China

Luxury brands from PPR to LVMH may be announcing more banner results this month, but according to a new report from UK luxury consultancy Ledbury Research, their CEOs are probably a lot more worried about the industry’s prospects in 2012 than they are letting on. Read more

Today the Hong Kong-based Fung family further enlarged their empire of Western luxury brands when Trinity Limited, the Hong Kong-based, publically-listed subsidiary of Li & Fung Group (whose two main shareholders are Victor and tk Fung) announced it had agreed to purchase British tailor extraordinaire Gieves & Hawkes from Wing Tai Properties Limited.

The deal was priced at £32.5 million “plus annual payments for 18 years up to a cumulative maximum of £60 million” accoding to the announcement.
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Much hair-pulling and hand-wringing has gone on in the last few years over the migration of manufacturing jobs from Western nations to Asia, where costs are lower — exemplified in part in the Obama administration’s current “Made in America” campaign — but a piece today in the FT suggests that, when it comes to luxury and Europe at least, the equation may be about to reverse.

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Any regular reader of this blog knows that my opinion of fashion film shorts is not exactly sky-high; of all the ones produced by this industry recently as it discovered the joys of YouTube and its gazillion viewers, only one has really worked. That’s because it walked a perfect line between self-mockery and great fun, and was not obsessed with framing its products perfectly in the camera’s eye. (The film of which I speak features models wearing Lanvin and dancing to Pit Bull.)

So I admit: when Cartier called me to tell me about its new commercial, my first reaction was (and I’m not proud of this, but we are going for full disclosure here): oh, no. Not again. Ergghh. And so on. But I took myself off to the unveiling at the Mini Palais restaurant in Paris anyway, sat myself in the plush velvet seat and prepared to grit my teeth. Read more

You know something is up when all the talk runway-side at a fashion show is about how a brand is NOT doing an IPO.

The Facebook listing has tech companies everywhere flirting with Wall Street (latest under discussion: etailer Gilt Group), but Michael Kors’ blockbuster public offering of last year, which saw his company attain a market capitalisation of $6.41bn, has not had the same effect on his fashion peers. Or so the folks at Tory Burch, whose a/w collection bowed this morning, might lead one to believe. Read more

Nathalie Rykiel (left) with designer April Crichton at Sonia Rykiel show. AFP/Getty Images

Nathalie Rykiel (left) with designer April Crichton at Sonia Rykiel show. AFP/Getty Images

Fung Brands Ltd just announced they were in exclusive negotiations to buy 80 per cent of French fashion house Sonia Rykiel, for an undisclosed price. Interesting.

This will be Fung Brands‘ first ready-to-wear acquisition since it was formed last year with Jean-Marc Loubier, latterly of LVMH and Celine, as chief executive. They’ve been moving pretty quickly, having already also bought French shoe brand Robert Clergerie, and Belgian luxury handbag house Delvaux. (Fung Brands is the subsidiary of Fung Capital, the private investment arm of the Fung family, which also owns the Asian manufacturing powerhouse Li & Fung).

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In the category of ingenious solutions to seemingly intractable problems, I nominate Raphael le Masne de Chermont, executive chairman of Shanghai Tang, who turned a piece of really bad luck – being kicked out of the building where Shanghai Tang was founded in 1994, and where its flagship was established, with less than six months notice – into a creative retail opportunity. Read more

In an example of truly portentous timing, just as the Chinese become potential players in the rescue of the Eurozone, Walpole, the British consortium of luxury brands (supported in part by this newspaper) announces they are awarding their 2011 medal of excellence, which is to say, their highest accolade, to…Dr Christopher Cheng, the Hong Kong-based property mogul and owner of Gieves & Hawkes.

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Could the above statement be true? It seems difficult to believe, but the numbers – at least numbers published today to the industry by Bain & Co, the consulting firm, in its 10th annual Worldwide Luxury Goods Market study (on general release later this week) – seem to say yes.

Consider: according to the Bain report, 2011 is going to be a record-setting year for the luxury market. Yes, you read that right. Bain predicts the industry will increase by 10 per cent beyond its current value of sales, which it estimates at €173bn. That would be growth of 13 per cent over 2009.

What’s more, the strongest markets are not just China (as expected), but also the Americas and western Europe, with sales in Europe up 10 per cent and those in the Americas 16 per cent higher. Put another way: the two most beleaguered global areas where the jobless numbers have risen are the places where someone (tourists?) are spending. A lot. Especially on high-margin watches and jewellery.

Weird, right? Read more

Is it a tongue twister? No, it’s an acquisition. Sometimes during fashion week it’s what happens when you aren’t looking that’s most interesting.

Fung Brands Limited, the private luxury investment arm of Fung Capital Europe, has bought Delvaux, the Belgium equivalent of Hermes. This follows Fung Brands April purchase of Robert Clergerie, the famous French shoe maker that had almost faded from view.

In other words: since Fung Capital is owned by the Fung family of Hong Kong (aka the Asian retail and distribution powerhouse that owns Li & Fung), the prophesy that western luxury brands will go east, not just for consumers but corporate owners, has once again come true.

The choice of Delvaux is both smart and telling — the latter because it marks a new approach to making east meet west when it comes to luxury. Read more

It being Milan fashion week, I have Milan news on the mind, and here’s something interesting: I’ve just learned Yoox Group, the Italian etail experts who build and manage about half the fashion world’s etail outlets, are about to make a move of their own. Next week, thecorner.com, their high-end multi-brand boutique, will become the first multibrand etailer to launch in China. The floodgates are opening! Let the race begin.

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Women’s wear daily is reporting today that PPR is in talks with Brioni about buying the Italian luxury brand. The PPR folk won’t comment, but I think this makes sense. Read more

In the wake of the Prada IPO, where some investors balked at having to pay Italian taxes on their share purchases, according to Guangzhou Daily the government has announced plans to cut their taxes on luxury imports to the mainland by 2-15%. Brands all over Europe must be celebrating. Ooooooh the possibilities! The mind boggles.

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There’s a new report out from Walpole, the British luxury consortium, and Ledbury, the British luxury consultancy, with a jaw-dropping discovery in it: Americans are the most important luxury shoppers in England! Who knew?

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Speaking at the Business of Luxury summit in Lausanne, Gavyn Davies, chairman of Fulcrum Asset Management and an FT blogger, and Jim O’Neill, chairman of Goldman Sachs Asset Management, had some interesting things to say about two of the biggest luxury consumers: the Chinese and the American, what’s happening to them, and what it means for the future.

Specifically, they painted an “Invasion of the Body Snatchers” scenario, where the two groups change places in the next year or so. Read more

Diego Della Valle, chairman of Tod’s Group, has just taken the race for the new Chinese consumer, aka the Great Eastern Hope of the luxury industry, to a new level, and claimed them for – well, not just himself, but his country.

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A notable report arrives from the Journal of Commerce/PIERS, a trade publication for the shipping industry. Apparently, container shipments from China to the United States of apparel and footwear have dropped Read more

The Bain luxury goods “worldwide markets study” spring update is out and – wow, things are looking good. Market growth for 2010 was 12% — 2% more than the most optimistic predictions! But wait: don’t be fooled into thinking all you have to do is ride the coming gold-plated wave.
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It struck me, reading the peppy results releases from Burberry and LVMH yesterday and today about their financial performance in the six months ending march 31, 2011, and first quarter 2011 respectively (Burberry revenue up 30%; LVMH revenue up 17%), that Japan barely figured in the reports.

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When the annals of early 21st century geo-politics are written, in the section dealing with the rise of China, there ought to be a chapter on sartorial diplomacy. The sub-title would be obvious: outsiders, wear red! Read more