 

The LFW digital platform, launched in June for the men’s calendar, will continue to serve as the Official Digital Hub and will be freely accessible to everyone, industry professionals and global fashion consumers alike. The British Fashion Council says. “LFW is one of the few international events to still be going ahead in London, proving the industry’s resilience, creativity, and innovation in difficult times. Now more than ever, the BFC acknowledges the necessity to look at the future of LFW and the opportunity to drive change, collaborate and innovate in ways that will establish long-term benefits, develop new sustainable business models and boost the industry’s economic and social power. The British Fashion Industry faces enormous challenges due to the impact of COVID-19 and the BFC keeps on calling on Government to support a sector which in 2019 contributed £35 billion to the UK economy and employs over 890,000 people (Oxford Economics, 2020).”

Burberry fashion weeks during covid 19 chic geek expert comment

Having a traditional ‘schedule’ for barely 28 shows seems old fashioned. As fashion blogger @bryanboy tweeted to his 502.4K Twitter followers regarding NYFW, this week, “It’s really annoying how designers still get an individual time slot for what essentially is a release for a pre-taped short film. No one cares!! Just do a date and release it on the morning or afternoon of that day and it doesn’t matter if it overlaps with other designers”.

Right - Burberry Horseferry check face mask coming soon

It’s the equivalent of waiting in all day for an e-mail. Nobody has time for this, especially when it feels like most of this stuff won’t be ordered or bought anyway. Maybe just have a single release date, hub for content and publicise that?

The most anticipated London show is Burberry’s. Rumoured to be Riccardo Tisci’s last, it will be held outdoors. Burberry will use Twitch’s ‘Squad Stream' function, which allows users to view multiple perspectives of the show at a time and chat with fellow viewers using the service’s chat window. It will be live-streamed without an audience.

LFW designer Emilio De La Morena is presenting an exhibition rather than a traditional catwalk show. Called ‘Troubles SS’21’, it is an assimilation of fashion, film, and sculpture into a “consolidation of the designers professional and personal journey in conjunction to the global pandemic”.

Fashion’s optimistic hope has been that this pandemic will blow over and we’ll get back to the normal fashion week circus asap. Fashion weeks work in the future and were hoping that by the time the 2021 collections come out this will all feel like a bad dream, but, it’s also realistic to think otherwise. Fashion is fickle, when the pandemic is over any product will instantly feel dated and obsolete. It is difficult to know how much time and money to invest in it.

Adar Poonawalla, CEO of the world’s largest vaccine manufacturer, saying that not enough COVID-19 vaccines will be available to inoculate the global population until at least the end of 2024. According to Poonawalla, pharmaceutical companies are not increasing production capacity quickly enough to vaccinate everyone faster. “It’s going to take four to five years until everyone gets the vaccine on this planet,” Adar Poonawalla, chief executive of the Serum Institute of India, said.

Some brands are incorporating PPE protection into their collections. Louis Vuitton has designed a coronavirus face shield which can also be flipped up and used as a sun visor. The LV Shield will be available to purchase from 30th October 2020 in selected Louis Vuitton stores worldwide for around £700. Burberry face masks are coming soon on the brand’s website, strange they haven't released these faster, and are donating 20% from the selling price of each face mask to the Burberry Foundation COVID-19 Community Fund operated by The Burberry Foundation to support communities impacted by the pandemic globally.

Fashion weeks as an idea is still important, it just needs to reinvent itself for life post-pandemic. Mega brands can still blow millions on a pointless extravaganza, but for smaller designers and brands it can be their slim opportunity to be scouted and brought to attention. It also reaffirms the importance of seeing, feeling and experiencing fashion, but with many influencers shunning fashion week and with the amount of traditional magazine press dwindling, who is it for exactly?

We do need to see. Digital is all a bit unreal. We may as well be dressing avatars. You also have a better memory of items in real, it’s the equivalent of a school trip, they’re fully rounded and you can picture yourself wearing it. But, is it that worth £100,000s to brands? Fashion week is a preview and is also important for brands to know what to make and order. We’ve tried ‘See now, buy now’ and now’s the time for digital presentations. Is the future for fashion weeks somewhere in-between? Or does that just take us back to square one?!

Buy TheChicGeek's new book FashionWankers - HERE

Published in Fashion
Tuesday, 18 February 2020 10:10

ChicGeek Comment The Coronavirus COVID-19 Effect

Coronavirus covid 19 effect on luxury brands fendi maskWhen China sneezes, the world catches a cold. So, when China caught the new coronavirus, or COVID-19 virus, there was going to be major economic repercussions. With the world’s second largest economy on virtual lockdown, its effect on both domestic and international sales for fashion companies will be seismic.

While there is no way to predict how long it will take to runs its course, companies have already started to make tentative statements about how it is affecting their bottom line. Those companies heavily reliant on the Chinese market and high spending Chinese tourists will be particularly affected and be crossing their fingers that this is over quickly.

Left - Fendi - FF Silk Face Mask - £170 from Luisa Via Roma 

While it is hard to predict the length of the outbreak and its impact, we can look back at the last major virus outbreak, SARS, which originated in China in 2002. It's thought that this strain of the coronavirus usually only found in small mammals mutated, enabling it to infect humans in the same way as COVID-19 has. By the end of the nine-month long SARS outbreak, the virus had spread to several other Asian countries as well as the UK and Canada, killing 775 and infecting more than 8,000 people.

The current stats for COVID-19 are 71,499 confirmed cases and 1,776 deaths, that’s a 1 in 40 death rate compared to over 1 in 10 for SARS. In terms of stats it looks less serious, with many people being carriers and displaying no symptoms. The under reporting of Chinese authorities has been questioned and how they are trying to minimise the severity of the outbreak, but they seem to be taking swift action to prevent contagion. 

The world in 2020 is very different from 2002. The Chinese are travelling much more and have become some of the world’s highest spending tourists. In 2005, there were 95,000 Chinese visitors to the UK, in 2018 that number had reached 391,000 and was continuing to grow. Chinese tourists make up the largest share of visitors to the UK (32%) and they have one of the highest average spends of any national group. In 2018, the latest set of statistics, the average spend of a Chinese tourist in the UK amounted to £1,373. They were only surpassed by visitors from Qatar and UAE.

In London’s West End, accounting for a quarter of all non-EU tax-free spend in 2018, on average, Chinese customers spent £1,630 per shopping trip, making them 59% more valuable than other international shoppers.

Hong Kong-based airline, Cathay Pacific, has already cut 90% of its capacity into mainland China and announced that overall capacity would be slashed by 30% as a result of falling demand related to the outbreak. British Airways announced that it would temporarily suspend its flights to mainland China, following the UK Foreign Office’s advice against all but essential travel to the country.

The most visited country in Europe was France with 2.2 million Chinese nationals visiting in 2018. Paris was already having to contend with transport strikes and gilet jaunes protests and now one of its most valuable visitors is staying away. The same could be said about Hong Kong; months of riots now followed by COVID-19 will have taken its toll on this important luxury retail location. The majority of the world’s major cities will be affected by the lack of Chinese tourists.

For British luxury giant, Burberry, Chinese consumers account for 40 per cent of revenues worldwide. Burberry Group plc released a statement at the beginning of February saying, “The outbreak of the coronavirus in Mainland China is having a material negative effect on luxury demand. While we cannot currently predict how long this situation will last, we remain confident in our strategy.” said Marco Gobbetti, Chief Executive Officer.

Currently 24 of Burberry’s 64 stores in Mainland China are closed with remaining stores operating with reduced hours and seeing significant footfall declines. This is impacting retail sales in both Mainland China and Hong Kong “The spending patterns of Chinese customers in Europe and other tourist destinations have been less impacted to date but given widening travel restrictions, we anticipate these to worsen over the coming weeks.” the statement said. Burberry was planning to hold a fashion show in Shanghai in March but that has been put on indefinite hold, while Chanel has cancelled its May Métiers d’Art show scheduled for Beijing. 

Coronavirus covid 19 effect on luxury brands off white mask

Estée Lauder gave a recent update to the markets saying it it expects adjusted earnings of $5.60 to $5.70 per share in 2020, down from a previous estimate of $5.85 to $5.93 citing the coronavirus. Fabrizo Freda, Estee Lauder president and chief executive, said: “The global situation will also affect our financial results in the near term, so we are updating our fiscal year outlook. We will be ready to return to our growth momentum as the global coronavirus is resolved.”

Other brands who have focussed on growth in China will feel the effects. Luxury outerwear brand, Moncler, warned that footfall at its stores in China had plunged 80% since the coronavirus outbreak and it earns 43% of its total revenues from Asia. Michael Kors and Versace owner Capri Holdings saying it would take a $100m hit from coronavirus in China, where it was forced to close more than 150 stores.

Right - Off-White - Logo Print Face Mask - £65 from Farfetch

Kering makes 34% of its sales in Asia Pacific, excluding Japan. Kering’s chief executive officer, François-Henri Pinault, said - on the 12th February - the group - Gucci, Saint Laurent, Balenciaga, Bottega Veneta - had experienced a strong drop in sales over the past 10 days. Many of the group’s stores in China are closed or running reduced hours. The company said it will halt advertising spend and postpone new openings in China in the near-term in a bid to limit the damage caused by the virus. Pinault said that planned product launches might also be reconsidered and is also shifting inventory to other regions to make sure stocks don't pile up in China. Without giving an estimate for any impact from the virus on earnings, he said online shopping was not really making up for the decline in store footfall. "The warehouses are shut. People can place orders but there are no deliveries," he said.

While being strong in China and in the Chinese market has been a boon for many years, this outbreak shows the danger of having all your eggs in the Chinese basket. Once a high growth area, this is a double whammy for brands; you have the domestic market closed and the free spending tourists are no longer shopping. 

China’s growth was already slowing, but it was just about to come out of the trade wars with America. Even if this outbreak is over in a relatively short window of time, it’s the momentum it has lost that will take the longest time to get back. Getting those Chinese tourists to rebook their flights and travel plans, brands reworking expansion plans and product and consumers getting that feel good factor to spend will take months to correct. Many brands are downplaying the current impact to protect their share price. Hopefully, the epidemic will be over shortly, but the repercussions of COVID-19 will be felt by the fashion industry well into 2020.

BUY TheChicGeek's new book - FASHIONWANKERS - HERE 

Published in Fashion
Tuesday, 25 September 2018 13:41

ChicGeek Comment Versace to Kors

Versace bought by Michael KorsVersace is a trophy brand and I can imagine many a green eye coming from the offices of LVMH, Kering and other fashion conglomerates asking why they hadn’t claimed this prize themselves. While the price isn’t a snip - approximately US$2.12 billion - and nobody knows the details of Donatella’s contract - it would have be something special in order to entice her to sell the family’s 80% stake - it is one of the few brands which resonates on to the lips and minds of everyday consumers. This happens for very few brands and is very hard to achieve.

Left - In Donatella's image? Versace advertising

Versace has a strong identity and tropes which are continually referenced - you only have to look at the continual ‘baroque’ collections from ASOS, Boohoo and River Island to see that - yet it never seems to fully capitalise on them itself. It can’t turn that into money. The profits are small - 15 million euro in 2017 - and it was always a brand which seemed to play musical chairs with its store portfolio; continually opening and closing stores.

On the other hand, Michael Kors is a well run accessorises company. The minute they knew their mid-market brand had peaked, and their market was saturated, they started closing stores -  between 100 and 125 over two years. They knew the landscape changed, the brand was fatigued, and you need to make hay while the sun shines, which they’ve done. It’s knowing when to start putting your money into new areas and elevating. Everything is about ‘elevating’ ATM!

The confidence of buying Jimmy Choo, and that seems to be doing well, has maintained the momentum of this spending spree. While not likely partners, many groups have disparate brands and, if Michael Kors knows one thing, it’s how to grow.

John D. Idol, Chairman and Chief Executive Officer of Michael Kors Holdings Limited, said, “With the full resources of our group, we believe that Versace will grow to over US$2.0 billion in revenues (from 668 million euro currently). We believe that the strength of the Michael Kors and Jimmy Choo brands, and the acquisition of Versace, position us to deliver multiple years of revenue and earnings growth.”

“Donatella’s iconic style is at the heart of the design aesthetic of Versace. She will continue to lead the company’s creative vision.” he says.

Versace bought by Michael Kors

It’s interesting to remember LVMH used to own a third of Michael Kors before he went for the masstige market and the company blew up and he was also the Creative Director of the LVMH owned Celine in the late 1990s.

The new group will be called ‘Capri Holdings Limited’. (Didn’t Michael Kors once do a mink beach towel with ‘CAPRI’ on it?) The new group says there is an opportunity to grow the group’s revenues to US$8.0 billion in the long-term, which would make it one of the largest fashion companies.

Right - Vintage Versace advertising - Gianni Versace is forever associated with the Supermodels

Donatella Versace says, “Santo (brother), Allegra (daughter) and I will become shareholders in Capri Holdings Limited. This demonstrates our belief in the long-term success of Versace and commitment to this new global fashion luxury group.”

Michael Kors’ expertise is accessorises. They say they want to expand Versace men’s and women’s accessories and footwear from 35% to 60% of revenues. Versace has never really resonated in these areas, often looking more tacky than desirable. Jimmy Choo will also offer synergies in luxury footwear and bags.

There’s also going to be a filip back to dressing up at some point and Versace is well placed, particularly in a sexually charged, Italian way.

As for more affordable products, they could expand underwear, home, sunglasses and perfume. The perfumes, since the very beginning, have never matched the quality and branding of the rest of the brand. Versace needs to choose areas and do them well, rather than the light licensing it has often achieved since its inception in 1978. Versace was one of those brands that had such disparate product - from cheap looking tins of perfume to the most luxurious Italian printed silk.

Capri Holdings say they want to “build on Versace’s luxury runway momentum”, - *books Supermodels* - and want to be less reliant on its home market of the US, grow in Asia and become more global.

Versace must have had numerous takeover offers through the years and it would be interesting to know the reasons of, why now? Why Michael Kors? The brand is 40 this year, so maybe the family want to fully maximise its potential, maybe it was pressure from the private equity investors to get out, or maybe it’s the realisation that you have to turn into a billion dollar brand to survive. Grow or die.

Below - The Versace ladies by Steven Meisel 

Versace bought by Michael Kors

Published in Fashion

The real reason luxury fashion companies are no longer using real furThis article isn’t a discussion on the pros and cons of real fur and offers no moral viewpoint on its use. I acknowledge that this contentious issue/material is divisive and has passion on both sides. 

The real ‘fur’ industry has seen massive growth, since the beginning of this century, driven by international consumers and trims on accessories and coats. It is now a $40 billion industry. It was inevitable that it would have a backlash and there would be a reaction to it, most notably from younger consumers. 

I put ‘fur’ into speech marks because it’s a very broad term and while some brands may no longer use mink they continue to use the skins of other animals and there’s no definitive reason for the choice of some animals making the used list and not the others. Read more here - ChicGeek Comment Fur Debate: You Either Use Animals Or You Don’t

Brands such as Gucci, Versace and Martin Margiela have decided to announce they will no longer use real fur. Donatella Versace recently said, “Fur? I am out of that,” she said. “I don’t want to kill animals to make fashion. It doesn’t feel right.”

“Naturally we were disappointed to hear that Versace has said it won’t use real fur in collections. However, the majority of top designers will continue to work with fur as they know it is a natural product that is produced responsibly. When Donatella Versace says ‘I don’t want to kill animals to make fashion.’ presumably her company will soon stop using silk and leather?” says Andrea Martin from the British Fur Trade Association.

“It is disingenuous to claim that leather is a by-product of the meat industry, a cow still had to die to provide the product. Silk cocoons are placed in boiling water to help unravel the thread with the silk worm inside,” says Martin.

Italian accessories brand Furla has formally declared that it will be banning fur from its collections from November of this year, which would coincide with the launch of its Cruise ’19 collections. This follows decisions by Michael Kors and Yoox Net-A-Porter, which has declared that all its stores and websites would be real fur-free zones.

“I think some of the brands have gone fur free under pressure from anti-fur trends, and some are genuinely concerned. If brands don’t want to use animals for fashion then they need to consider leather, exotic skins, silk, sheepskin, makeup and products, all of which use animals. I also think human welfare is important to consider when producing fashion, and this often gets forgotten.” says Rebecca Bradley, a London based fur designer.

So, why are luxury brands really dropping the use of real fur? 

I think it is pure economics and the high margin greed of today’s luxury industry. It’s the same reason many restaurants are pushing vegetarian and vegan options: the margins are higher and therefore the profit. By charging slightly lower prices for something which is much cheaper to make, the margins increase. There are only so many €25,000 full-fur coats a brand will sell and the ceiling price is sensitive, so you can’t factor in the same margins you would on your other products. If you make it in faux-fur you'll get a higher margin and a bigger percentage of profit. You’ll also sell more and probably generate more money overall.

The irony is, the reason a real fur coat is so expensive is because of the high welfare standards of the European producers. Luxury brands wouldn’t be able to use cheaper real-fur from other sources witout criticism and scrutiny.

“Fur coats may seem expensive, however the price of a fur coat should reflect a high standard of animal welfare, and therefore with a beautiful, high quality fur, many skilled people are involved with production, including a furrier, and finisher to create a fur coat that will last for many generations, ” says Bradley.

Fur, for the majority of brands, is a very small part of their businesses and therefore it’s not difficult to heroically declare you’re no longer going to use it. It’s also easily replaced by a cheaper, synthetic alternative while not altering the price very much or at all. You can paint the use of a fake fur trim as an ethical choice rather than a cost saver to the consumer. It’s cynical I know, but it’s working.

PETA’s Director, Elisa Allen, says, “Fur is dead, dead, dead. As well as making sense for designers' conscience, ditching fur makes business sense, as today's consumers are demanding animal and eco-friendly clothing for which no animal has been electrocuted, strangled, or caught in a steel-jaw trap. From Armani to Versace, the list of fur-free designers is growing every day, and innovative vegan fashion is on the rise. The tide has turned irrevocably, and there's no going back.”

Many brands used the word ‘sustainable’ when announcing their decision to no longer use real-fur, but again, this is another term in fashion that is very broad and has little full meaning until you see the detail. I’m not sure a fake fur coat is particularly sustainable, but then again it does depend on the material.

But, you also have to acknowledge that nobody needs to wear a real fur coat. We could easily survive without real fur, but it’s interesting how, out of all the animal products we use, this is one of the most offensive to some and creates the biggest reactions and protests.

The real fur industry continues to grow in China and with other newly rich consumers and markets. It is now a US$17 billion-a-year industry in China and Haining, near Shanghai, is its hub.. Fur companies will be a bit like tobacco companies: the falling sales in established markets will be replaced by growing sales in new and even bigger markets in Asia.

Chinese animal welfare standards are very different from European standards. European producers have very strict regulations and it’s an industry which has to be transparent in order to ward off criticism.

“We respect the fashion industry’s attempts to become more responsible for the products they produce. Animal welfare is of critical importance and the fur produced is farmed to the highest welfare standards.” says Martin.

“With growing concern about the environment and plastics we believe it is more responsible to move back to the use of natural, biodegradable materials. Fur is the natural and responsible choice for designers and consumers.” says Martin.

Ditching fur is quite a lazy way for luxury brands to try to be more ‘sustainable’ and look like they care about the environment. 

“I think that companies and consumers becoming educated and aware of origins of products and materials is a fantastic thing, but the focus needs to be across the board, ensuring standards of human, or animal welfare and environmental impact.” says Bradley.

Many brands are seeing real fur as something they live without and it’s more hassle than it’s worth if the profit and quantities aren’t there. You can pick holes into both sides of the fur debate. While a positive move for many, the decision to no longer use real fur is really a cleverly spun business decision and driven by their continued obsession for huge margins.

Read more expert ChicGeek Comments - here

Published in Fashion
Sunday, 23 April 2017 21:14

ChicGeek Comment The Problem With Marc Jacobs

Problem with Marc Jacobs BangLet’s make something clear, Marc Jacobs is a great designer, yet his business is struggling. Why is this? Business of Fashion said, on Tuesday, the label announced its decision to shutter its men’s business, ending a license agreement with Staff International, after the delivery of the Autumn/Winter 2017 season. 

Okay, Marc Jacobs menswear had disappeared recently and, to be honest, it never really have any identity and this is ultimately Marc Jacobs’ problem.

Left - Marc Jacobs going out with a Bang, now discontinued

One of the biggest designers in the world and he has difficulty establishing his own brand. Karl Lagerfeld has always been the same, but that’s a whole other ChicGeek comment.

I knew something was wrong when I went to a Coty fragrance launch, last year, and asked how the Marc Jacobs Bang fragrance was doing. They said they’d discontinued it. I was surprised because, firstly, the bottle was great and the black peppery fragrance was very wearable and commerical. Maybe it was those naked ads, starring the man himself, that tipped it over the edge!

Marc Jacobs has done a lot of things: he put Grunge on the catwalk, but unfortunately you’ll never make money from grunge, he pioneered Louis Vuitton’s ready-to-wear and introduced many great collaborations, such as Stephen Sprouse, those leopard print-type scarves were everywhere, but he’s never really owned anything. You can’t point to something and say “that’s very Marc Jacobs” which is when a brand or designer because part of the visual language and, ultimately, means longevity and heritage.

In the early 00s it was all about the Stam handbags, which were expensive, then Marc by Marc Jacobs came along and everything was really cheap. He seemed to miss the middle, sweet spot that Michael Kors has come to dominate. He was either really expensive or pocket-money cheap and that confused the brand. You never felt like spending money on Marc Jacobs.

The fashion probably wasn't expensive looking enough for the clientele who buy designer clothes the world over and when the only shop left on the street in New York that you pioneered is a book shop - BookMarc - great name BTW - it seems as though this is a signifier of how tough things are to make money from ready-to-wear even when your name is established. 

The bad news is it’s only going to get more difficult in the next few years in American fashion. Calvin Klein is hoping for a resurgence thanks to Raf Simons, Donna Karan has new owners, that will no doubt start investing heavily and Ralph Lauren is bound to hit bottom soon. They’re all chasing the same customers and competition is difficult in a saturated market. Marc Jacobs needs to decide where is wants to sit within the fashion market and aim for that. Or, hope check shirts make a major comeback!

Published in The Fashion Archives
Friday, 31 March 2017 17:54

Tried & Tested Michael Kors Extreme Night

Review Michael Kors Extreme Night for MenMr rose gold himself, Michael Kors, has been the billion dollar unicorn of the fashion industry with his ubiquitous bags and watches. His menswear has never really gained much traction, but his fragrances have always been pretty reliable. This is packaged as before, but in a blue colourway.

It opens with black pepper and nutmeg, then a middle of cypress and clary sage and, finally, a base of orris and tonka bean.

TheChicGeek says, “I must be getting old because I can’t remember the last time I had an ‘Extreme Night’. I think Michael Kors' idea of an extreme night out might be a bit more glamorous than ours. 

The first thought I had when I smelt this was tonka bean. It does revolve around this, but has a soft aromatic quality which is fresh and green and smells cooling. Fans of Jean Paul Gaultier’s Le Male will like this”. 

Left - Michael Kors Extreme Night For Men - 120ml - £70

Published in The Grooming Archives

TheChicGeek talks a buzzy Pitti Uomo in Florence, how the major brands were domestic, Zegna looking around again after their foray into high fashion and why Michael Kors is the fashion brand of this decade. Enjoy!

Published in The Fashion Archives
Monday, 21 March 2016 10:58

#OOTD 71 Peacock Geek 3/4

The Chic Geek orange menswear styleLooking as hot as the donuts! TheChicGeek is as bold as a tequila sunrise in this OOTD.

Taking his cue from the new romantic mood in menswear, TheChicGeek makes flower corsages and feathers the latest must-have menswear accessories when worn with bright silks, beautiful patterns and colours.

Unpinned with a sharply tailored jacket, let your imagine run wild and escape to a place where there is no limit to male display. Join the Peacock Revolution! 

Get involved #PeacockGeek

Credits - Jacket - French Connection Exclusive to Moss Bros, Coral Pin - Tateossian, Shell Shirt - Scotch & Soda, Floral Sweater - Scotch & Soda, Feather Necklace - River Island, Spectacles - Cazal, Watch - Storm London, Bracelet - Tateossian, Belt - Rokit, Trousers - Scotch & Soda, Trainers - Replay, Socks - Item M6, Extreme Blue Fragrance - Michael Kors, Body Defence Sunscreen - Zelens

Shot by Robin Forster on OlympusPEN

Check out more images and the video below

Make your own Gucci-style corsage here

male corsage gucci the chic geekgucci menswear 2016 the chic geek ootd menswearstorm london watch ootd style menswearreplay trainers flamingo trousers ootdthe chic geek style icon menswear bloggers ukpeacock geek flatlay ootd menswear 2016

Published in Outfit of the Day

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