Week in Review: Part 2

Wheeling & Dealing: Mergers and Acquisitions Are on the Rise in European Fashion Companies.

For the past five months there have been many headlines broadcasting the selling and purchasing of many fashion and beauty companies with LVMH being a part of several of the headlines.  The most recent extravagant purchase of Bulgari for $6 billion continues to capture the attention of fashion followers around the world.  As the economy and retail environment continues to change and revive, banks and companies are now ready to re-invest in new growth opportunities. Many of the recent deals completed by LVMH have been viewed as positive actions by the acquired companies as it brings the opportunity to build their business in ways that only a large conglomerate with a strong financial backing can.

Currently companies are looking to acquire and invest in both luxury and lifestyle brands that have the potential to grow globally. It is through potential global growth that investors and buyers are focused on. In addition to the LVMH centered headlines, other headlines and rumors continue within the industry such as the rumors surrounding several takeover speculations for Tiffany & Co. as well as the rumors surrounding Burberry and the recent news regarding Jimmy Choo and AllSaints and the several companies looking to go public. And what types of companies are looking to make these purchases and continue to wheel and deal? The types of companies that are most active in this merger and acquisition trend of cash rich private equity firms who are currently in the market both buying and selling.

Not only is this trend happening in Europe but there have been 53 retail buyouts in the U.S. this year totaling $9.31 billion which is a huge increase to the $1.6 billion in deals seen just a year ago. Analysts are saying there hasn’t been a better time for mergers and acquisitions. Companies have been piling up cash and now they are finding a use for it. An additional cause for this trend stems for the oversaturation in the marketplace and the overabundance of production. Organic growth is increasingly more difficult to achieve leaving much of the growth potential in acquisitions. This strategy of acquisitions and global growth seems to be one reason for the record sales and earnings LVMH is experiencing and remains confident about.

This is only the beginning as many companies are either in expansion mode or are finding the need to consolidate which will continue to support this trend.

Below is a list of some of the other companies who have been active participants in this trend:

• J. Crew and it’s $3 billion acquisition by TPG Capital and Leonard Green Partners
• The acquisition of Gymboree Corp.
• Walgreens to buy Drugstore.com
• Revlon Inc. bought out Sinful Colors brand
• Nordstrom Inc. acquired HauteLook Inc. for $270 million
• LVMH huge purchase of Bulgari and its controversial stake in Hermes
• Kellwood Co. bought Rebecca Taylor in January
• Perry Ellis International Inc. acquired Rafaella Apparel Group from Cerberus Capital

Rising Raw Material Costs Impact Fast Fashion: H&M Profits Challenged.

H&M (Hennes & Mauritz AB) is the world’s third largest fashion retailer but it posted a huge profit drop of 30% this first quarter as a result of soaring cotton prices and negative currency effects in the market place which impacted the company’s gross margin. Higher transportation costs, the negative U.S. dollar and accelerated inflation costs in sourcing markets are the main factors effecting H&M’s profit.

Rather than passing on retail increases to their customer, H&M decided to strengthen its price positioning to maintain its competitive edge which in turn cut into their margin or profit hoping this strategy would pay off in the long term. The company’s goal is to increase sales volume in order to counter the increase costs.

H&M is not the only retailer feeling the pinch though many retailers are approaching this most recent challenge in different ways. One this is for many price sensitive retailers like other fast fashion brands, Target, Wal-Mart and the like, this is one challenge that they will be dealing with for the remainder of the year.

http://www.retailgazette.co.uk/articles/22130-hm-profits-down-as-retailer-absorbs-rising-costs

http://www.procurementleaders.com/news/latestnews/1314-h-m/

China Continues to Be Impacted By Rising Material and Labor Costs.

Costs are rising for the Chinese apparel and textile production industry as a result of higher labor and material costs and a maturing Chinese economy. These cost increases have led to the closing of several factories and cost control measures with higher prices to come for customers.

Not only are raw materials such as cotton, wool and silk experiencing increases but the labor force has demanded higher salaries which are now needed to attract workers. Therefore, big changes are necessary for the world’s largest maker and exporter of apparel.

The increasing prices in raw materials have already led to a 10% increase in production costs over last year for many companies and the migrant work force that these companies once relied on has changed. China has relied on migrant workers for a long time now which has brought a steady stream of cheap labor to wealthier cities and regions but as wealth begins to trickle into the countryside, many of these workers are finding other employment options closer to home.

China is now partnering more closely with the overseas apparel companies it does business with in order to find ways of controlling production costs. What was once a one-sided relationship for these Chinese companies is now becoming a two-way partnership.  With the closure of so many factories and the increase in costs and labor there is more of a balance between the supply and demand in China’s manufacturing sector.

http://www.chinadaily.com.cn/bizchina/2010-04/24/content_9771340.htm

The Economy Continues to Impact the Retail Landscape: L.A. Faces Continued Vacancies as a Result.

Throughout the U.S. retailers have closed their doors and new ones have appeared in their place. The landscape is changing everywhere from New York’s Fifth Avenue to L.A. The past 3 years have brought an incredible amount of change with companies going into bankruptcy and closing their doors, consolidating stores and new companies looking to expand in key areas of the U.S. market.

New York’s Fifth Avenue was a shopping district of little change but in 2008 that ended. In 2009 more stores closed and opened on the avenue than ever before. Despite some occupancy remaining open the avenue continues to have new stores that never existed there before. Even smaller shopping districts like Chicago’s Oak Street have retail space that remains open today after several store closings only few retailers have moved in to take over some of the occupancy. L.A.’s retail landscape continues to make the news as they continue to feel the biting effects on the national and state economy. The landscape in L.A. is unrecognizable to some as it has been completely overhauled in recent years with rampant store closings, moves and new store openings. Many have exited the market and continue to exit. Unfortunately, the southern California market has been slammed with a multitude of economic crisis from housing to the stock market and the state budget crisis. Retailers who remain are focusing on making their businesses more efficient so that they can survive and see if and when the market returns.

The Bridal Trend Continues as Isaac Mizrahi Joins the Bridal Market

Isaac Mizrahi launched his wedding gown collection for the member-only ecommerce site The Aisle New York collection the beginning of this month. The designer returns to bridal but this time offering price points between $2200 and $4500.

http://www.theaislenewyork.com/

http://nymag.com/daily/fashion/2011/04/first_look_isaac_mizrahis_full.html 

Week in Review: Part 1

We have a lot to catch up on this week. It has been a while since we last posted and we do apologize for the lapse. This is the first part of this Week in Review with a second part more focused on China’s labor challenges, the European mergers and acquisitions trend, the continued effects of fiber cost increases on textile shows and the ever-changing retail landscape as a result of the struggling economy.

Beijing Bans Luxe Billboards

China has celebrated luxury and opulent products and lifestyles over the last decade but now Beijing is banning outdoor advertising that uses certain terms which celebrate living the high life.

Taking effect this month on April 15^th, the Beijing Administration for Industry and Commerce are taking new steps that will “target advertisements that ‘promote hedonism’ or the ‘worship of foreign-made products.’” The actual changes pertain to the banning of certain words in outdoor billboards and advertising. Banned words will include “supreme,” “royal,” “luxury” and ”high class.”

Possible causes of these changes are speculated to come from the political leaderships desire to tackle one of the country’s most challenging problems: the fast growing wealth gap. China is one of the world’s fastest growing luxury goods consumers, surpassing the US 2 years ago with a $10 billion a year luxury goods market, second only to Japan. The Chinese consumers, with or without wealth, tend to be obsessed with brands and marketing has only played into this obsession.

The wealthy are growing exponentially wealthier while the middle class and poorer blue collar workers continue to face stagnant wages and record inflation. It is yet to be seen how this will be enforced and how significant a role this step will be in the fight against the wealth gap.

http://www.telegraph.co.uk/news/worldnews/asia/china/8398097/China-bans-luxury-advertising-in-Beijing.html

http://money.cnn.com/2011/04/05/news/international/china_luxury_ban.fortune/?section=money_latest

Another challenge for China has been converting its population to society of savers to a society of consumers. To read more about this please visit the link below.

http://www.mckinsey.com/mgi/reports/pdfs/china_consumer/MGI_china_consumer_chapter_1.pdf

Hispanics Becoming a Growing Force as Consumers

This Hispanic population has been growing over the past several years and is currently the largest and fastest growing group in the U.S and is projected to reach 132.8 million by 2050. The projected buying power is expected to rise from $1 trillion this year to $1.5 trillion in 2015. This buying power is larger than the entire economies of all but 14 countries in the world, pretty impressive. So who is listening to this growing consumer?

Retailers like Macy’s, Wal-Mart, Dillard’s, J.C. Penny, Kohl’s, Kmart and Sears have been playing close attention and have been aggressively focused on the Hispanic customer through product, marketing & advertising campaigns and bilingual direct mailers, credit card applications and in-store signage. One example is Kohl’s recent partnership with Jennifer Lopez and Marc Anthony to do a lifestyle fashion venture. Kmart is also launching Sofia Vergara a young contemporary lifestyle collection this fall.

There are several differences in spending habits in the Hispanic population such as shopping more as a family than as individuals, shopping for different silhouettes, colors, styles and even different fabrications. Some other distinguishing characteristics in shopping behaviors include being fairly conscious of status, loyal to department stores, loyal to brands that fit well and a love for value and newness. Many retailers have addressed some of their stores as more Hispanic in product assortment etc especially in certain areas of the U.S. such as Miami, Texas and New York. It remains important to not lump Hispanics together in a general fashion, there are differences retailers must recognize according to the original country of origin such as Mexico, Cuba or the Dominican Republic.

As a result of this growing population of consumers, several retailers have also re-allocated how they are spending their marketing dollars. In 2009 J.C. Penny’s devoted $50 million of its media spend to the Hispanic market while Wal-Mart allocated $66.1 million and Macy’s used $38.8 million to the Hispanic market.

Barney’s Mark Lee Continues to Make Changes

Change continues to remain constant this first quarter of the year for Barney's with the addition of Carine Roitfeld, the former French Vogue editor in chief, joining the team as a guest editor and stylist as well as muse and inspiration for the fall. She will be collaborating with photographer Mario Sorrenti and Barney’s new creative director Dennis Freedman.

Roitfeld will style and edit Barney’s advertising campaign, shot by Sorrenti, as well as edit the catalogues, fall mailers and put her styling into the windows in the Madison Avenue location which will be unveiled in September.

Roitfeld was drawn to the concept of crossing over from the editorial side, more open where the envelope can be pushed, to the retail side where the focus is on commerce. Mark Lee continues to shake things up at Barney’s and it is exciting to see how his vision will play out as the year progresses.

PPR Makes Strides to Become More ECO-Friendly

PPR, the French retail firm that owns Gucci Group is unveiling a new sustainability plan as the fashion world and consumer continue to embrace eco-friendly and sustainable fashion. The plan includes the following:

•   The launch of the Creative Sustainability Lab, a partnership with Cradle to Cradle, that will focus on developing products the integrate and apply environmental objectives and social concerns for PPR’s luxury labels such as Gucci, YSL and Balenciaga.

•    The offset of carbon dioxide emissions generated in 2010 by PPR’s luxury group, PUMA and PPR’s headquarters through the purchase of carbon credits from San Francisco company Wildlife Works Reduced Emissions from Deforestation and Degradation (REDD) offsetting project in Kenya.

•   Puma plans on publishing its first environmental profit and loss statement as a first step towards measuring the full environmental impact of its activities and its suppliers.

GAP Focuses on Bringing Modernity to its Fall Collections

The Gap has struggled in recent years especially when it comes to its product. As competition has increased the product piece has remained somewhat stagnate. The company announced several changes earlier this year and the latest is the evolution of the “seven-day-a-week brand,” according to the retail brand’s executive vice president of global design, Patrick Robinson. The non-denim part of the collection was previewed the end of March and has created a buzz for what is to come.

The women's designs are taking a more elevated, modern approach with dressed up options that still remain true to the GAP philosophy.  They designs will reduce layering but emphasize texture and will still give women the option to transition their clothing from day to night. In addition there will also be an enhanced and more detailed accessory collection to coincide with the accessory push happening across the marketplace.

The men’s designs are focused on updated classics updating to skinny silhouettes and suit separates. Knit shirts will also make a strong statement in addition to leather such as leather bombers and motorcycle jackets. Textured and chunky sweaters will also make an appearance in this fall’s collection.

Style Rookie’s Tavi Gevinson Teams up With Jane Pratt

Tavi Gevinson, the 14-year-old blogger of Style Rookie has captured the attention of many in the fashion industry and is now teaming up with Jane Pratt to launch a web site and magazine. Tavi’s blog has become a must follow for the likes of Anna Wintour and designers around the world, receiving more than 50,000 visitors in one month.

Jane Pratt has launched 2 magazine and 2 TV shows which she lost. Since 2005 Jane has kept a low profile but in the next two months Pratt will launch JanePratt.com. This summer Jane will team up with Tavi to introduce a magazine and website for teenage girls. The site will be styled like a magazine instead of a blog and will feature commentary, photography, poetry, fiction and interviews by teenagers.

To visit Tavi’s blog Style Rookie please click on the below link:

http://www.thestylerookie.com/

To read more about this collaboration please explore the below:

http://www.janepratt.com/

http://fashionista.com/2011/03/tavi-gevinsons-magazine-with-jane-pratt-will-launch-this-summer/

http://news.yahoo.com/s/yblog_thecutline/20110323/bs_yblog_thecutline/the-details-on-jane-pratts-new-sassy-esque-ventur

Week in Review

Consumers Frown at Apparel Price Increases

With food and fuel prices climbing consumers are not in the mood to also accept retail increases on their clothing. Many retailers who had experienced slight price decreases last year experienced increases in January which resulted in price resistance from customers. The increases were necessary in order to begin to offset the sky rocketing costs of raw materials and transportation costs with fuel. As a result of the consumer’s reaction some retailers have begun to drop prices in an effort to improve sales. These price decreases began in February and were minimal as retailers are now challenged with accommodating consumers and protecting shrinking margins. This will continue to be an uphill battle with the public given the anticipated 10-15% increase in apparel coming this fall, a necessary increase given the soaring price in cotton, wool and silk. The retailers who will have the greatest challenge are companies like WalMart, Target and fast fashion brands with lower retail prices. Given the amount raw material prices have increased, it will be nearly impossible to stave off increases at the register and their margins will continue to be under great pressure as they try to sustain prices.

http://departmentstoreretailing.blogspot.com/2011/03/retailers-scale-back-apparel-price.html

http://news.yahoo.com/s/ap/20110214/ap_on_bi_ge/us_clothing_prices

http://www.cottonafrica.com/documents/NCTO%E2%80%99s%20Textiles%20in%20the%20News%20updates_Feb%2028%202011.pdf

Holmes & Yang

Despite having a line since 2009, Katie Holmes and Jeanne Yang entered the sometimes turbulent waters of fashion as celebrity designers quietly. Now, two year later, the twosome is only now beginning to more heavily promote their line.  As manufacturing continues to move off shore these two designers have kept most of their manufacturing in New York with the exception of a few French laces that they are using within the collection. This decision has been a somewhat personal one for Jeanne Yang as her mother used to be a sewing contractor for a factory in LA and as costs rose and overseas competitors became a factor, the factory closed. In addition, the pair’s design philosophy is about luxury quality and “making it your own.” They aim to prove that great quality and luxury can in fact be made in the U.S.A.

http://www.holmesandyang.com/

Giorgio Armani ‘s Acqua for Life Project”

Giorgio Armani’s latest philanthropic initiative, “Acqua for Life” kicked off a week and a half ago. This initiative is in conjunction with Green Cross International and UNICEF’s Tap Project which aims to provide a minimum of 40 million liters of drinking water worldwide to populations in need.

For every bottle of Acqua di Gio or Acqua di Gioia purchased, Giorgio Armani pledges to donate around 100 liters of drinking water to the cause through the end of the month. Customers also have the ability to double their water donation by logging onto the dedicated Facebook page.

http://www.acquaforlife.org/Home?cm_mmc=LabeliumSearch-_-GoogleGeneric+AFL-_-Armani-_-acqua%20for%20life

Key Trends From the New York Fashion Trade Shows

FASHION COTERIE

• ·         Skinny and straight boot-cut jeans and flares
• ·         Animal print knitwear, jackets & dresses
• ·         Mixed textures, hard-knit sweaters, cardigans, tunics & turtlenecks
• ·         Outerwear from ¾ length military and aviator jackets to anoraks, capes & furs
• ·         Slinky, sexy tops, vintage blouses and exaggerated necklines

Key Collections

• ·         Desigual

http://www.desigual.com/desigual/index.jsp?storeId=store_gb&locale=en_GB&repriceOrder=true

• ·         ABS dresses  http://www.absstyle.com/

DESIGNERS & AGENTS SHOW

• ·         Boho chic: Floor length floral dresses & artisanal native prints
• ·         Knitwear: From fine gauge to crochet details
• ·         Focus on textures & patterns

Key Collections

• ·         Min Young Lee http://www.minyounglee.net/index.php?/collections/ss2011-1/

• ·         4 Love & Liberty http://jw.mcycorp.com/4love/

• ·         Clover Canyon by Rozae Nichols http://www.rozaenichols.com/collection-rn.asp

• ·         Lilith http://www.lilith.fr/en/index.html

CAPSULE

• ·         Outerwear for the indoors. Heavy grey wools took focus
• ·         Dresses replaced coats as a key item
• ·         Men’s wear details for women’s wear. Tailoring, textures & fabrics

Key Collections

• ·         Billy Reid http://www.billyreid.com

http://www.style.com/fashionshows/review/S2011MEN-BREID

http://runway.blogs.nytimes.com/2010/11/16/the-designer-billy-reid-wins-major-fashion-award/

• ·         Rachel Antonoff http://rachelantonoff.com/

• ·         Penfield http://www.penfieldusa.com/index.php/us

FAME & MODA MANHATTAN

• ·         Funky, stylized basics
• ·         Pastels and natural colors for everyday
• ·         Fur vests, blazers and colorful quilted jackets

THE TRAIN & THE BOX

• ·         Tops & dresses made from silk, organic cotton with organza ruffles and pleats
• ·         Dark colored, stylish basics that can be easily paired with jackets, vests etc
• ·         Accessories: vintage and antique inspired from jewelry to hats and headbands

DESIGNERS AT THE JUMEIRAH ESSEX HOUSE

• ·         Black evening wear was apparent with alternatives in metallic, red and sapphire blue.
• ·         Cocktail dresses, gowns and classic luxury jackets
• ·         Separates with unusual details such as laser cut designs

ATELIER DESIGNERS

• ·         Colors such as papaya, greens, taupes and gray blue
• ·         Assortment of knitwear separates from cardigans to jackets
• ·         Easy dresses and tops with interesting details.

CFDA Award Nominees Announced

http://www.cfda.com/2011-cfda-fashion-awards-nominees-honorees-announced/

http://www.cfda.com/2009cfda-fashion-awards/

http://www.cfda.com/

Womenswear Designer of the Year Nominees:

Alexander Wang

Jack McCollough & Lazaro Hernandez of Proenza Schouler

Marc Jacobs

Menswear Designer of the Year Nominees:

Michael Bastian

Patrik Ervell

Simon Spurr

Accessory Designer of the Year Nominees:

Alexander Wang

Jack McCollough @ Lazaro Hernandex of Proenza Schouler

Reed Krakoff

Swarovski Award for Womenswear Nominees:

Joseph Altuzarra

Ashley Olsen & Mary-Kate Olsen

Prabal Gurung

Swarovski Award for Menswear Nominees:

Alexander Wang

Phillip Lim

Robert Geller

Swarovski Award for Accessory Design Nominees:

Alejandro Ingelmo

Eddie Borgo

Jason Wu

Pamela Love

Honoree Awards:

The Geoffrey Beene Lifetime Achievement Award:

Marc Jacobs

The Media Award:

Hilary Alexander, The Telegraph

International Award:

Phoebe Philo for Celine

Fashion Icon Award:

Lady Gaga

Board of Director’s Special Tribute:

Arthur Elgort

PPR, Owner of Gucci, YSL, McQueen and Puma Unveils New Sustainability Plan

http://luxurysociety.com/news/15374

Paris Fashion Week Highlights

Week in Review

Apparel Prices Rising as Fiber Prices Increase

Many fiber prices have been rising the last year including cotton which has risen 160% from last year from 64 cents per pound to $1.67 per pound, the highest prices since the civil war. In addition to cotton, wool has seen its highest prices in years with a 44% increase in price over the past year and many types of polyester have increased as the price of crude oil has increased. Although polyesters and synthetic fibers have seen a price increase, the increases are nowhere near the price increases of natural fibers.  As fiber prices increase so to will garment costs which will affect consumers at the register with higher retail costs.  Many of these latest increases in fabric prices will be experienced now and possibly increase further during the spring 2012 season.  As many consumers are now finding more value in natural fibers, believing them to be higher quality, this inflation could seriously hinder sales in the coming year, especially with an estimated 10-15% increase in retail prices for this coming fall. (According to WWD 74% of women believe better quality garments are made from natural fibers but only 55% of women said they were willing to pay more for natural fibers despite the increase in price) 

So what is causing these price increases?

Some of the increases in wool are due to the rise in demand as the consumer has shifted back to the desire for garments to be made from natural fibers; however, the increase is mostly affected by production decline. Many sheep farmers in countries like the US and Australia are choosing to change how they use their land and moving to less labor-intensive and more profitable farming such as corn and soybeans.

Cotton prices have also been driven up by an out of balance supply and demand ratio caused by the global economic recovery last year. In addition, there is a high demand from China as a result of the cotton shortfall on the world market. All of this coupled with the challenges in the growth and farming of cotton caused by flooding in areas like Pakistan, Australia and China in addition to India limiting cotton exports last year have affected the price of this material. 

There is no telling how long the increase in prices will last but as mother nature continues to through curve balls in the world’s climate, weather and natural disasters, we may continue to see negative effects on many crops, including cotton.

What many companies are doing in reaction to the price increase is to combine synthetic fibers with cotton to create cotton blends. Blends using cotton, linen, viscose, synthetic and cellulose-based fibers like Lyocell, Modal and Tencel are being shown throughout all of the shows and designers are embracing these blends for their collections. Many designers are remaining positive about these new blends because it creates something new and different. There is still a trend that people will accept price increases if garments have quality construction, have a quality product and a quality idea, cut and style. One thing is certain, basic cotton shirts and blouses will be more expensive.

“Green” Fashion

Making a statement in green fashion has been a trend for a while now but has become more accepted and even demanded by consumers in recent years. Below are some new projects being developed in this important arena of sustainable and green fashions.

To read more about eco fashion visit this fabulous site. Eco Fashion World.

http://www.ecofashionworld.com/

EcoDenim

EcoDenim from Colombiatex has created an innovative denim fabric that is partially made from recycled plastic bottles. The new denim is made from 32% recycled plastic bottles.

http://blog.denimtherapy.com/2011/02/colombiatex-debuts-recycled-plastic-eco-denim-textile/

http://www.waste-management-world.com/index/from-the-wires/wire-news-display/1364571928.html

Alberta Ferretti and Emma Watson Unveil Pure Threads

Alberta Ferretti teams up with actress Emma Watson to create a “green” capsule collection called Pure Threads. Part of the proceeds for this collection will be donated to People Tree, a non- profit that Emma Watson supports, which collaborates with 15 developing countries and stimulates small companies to produce low impact clothing. The collection will consist of 5 pieces: Two dresses, a shirt, a long skirt and a pair of denim shorts all made from organic fabrics like poplin, cotton muslin and hemp.

What to Watch in 2011—Update

Urban Superstores

As mentioned in the original post from January 18^th many of the discount super stores, such as Target and Walmart, were exploring city or urban concepts that were scaled down to fit city landscapes in order to expand into other markets.  Now Target has a plan to open its first CityTarget in Chicago. This new store will be opening in the former Carson Pirie Scott building located on South State Street and Madison Street E in the historic landmark building. Target says it will preserve the historic building and make no changes to this “Chicago treasure.”

Target has also found sites for other CityTargets in San Francisco, Los Angeles and downtown Seattle.

Matthew Williamson Joins the Bridal Market

Bridal was a big trend we reported on January 18^th in what to watch for 2011. Recently Anthroplogie launched BHLDN and ShopBop went live with the online Wedding Boutique. Now designer Matthew Williamson launches his own bridal line. He began testing the waters last year when he unveiled a capsule bridal collection for net-a-porter. The proven sales figures led to this new fashion-conscious bridal collection.

http://www.net-a-porter.com/Content/boutique/wedding?cm_mmc=GoogleUS-_-Bridal%20-%20Designers_US-_-Bridal_Matthew%20Williamson%20EX-_-matthew%20williamson%20bridal

http://www.trendhunter.com/trends/mattew-williamson-bridal-collection

JCrew –Update

The “Go-shop” period ended last month for J.Crew.  Despite entertaining other potential suitors such as Edward S. Lampert of Sears Holding Corp. and Urban Outfitters Inc to take the company private the “shopping” period is over and the $3 billion deal to take the company private will continue with TPG Capital and Leonard Green & Partners.

The story of JCrew and how it became a hot commodity:

http://www.businessinsider.com/the-story-of-how-jcrew-became-the-3-billion-dollar-company-everyone-was-fighting-over-2011-3#the-popular-store-started-off-as-a-low-priced-womens-outfitter-that-made-sales-door-to-door-1

On a side note, Edward S. Lampert turned to the Gap instead and purchased a 5.8% stake in the company last month. To read more on the Lampert’s Gap purchase go to: 

http://online.wsj.com/article/SB10001424052748704409004576146541747431906.html

http://departmentstoreretailing.blogspot.com/2011/02/edward-lampert-moves-in-on-gap.html

http://www.businessinsider.com/eddie-lampert-big-bet-on-the-gap-just-flopped-2011-3

GAP: Strategy for the Future

The Gap has been in desperate need for a re-vamp for the past few years. Recently the Gap changed out some of its executive staff in hopes of turning around the business. Last week the company outlined its plan for the turnaround.

1. Shift marketing dollars to areas that will woo new, younger customers as well as minorities.2.        
2. Maximize the pipeline which has sped up as a result of the overhaul over the past year and provide more on trend product.
3. Close 200 Gap stores by 2013 bringing the new global store total down from 900 to 700. (http://www.fashionologie.com/Gap-Closing-200-Its-900-Stores-Focusing-Younger-Customers-14945555) 
4.   Drive sales through RFID technology that will help locate product for customers both online and in stores. (http://www.aimglobal.org/technologies/RFID/what_is_rfid.asp)

LVMH: The Buying Streak and the Saga with Hermes Continues and Continues and Continues

LVMH and Bernard Arnault have been in the news a lot recently between buying up a storm brands like Ole Henrikson, NUDE, and recently Bulgari to the Hermes saga and the Dior tragedy. The company has had some serious PR issues to contend with. The buying streak continues as Bernard Arnault buys the heritage luggage maker Moynat.  Arnault intends to reinvigorate the brand which is older than the famous Louis Vuitton and there are rumors of LVMH possibly buying the luxury shoe brand Jimmy Choo.

Moynat was created an 1849 and was one of the first leather good companies of its kind.

To read more details please click below to read the fabulous blogs Fashionologie and CPP-Luxury: Business of Luxury:

http://www.fashionologie.com/Bernard-Arnault-Buys-Heritage-Luggagemaker-Moynat-LVMH-Reportedly-Considering-Bid-Jimmy-Choo-14914581

http://www.cpp-luxury.com/en/lvmh-buys-french-trunk-maker-moynat_1195.html

In addition to the continued purchases of Mr. Arnault, the Hermes saga continues as Patrick Thomas, the chief executive officer continued verbally lashing out against Arnault. It is common knowledge that Hermes finds the purchase of its company’s shares to be vulgar and ungentlemanly. Bernard Arnault believes that a relationship between LVMH and Hermes could be mutually beneficial but the family owned Hermes feels differently. The Hermes family has tried to create a united front against Arnault as well as a holdings in an effort to protect themselves from a takeover but not all of the family members  share the same sentiment and believe that there could be major drawbacks for individual family members. 

http://www.fashionologie.com/Hermess-United-Family-Front-Against-Bernard-Arnault-LVMH-Starting-Crack-14943696

Designer Partnerships

These days having your own line is incredibly hard to do despite the success of Alexander Wang and his budding empire. Even the designers that flash across the fashion periodicals as the next big thing have a long way to go before they reach financial success and security, which is somewhat of a myth these days. Self preservation is key and business partnerships are bred and cultivated out of a mutual need and benefit. We have seen designer partnerships at H&M, Sears and even Payless. These partnerships are mutually beneficial for both the retailer and the designer. Bringing more exposure, credibility and a paycheck to the designer as well as bringing exposure, cool fashion credibility and hopefully additional business to the retailer. This is a way to survive as a designer in this age of fashion, inking collaborative deals that are financially beneficial to both parties.

Last fall Sears announced a partnership with French Connection to help spruce up their apparel portfolio and make it more competitive with brands like Target. This past month Target announced a revival of the best of their designer partnerships returning and bringing the best sellers back for a limited time only. Now Christian Siriano, from Project Runway who also has his own line showing at New York’s Fashion Week, is teaming up with Spiegel and creating a capsule collection of special occasion dresses that will be featured in Spiegel’s The Dress Event magazine and online at Spiegel.com beginning April 4^th.

http://www.spiegel.com/shop/category_splash.aspx?gp_coll_id=5001&gp_cat_id=5002&nav_cat_id=16392&category_id=16393

On a separate note, lesser known London based designer Kinder Aggugini is the first to join Macy’s for a series to build up the chain’s Impulse contemporary department. Aggugini will be the first to design a capsule collection which will sell for two months at Macy’s this year. This capsule will be followed by more exclusives from four designers in the fourth quarter, including designs by Karl Lagerfeld. Matthew Williamson will be next on the list to do the capsule collection for Macy’s. Williamson also recently launched his own bridal line.

To see Aggugini’s collection click on Macy’s link below.

http://www1.macys.com/shop/womens/impulse-brands/kinder-aggugini?id=54644

Fashion Tech

Fashion is ever-changing but the new trend in recent years is virtual and online. It seems everything is going online from social networking, videos streaming across the world, e-commerce business, fashion shows live streamed, ordering direct from the runway etc. The internet eliminates borders and creates a larger audience for your business. It is the sector of the fashion industry that is still scratching the surface. Online components and understanding the digital age is necessary for everyone in this new age of fashion. Although online removes the tactile experience one has with clothing and textiles, I am sure one day someone will develop a solution for that experience as well. (Hint to fashion students: Learn about the digital applications companies are now using, learn about programming, digital media etc—these are the opportunities that may be more readily available as traditional operations and roles within the industry are diminishing or eliminated.)

The Digital Trunk Show from Moda Operandi

The latest use of digital media and virtual web concepts comes from Moda Operandi which is bringing the trunk show concept online. The company launched this new concept with Alexander Wang’s fall collection last month on February 16^th. This site hopes to break new ground which gives little lag time to the designer’s runway show and the consumer ability to place an order. (We had seen this concept last fall from Burberry as it allowed customers to place orders for some of the looks that went down the runway.) 

The site also features a gallery of every look from the designer which they shoot in the designer’s showroom on models shortly after the show. Shoppers can then order by putting down a 50% deposit and paying the remainder when it is shipped. In addition to shopping, the site also offers editorials and designer profiles as well as reviews and trend reports. 

This concept certainly makes fashion more immediate and gives designers an immediate response to which items will be hot sellers or popular to the consumer. This is only the beginning as we have seen an influx of digital media and online presence the past couple of years.

Moda Operandi is through invitation only membership.

http://modaoperandi.com/

Alexander Wang Online

As Alexander Wang continues to expand his empire he re-launches his website which will continue to promote his brand with behind the scenes access and product executed with a straight forward and interactive approach. There are several new exciting things that will be happening with the site so we encourage you to keep following it.

http://www.alexanderwang.com/

Employment

It is no secret that the recession has had a major impact on employment for all sectors of business and the fashion industry is no different. Over the past three years jobs have been cut and head counts reduced with no end in sight. As companies continue to react to the changes in sales and consumer mentalities, positions and job opportunities continue to change. New leadership and the changing of the guard has also taken place in several companies over the last few years which has also led to strategy changes and employment changes.

New York City’s fashion industry employment fell 7.3% for the first quarter of 2010 compared to the same time the year prior. The manufacturing sector of the industry experienced a loss of 2,500 jobs and the wholesaling sector also dropped 1,224 jobs. Despite the continued drop in employment it is not as steep as it has been in recent years.  

Chicago Designers in the News

Maria Pinto’s New Gig

Maria Pinto, the Chicago designer who closed her doors after gaining national press from dressing the First Lady has a new job as the new creative director for women’s fashions at Mark Shale.

http://www.chicagomag.com/Chicago-Magazine/The-312/March-2011/Maria-Pinto-Returns-to-the-Fashion-Industry-with-a-Mark-Shale-Gig/

http://www.stylelist.com/2011/03/03/maria-pinto-mark-shale/

Cynthia Rowley’s Pretty Penny

Cynthia Rowley quietly launched a brand extension last November called Pretty Penny that offers support and seed money to budding entrepreneurs.  Pretty Penny’s first beneficiary was Exhibition A which is an online site that sells limited edition art and other pieces at friendly price points.

https://exhibitiona.com/login.aspx

Henri Bendel’s Legendary Designer Open-See: March 25!

 If you are a designer of women’s accessories & handbags, jewelry, beauty, fragrance, gourmet edibles and gifts this is your opportunity to get discovered by Henri Bendel. This opportunity allows you showcase your designs to the Henri Bendel buyers. 

This event is first come, first serve so be there early!

http://www.henribendel.com/fashion-events/open-see