Financial results

Even before its results announcement today, PPR had made some news: it was proceeding apace with its plan to dispose of no-longer-core assets (ie, non-luxury/sports lifestyle rbands), and had agreed to sell 29.8% of its stake in CFAO, an African automotive and pharmaceutical distribution company, to Toyota Tsusho Corporation. This should net the PPR guys about €980 million.The stated plan is to use the money to pay down debt, but in that impossible-to-control way of things, already there is speculation among some watchers about what they might buy, if they were going to use the money to buy something. I love a nice round of speculation. Read more

Buried amid all the Mulberry hoo-ha over the last day since shares tumbled one comment stood out to me. It was from Godfrey Davis, Mulberry’s chairman, who blamed the fall in profits, which led to the fall in shares, on a bad performance in his outlets. Outlets? In luxury goods-land? Well, yes – of course. We all know about them. But who knew they could have that much of an effect on a brand’s bottom line?
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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

Looking at the yesterday’s impressive Hermès results, it’s hard not to wonder if the much-bemoaned 22% stake that luxury conglomerate LVMH built up in the group has actually been good for it – as opposed to the end-of-the-world/ barbarians-at-the-gate scenario the Hermès folks were painting. Why has to do with pretty basic psychology.
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Don’t know about you, but it seems to me the economics of fashion are becoming increasingly abstract — and I’m not talking about the highly subjective concept of “brand value” (yes, I know there are equations to convert this into numbers, but boiled down to its essence it’s in the eye of the beholder, no?). I’m talking about celebrity endorsement investment, and a new concept I discovered last week: retail endorsement investment.

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We Are All Guilty for this Mess,” according to Suzy Menkes, fashion editor of the International Herald Tribune. In a heartfelt piece in her newspaper, my fellow Fashion Week traveller and friend took the fashion industry (herself included) to task for the very public soap opera that is the current round of designer switcheroos, in which bystanders gossip and place bets and tweet about real jobs and real people like they are characters in a reality television game.

It’s tough and honest and has people buzzing at the shows, and I recommend you read it, but I’m also not sure I entirely agree with it. I think she’s right about the situation, but doesn’t fully get to the cause. Read more

Interestingly, this morning, the day after the PPR 2011 annual results announcement, I received another earnings notice, this time from Bottega Veneta – and about the first half of 2011, not the second. It was good, to be sure, but more than that, it was singular. And that is interesting. Read more

The Dior third quarter 2011 results are in and, contrary to what everyone predicted back in March when Dior designer John Galliano was fired for saying bad stuff, they are good. In fact, they are very good. What do we make of this? The conclusions, it seems to me, are pretty obvious.

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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

Royal Wedding Day minus 1 and slowly the sartorial chips are falling into place. Read more

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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The other day I was talking to Bernd Beetz, the chief executive of Coty, in his office high over Park Avenue, and he noted that “fragrance is now a crucial building block of a brand.” In other words, it’s the base, not the capstone, of a business. I was thinking about this today because Puig Beauty and Fashion Group just announced a truncated version of their 2010 results and they are pretty good.

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Hermes has released an annoucement noting they have received “an expression of interest from potential buyers in its 45 % stake in the Jean-Paul Gaultier company. Discussions have been initiated.” I find this logical (at least on their part) for a few reasons.

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There’s a report in today’s FT about falling luxury stocks on the back of the situation in Japan, but in reality, luxury groups have spent the last 10 years strategising about how to replace Japan on the balance sheet (China, anyone?), so in a way they were among the most prepared companies for the effects of the current disaster.

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The Hermes/LVMH story just keeps running and running. Today the French luxury treasure (ok, I admit, the AMF is still reviewing the designation, but lets go with the current decision) announced its 2010 results, a day before its unwanted suitor comes out with theirs.  Read more

The Economist says bling is back. I’m not so sure. Their reasoning seems to be based on two observations, one having to do with shopping bags, the other with sales. It seems to me there are some pretty big conceptual leaps going on here.

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Should fashion be a family affair? At the beginning, it often has to be — where is a young designer going to find an executive who believes unreservedly in his or her talent, is happy to do the backroom work so they can have their creative freedom, and will toil away at all hours for little or no money, other than at their breakfast table, or childhood home?  Read more