2
WWD, WEDNESDAY, NOVEMBER 25, 2009
WWD.COM
J. Crew Profit More Than Doubles
J. Crew Group is sticking with the
formula — and it’s paying off.
The New York-based specialty retailer on
Tuesday reported net income of $43.9 million,
or 67 cents a diluted share, for the third quarter
ended Oct. 31, more than twice the $19 million,
or 30 cents, reported in last year’s period and 9
cents above analysts’ consensus estimates.
Revenues grew 14.1 percent, to $414.1 million
from $363.1 million, as same-store sales advanced
8 percent. Included in revenues was 19.6 percent
growth in store sales, to $300.1 million, and a 3.6
percent pickup in direct sales, to $105.5 million.
Gross margins jumped to 48.4 percent of sales in
the quarter, up from 41.6 percent a year ago.
On a conference call with analysts, Millard
“Mickey” Drexler, chairman and chief executive
officer, said, “Regardless of the economic environment, our long-term mission does not change — it’s
about product, it’s about quality, it’s about design,
it’s about service, it’s about creativity. It might
sound simple, but in this business, sometimes the
simplest things are the hardest to achieve.”
Revenues at J. Crew grew 14.1 percent, to $414.1 million.
Although the third-quarter results were strong,
the company is still being conservative in its holiday
forecasting. Chief financial officer James Sculley
said, “Our fourth-quarter outlook reflects compstore sales growth in the high-single digits and direct sales growth in the mid- to high-single digits.”
Pressed by analysts to identify from whom J.
Crew was taking market share, Drexler declined
to name names, but said: “We’re not specifically
looking at where our customer came from. You
cannot buy J. Crew anyplace else but in our
stores or online. We control our distribution and
our pricing. I don’t know if we’re getting share
or not, but I do know that if you sell a product
that’s sold in other places today, you better be
prepared to meet prices or lose customers.”
Drexler said that in his early days in department store retailing, “my inventories were, in
fact, managed too often by my competition. So,
as I look at it, if we can offer equivalent or better
style, better value, better service, I don’t think
the customer really leaves someone, but she will
join someone else.”
Drexler said he was pleased with the
Madewell line’s progress and said: “Customers
are loving the tweaks we’ve made to our assortments.” Madewell has moved away from classic
T-shirts and begun to offer more fashion mer-
chandise — such as plaid and chambray shirts,
denim leggings, rail-straight jeans, blazers and
boots — and customers are responding.
Drexler said there are no plans for an aggressive
rollout of Madewell, which he said was in a “somewhat incubation stage.” However, he added its ecommerce launch next year should “make a big difference” in getting more exposure for the brand.
Turning to opportunities for spring and beyond,
Drexler said the company is determined to “own
the men’s suit business” by stacking up its $650
Ludlow or Aldrich model against a $2,000 suit made
in Italy. J. Crew also expects jewelry, new versions
of art T-shirts, women’s blazers, an expanded assortment of dresses, slimmer-fit shirts and men’s dress
shirts to continue to have traction next year.
There are no plans to expand internationally
or open pop-up stores in the foreseeable future,
he said.
The firm said it expects earnings per share in
the crucial fourth quarter of 37 cents to 42 cents,
effectively straddling the current consensus estimate of 40 cents.
For the nine months, J. Crew’s profits grew
22.6 percent to $82.9 million, or $1.29 a diluted
share, from $67.7 million, or $1.06, in the first
three quarters of 2008. Revenues expanded
7.5 percent to $1.12 billion from $1.04 billion.
Comparable-store sales declined 0.4 percent,
matching the performance of the prior year.
J. Crew’s numbers were disclosed after the
close of the markets on Tuesday. Earlier in the
day, American Eagle Outfitters Inc. met analyst
expectations with a 38.9 percent increase in
third-quarter profits.
For the three months ended Oct. 31, the
Pittsburgh-based teen retailer reported net income
of $59.2 million, or 28 cents a diluted share, compared with year-ago profits of $42.6 million, or 21
cents. Subtracting a tax benefit of 7 cents a share,
the firm’s third-quarter profits equaled 21 cents a
share, in line with the average estimates for adjusted earnings of analysts polled by Yahoo Finance.
Sales in the quarter fell 0.7 percent, to $749 million from $754 million, and declined 4 percent on
a same-store sales basis. At AEO Direct, sales rose
10 percent. Gross margin declined to 40.1 percent
of sales from 41 percent in the 2008 period.
“The AE brand showed improvement across
key merchandise categories,” said ceo Jim
O’Donnell, who described the quarterly results as
“below our standards.” He lauded top-line growth
at the firm’s aerie and Martin + Osa nameplates.
The company said comparable-store sales
were down 5 percent during the first three weeks
of November, but because of the importance of
the Thanksgiving weekend, fourth-quarter guidance would be provided as part of its November
sales report on Dec. 3.
Todd Slater, retail analyst at Lazard Capital
Markets, maintained his “hold” rating on the stock
as well as his estimate for fourth-quarter EPS of
32 cents, assuming a low-single- to midsingle-digit
increase in same-store sales. He said AEO’s inventory “could be a cause for concern” unless comps
trend more positively in the quarter.
In the nine months, net income fell 25 percent
to $109.7 million, or 53 cents a diluted share, as
sales contracted 3.1 percent to $2.02 billion.
WwDwednesday
Sportswear
FASHION
cutouts and contrasting fabric insets give
6 Graphic
street-savvy tops, dresses, leggings and jeans a
punch for spring.
GENERAL
more than a year of recession fallout that made
1 After
holiday ’08 a retail Waterloo, stores will put their
austerity strategies to the stiffest test on Black Friday.
with spring, chairman Renzo Rosso
3 Starting
said Diesel will be available at 50 Macy’s doors,
3
9
s
By Jean E. Palmieri
losses declined at Signet Jewelers Ltd.
14 Quarterly
but grew at Zale Corp. as the jewelers cut costs
and inventories, improving margins.
EYE
at the Armani Ristorante on Fifth Avenue
7 Dinner
was a welcome change for Cate Blanchett and
the cast of “A Streetcar Named Desire.”
In observance of the Thanskgiving holiday, WWD will not
publish on Thursday, Nov. 26 or Friday, Nov. 27.
Classified Advertisements.................................................................................................15
To e-mail reporters and editors at WWD, the address is
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WWD IS A REGISTERED TRADEMARK OF ADVANCE MAGAZINE PUBLISHERS INC. COPYRIGHT ©2009
FAIRCHILD FASHION GROUP. ALL RIGHTS RESERVED. PRINTED IN THE U.S.A.
VOLUME 198, NO. 111. WWD (ISSN 0149–5380) is published daily (except Saturdays, Sundays and holidays, with one
additional issue in January, May, October and December, two additional issues in March, April, June, August, September
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DAILY “The people have a
QUote hunger for wealth and
— Michael Silverstein, senior partner and managing director at
The Boston Consulting Group, on affluent Chinese consumers. Page 10.
— With contributions from Andrew Roberts
CORRECTION
Amy Schoening is a founder of True Story, a branding company.
This was incorrect in a story on page 15, Nov. 11.
TODAY ON
Photo by Kristen Somody Whalen
After months of work, Saks Inc. successfully negotiated a two-year extension and
amendment for its $500 million revolving credit
facility, which now expires in November 2013.
“This year we undertook a series of important
actions that strengthened our capital structure
and will provide considerable flexibility going
forward,” said Kevin Wills, executive vice president and chief financial officer. “In addition to
the extension and amendment of the revolving
credit facility, we issued $120 million of convertible notes in May, and we completed a $100 million common stock offering last month. Proceeds
of those transactions were used to reduce borrowings on our revolving credit facility.”
At the end of the third quarter, the luxury retailer had no direct outstanding borrowings under
the facility, which is unencumbered by financial
covenants unless availability falls to less than
$87.5 million. Below that threshold the company
is subject to a fixed charge coverage ratio. Interest
rates on the facility range from 3.5 percent to 4
percent over the London Interbank Offered Rate.
Wells Fargo Retail Finance, UBS Securities,
Regions Business Capital and GE Capital
Markets Inc. arranged the facility, which was
previously set to expire in September 2011.
Speaking via video from New York to a luxury conference in Milan, Stephen I. Sadove, Saks
chairman and chief executive officer, described
Diego Della Valle’s holding in the department
store group as “a passive investment” and ruled
out his direct involvement in the running of Saks.
Della Valle echoed that view from Milan, saying, “Our intention is not to manage but to watch.”
Through his investment vehicle Diego Della
Valle & C.S.A.P.A., Della Valle holds a 5.9 percent
stake in Saks after doubling his holdings in the
retailer earlier in the year.
Shares of Saks fell 9 cents, or 1.4 percent, to
$6.41 Tuesday.
”
prosperity that is unbreakable.
— With contributions from
Matthew Lynch and Arnold J. Karr
Saks Renegotiates Credit Facility
By Evan Clark
10
returning after four years.
The Peter Marino-designed boutique Chanel is
heralding as its most elegant yet opens today in
the Peninsula Shanghai Hotel.
The positive effects of perceived pent-up
consumer demand could be lost in the
Great Tradedown this holiday season.
Marketing: The X factor in China’s burgeoning
luxury consumption is its one-child generation
that sees luxury goods as self-expression.
WWD
.com
Martin Scorsese
and Cate Blanchett in
Giorgio Armani Privé.
• More images from
the Amani dinner
• More looks from Burberry and
Missoni Pre-Fall Collections
• Additional images of Chanel’s
new store in Shanghai
WWD, WEDNESDAY, NOVEMBER 25, 2009 3
WWD.COM
Diesel’s Rosso Seizing the Moment Chanel’s Shanghai Flagship Opens
Religion to Hugo Boss and Seven, and we decided this was a good business opportunity that
would fit us.”
He underscored that Diesel will select pieces
from the brand’s collection for Macy’s and that
it is not designing a specific line for the store.
Retail prices will be $150 and up. “This project
neither replaces nor does it damage our relationship with other stores,” Rosso said.
The company’s relations with Bloomingdale’s,
Neiman Marcus, Nordstrom and Saks Fifth
Avenue, among others, are continuing, and
Diesel selects a different product offer for each
store, Rosso said. He confessed to a soft spot for
independent points of sale, having himself started his business as an independent store. “They
are suffering more, but I like how they are free
to experiment,” he said.
In the U.S., Diesel operates 46 stores, including Diesel KID, 55DSL and outlets. The brand is
also available at 2,550 points of sale in the U.S.
Rosso said the changes underway mark a
“new chapter” for his company, saying he felt
a “new energy” and will intensify his efforts on
the Diesel brand. Rosso said he has been busy
building manufacturing arm Staff International
over the past few years and parent company
Only The Brave, which also controls Diesel. Staff
By Luisa Zargani
MILAN — Change is gaining momentum at
Diesel.
Starting with the spring season, chairman
Renzo Rosso said Diesel will be available at 50
Macy’s doors — returning to the retailer after a
four-year absence. A new chief executive officer
and a new creative director could be selected
in the next few weeks, and for the first time the
premium denim and streetwear company will
exhibit at the international trade show Bread &
Butter in Berlin in January, where it will unveil
a shop-in-shop concept planned to roll out globally next year. In addition, there will be to a runway show of the brand’s fall men’s and women’s
collections on Jan. 20.
“We think this will be a good window for us,”
Rosso told WWD.
“This is our first creative project applied to
multibrand distribution,” he said of the shop-inshop concept. It will be “warm, understated and
rock” — resembling a stage.
After the exit last week of Steve Birkhold as
ceo of Diesel USA to become ceo of Devanlay
U.S. Inc., the licensee for Lacoste apparel, Rosso
said the company’s U.S. branch “is very solid”
and reiterated his commitment to that market.
Conceding it was “a tough
moment” in the U.S. because
of the recession, Rosso said
Diesel has grown almost 2
percent this year in the country, adding he expected double-digit gains in 2010. Diesel
will continue investing in the
U.S. and has earmarked an increase in Diesel’s communication budget for the U.S. of 7 to
10 percent next year.
Rosso said investments
made in 2009, such as the opening of Diesel’s 20,000-squarefoot flagship on New York’s
Fifth Avenue, doubling the
brand’s space in Miami and
the relocation of stores in San
Francisco and Washington,
D.C., will help support growth
next year. Sales in the U.S.
totaled 200 million euros, or
$298.3 million at current exchange, in 2009 and accounted
for about 15 percent of the
brand’s total revenues.
“I grew up with the
American dream, and I will
continue to believe in the
U.S.,” Rosso said.
In an interview with WWD in late October,
Birkhold said denim sales were down in the single digits this year, and fashion apparel shrank
in the double digits. These declines were partly
offset by strength in the footwear, accessories
and underwear businesses, which offer a lower
price point entry to the Diesel brand. Diesel has
emphasized expanding its offerings in lower
price ranges, with some jeans selling for $110.
Outlining the strategy behind Diesel’s partnership with Macy’s, Rosso said: “They presented us with a premium floor project, where we
will be on display alongside brands in line with
our positioning, from Armani Jeans and True
Renzo Rosso
A handbag display at
the flagship.
By Lisa Movius
“
The boutique that Chanel is heralding as its most
elegant, refined and sumptuous opens today in Shanghai.
Designed by Peter Marino, the more than 5,160-square-foot store
is in the Peninsula Shanghai Hotel — the first new building on the
city’s historic Bund waterfront in more than 60 years — and developed by the Old Shanghai hotelier family the Kadoories.
The store is opening in advance of Karl Lagerfeld’s visit to
Shanghai next week, where he will launch a special “Paris-Shanghai
Métiers d’Art” collection and film in Huangpu Park across from the
store on Dec. 3. Although now a construction zone, the Bund’s extensive redesign is intended to transform the area into a luxury
showcase in time for next year’s World Expo.
Marino said the new flagship in Shanghai, long known as the
“Paris of the East,” derives its inspiration from the Paris apartment
of Coco Chanel. Chanel’s signature gold frog, Asian in origin, is replicated in the window displays and combined with other regional
design tropes such as birdcages.
The salon rooms of the store exhibit a variety of antiques and specially commissioned new artworks. From the ceiling of the entry hangs
a swirl of gold and black Muran glass pearls evoking Chanel’s iconic
necklaces and designed by French artist Jean-Michel Othoniel. An Yves
Klein acrylic table, a Sixties starburst mirror and 18th-century French
chairs adorn the shoes and accessories areas. A steel and crystal screen
by Christophe Côme, a bronze table by Ingrid Donat and a Goossens
crystal chandelier join the collection in the watch and jewelry section.
Marino, who has designed Chanel boutiques in Paris, New York,
Los Angeles, Moscow, Hong Kong and Tokyo, said he tried to avoid
the explicit nostalgia evoked by the Peninsula and its location, and
embraced Shanghai’s modernity.
“I hate to tell everybody in Paris, but I’m from New York, and
Shanghai is the number-one city in the world today. So that’s — you’ve
got to go there to see it,” he said. “At the moment, I say to everybody,
‘You want to be a citizen, a modern citizen of the world, you have to
go to Shanghai.’”
I grew up with the American dream,
and I will continue to believe in the U.S.
”
— Renzo Rosso, Diesel
International produces collections for Martin
Margiela, Sophia Kokosalaki, Dsquared, Viktor &
Rolf, Marc Jacobs Men and Vivienne Westwood.
Selection of a new Diesel ceo will free Marina
Tosin, longtime ceo of Diesel and Only The
Brave, to focus on the parent company.
A creative director is expected to soon join
the Molvena, Italy-based company. Rosso said he
had “personally been traveling around the world
over the past two years searching for new, fresh
creativity” for that position. Wilbert Das, the
creative director at Diesel, has left the company
after more than two decades, confirming a WWD
report in March.
The
Peninsula
Shanghai
Hotel.
director of Costume National.
Most recently, Martin was a
fashion journalist.
Alice Bon, formerly of
iorgio Armani, has been
named director of worldwide
product editorial, archive
and public relations, effective
Dec. 16. Mina Nemichi was
picked as director of marketing and communications for
ucci Japan.
In
addition,
Jenny
alimberti was appointed director of communications for
the U.K and for global brand
partnerships, while Annalisa
Dimonte takes on the newly
created role of worldwide relational marketing director.
— Alessandra Ilari
handbags and bottom photos by Lisa Movius
G
G
G
G
G
G
G
E
G
marketing and communications
in North and South America.
She joined ucci from iorgio
Armani in 1998 as manager of
special events.
Lila Staab was hired as director of worldwide entertainment industry relations after 10
years at iorgio Armani, where
she operated in the same area.
In Italy, J.J. Martin was
appointed director of worldwide public relations, special events and promotions,
iulia Masla.
replacing
She started Monday. Martin
served as marketing director
for Calvin Klein’s Jeans and
Underwear divisions in New
York before moving to Milan,
where she worked as licensing
G
na
si
r
ral
G
G
v
s
A
e
e e
e g
tions this month, ucci has reshuffled its staff with a string of
new hires and promotions.
Susan Chokachi was promoted to senior vice president of
marketing and communications
for ucci America, a new post,
reporting to Daniella Vitale,
chief executive officer of ucci
America. She had been senior
executive director of special
events and corporate partnerships and was instrumental
in developing integrated programs and strategic initiatives
such as the UNIC F partnership, the Tribeca Film Institute
Documentary Fund and the
ucci iPhone application.
Chokachi will oversee all
r
ft
Gucci Makes Multiple Executive Moves
Looks inside the shop.
WWD, WEDNESDAY, NOVEMBER 25, 2009
Cut It Out
ks a pun h. — m r day
i
F
Ki
c
ve street-savvy l
True Religion Brand
Jeans’ cotton and
Modal tank top
over Victoria’s
Secret’s bra worn
with Members
Only’s cotton and
spandex denim
jeans. Lia Sophia
ring; T.U.K. shoes.
cco
o
T
o
o
h t s by h mas Ianna
P
nsets
oo
gi
i
ntrast n fabr
ic
g
i
ut uts and
co
o
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Graph
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4
ne
WWD, WEDNESDAY, NOVEMBER 25, 2009 5
WWD.COM
William
Rast’s silk
top with
Serfontaine’s
cotton, nylon
and spandex
leggings.
Noir ring;
T.U.K. shoes.
s
Dolce Vita’s
silk top with
Helmut Lang
Denim’s cotton
and spandex
denim skirt.
Leyendecker’s silk
denim cutout dress.
Lia Sophia bangles.
MODEL: SVETLANA K/TRUMP; HAIR BY SEIJI USING TRESEMME AT THE WALL GROUP; MAKEUP BY WILLIAM MURPHY AT DEFACTO FOR MAC PRO COSMETICS; FASHION ASSISTANT: KELSEY DEGNAN
s Elizabeth and James’
nylon, polyurethane
and leather jacket;
TwoNineOne’s cotton top,
and Victoria Beckham
Denim’s cotton, polyester
and Lycra spandex
leggings with contrast
insets. Elizabeth and
James sandals.
6
WWD, WEDNESDAY, NOVEMBER 25, 2009
WWD.COM
Lean on Me
Burberry
Prorsum
“This collection is anchored in history, and what you’re seeing is a roll call of Burberry
outerwear,” says Christopher Bailey, Burberry’s chief creative officer, of the Prorsum
pre-fall lineup. Coats range from slim wool trenches to cropped leather jackets, in a
palette of dark green, black, khaki and nude. The collection has soft edges, too, via silk
dresses overlaid with delicate lace and tailored skirts with ruffles.
Meanwhile, Angela Missoni, creative director of M Missoni, takes elements from all
over — plissé from Japan, tartan from Scotland, armorlike metal embroideries from
medieval Europe and flowers from the fields to the jungle — resulting in pieces styled
in an effortless mix-and-match way.
M Missoni
photos by kyle ericksen and tim jenkins
Burberry
Prorsum
For more
pre-fall looks,
see WWD.com.
M Missoni
WWD, wednesday, november 25, 2009 7
WWD.COM
Welcome Wagon
FASHION SCOOPS
BERGE’S BOOK FOR YVES: Pierre Bergé, the longtime companion and
business partner of late couturier Yves Saint aurent, is pouring
his heart out in a new book. Bergé has penned “ etters to Yves,”
which will be published by ditions Gallimard in ebruary. he
entrepreneur said uesday the 125-page rench-language tome
contains no photos, only text, and was written between hristmas
— about six months after the designer died of brain cancer at age
71 — and ugust.
Funny to think that even after winning
an Oscar, Cate Blanchett might still suffer from nerves,
but that’s what the actress confessed at the prospect of
playing the iconic role of Blanche DuBois in “A Streetcar
Named Desire” for notoriously tough New York audiences.
“We are bringing an American classic back to American
audiences, so of course that’s nerve-wracking,” Blanchett said at a
dinner hosted by Roberta Armani in her honor on Monday. “It’s also pretty
exciting. [The audiences] are very astute, and particularly out of
BAM [where the play opens Friday].”
So while others might be gobbling up turkey over
Thanksgiving, Blanchett and the rest of the Sydney
Theatre Company, which she helms with husband
Andrew Upton, will be hard at work with director
Liv Ullmann. (The play previously ran in Sydney
and in Washington.)
The dinner at the supersleek Armani
Ristorante at the brand’s Fifth Avenue
flagship was a welcome change for the
theater company, whose official patron is
Giorgio Armani. Fellow Aussie Rose Byrne came
to pay homage, along with Martin Scorsese,
Matt Dillon and singer Ryan Leslie.
“Cate Blanchett can do no wrong,”
gushed actress Emma Roberts.
“This is a different experience than
the hotel we are staying at in Chelsea,”
Blanchett pointed out. “Although we are
in an Armani concept store, so I’m sure
that there isn’t a carb in sight,” she said.
She was sort of right — although there were
bread baskets, the nouvelle cuisine-style
portions of sole and vegetable Napoleon
left more than a few hungry. (Ben Stiller
demonstrated good timing, arriving just in
time for the chocolate cake dessert.)
But food obviously wasn’t the point: “I count
this relationship as a great privilege of my
s Martin Scorsese
life,” said Blanchett of collaborating with
Armani and his niece. “This run of ‘Streetcar’ with Cate Blanchett in
Giorgio Armani Privé.
would not be possible without them.”
DEFENDING LOHAN: manuel ngaro chief executive officer Mounir
Moufarrige dismissed rumors that Lindsay Lohan is on her way out as
the label’s “artistic adviser.”
“ s we speak, she is in ew York in shoots with ngaro,” he
said, amid speculation ngaro chairman Asim Abdullah was fed up
with the controversy and overheated publicity surrounding ohan. “I
totally deny it,” Moufarrige said, referring to a ew York Post report
riday that bdullah wanted to terminate ohan’s contract after the
tabloid sensation’s debut collection — in partnership with Spanish
designer Estrella Archs — was mauled by critics in ctober.
Speaking on the sidelines of a luxury conference in Milan,
Moufarrige conceded the decision to appoint ohan was
“controversial, but then fashion is controversial anyway, and you
need some novelties and you need to test some new ideas.” e
added that ohan, whom he described as a “walking, talking
advertisement,” was helping to raise ngaro’s profile and widen the
brand’s appeal to a younger audience.
“ here are some girls out there that whenever they move,
whatever they wear, they attract attention, even if they make
mistakes. It’s all publicity,” Moufarrige said. “We’ve got a
celebrity and it’s a new concept, which we’re going ahead with.”
nderscoring the point, Moufarrige said ngaro’s sales in its own
stores had “improved” since ohan’s appointment, even though the
starlet’s collection had not yet hit the shelves.
“[ ngaro], let’s recognize it, was a dormant brand, and now
everybody’s talking about it today, so the level of awareness has
improved greatly,” he added.
r a
Eugenia Silva in vintage
Giorgio Armani with Matt
Dillon in Giorgio Armani.
C
U
L
N
H
L
U
T
U
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STELLA LIGHTS UP: It’s something of a tradition for Stella McCartney
to have Brit comedians turn on the hristmas lights at her Bruton
Street boutique in ondon: In the past, stars of “ ittle Britain” and
Peter Kay have done the honors — and this year it was the turn of
surreal act he Mighty Boosh. Dressed as Gothic grannies in nylon
dresses, gray wigs and black eyeliner — a getup they described as
“Stella’s new collection,” — the five-piece cast, fronted by Noel
Fielding and Julian Barratt, played a few of the rock numbers from
their offbeat BB television show to a crowd gathered on the street
in front of the store.
Mc artney danced along at the side of the stage, joined
by guests including her husband, Alasdhair Willis; sister, Mary
McCartney; Twiggy, and Dinos and Tiphaine Chapman, before the
band switched on the store’s window display, which featured an
illuminated Santa, reindeer and holly. ater, guests piled inside
the store to sip hampagne and nibble on candy canes. Mc artney
admitted she asked ielding and Barratt to perform “because we
like their outfits — they’ve got good fashion sense.” nd while it
might have been a raucous start to hristmas for Mc artney, she
said she would spend the actual holiday in a more low-key fashion
“hanging out with the family at home.”
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— Vanessa Lawrence
GETTING COZY: DK Y’s popular cozy may be worn in multiple ways.
hose wishing to find out the tricks behind the piece now can get
their personal stylist to help them with the look. he brand just
launched a DK Y ozy iPhone application, which offers ideas on
how to wear the item of clothing through features
such as step-by-step visual directions on how to
style the wrap and an instructional video.
“We wanted to give the personal-stylist
experience to clients using technology that is
available today,” said Patti Cohen, Donna Karan
International’s executive vice president of global
marketing and communications. “ ot only is it
more environmentally friendly and cost effective,
but the cozy app is always accessible and much
more comprehensible than a printed guide.”
he app was created with timi Software
The DKNY Cozy
Inc., which also developed the Donna Karan
iPhone app.
iPhone application.
TAVI IN TOKYO: ashion blogger Tavi Gevinson is preparing to meet
one of her designer idols: Rei Kawakubo. he 13-year-old, who
writes the blog Style ookie, will be the guest of honor at omme
des Garçons’ holiday party on riday at the 10 orso omo store
in okyo. Gevinson is arriving early this week with her mother and
she has a series of photo shoots with Japanese magazines lined
up, said a omme spokesman. t the party, she will field questions
from guests and pose for more snaps. Gevinson describes herself on
her site as someone who “scatters black petals on ei Kawakubo’s
doorsteps and serenades her in rap.” She’ll finally get her chance.
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In another l fe,
l ne Dav -We ll coul have
made a very good international spy. he petite, soft-spoken
— and, one imagines, secretly formidable — president of
es rts Décoratifs in Paris, one of the largest decorative arts
museums in the world, is so intent on keeping her private
life, well, private, that she deflects all questions of a personal
nature with the skill and grace of a seasoned diplomat.
s a well-known collector, who are some of her favorite artists?
“ h, I can’t tell you.”
Well, has she seen any newcomers recently she liked?
“Yes.”
Will she name them?
“ o.”
Was she surrounded by beautiful
objects growing up in rance?
“Yes.”
ny specific ones come to mind?
“ o.”
While any endeavors at probing
her background and tastes become
an exercise in futility, David-Weill
is more than happy to wax on about
her work. Seated on a sofa beneath
a Picasso nude in the palatial ifth
venue apartment she shares with
husband Michel (a former head of
azard), she explains her passion for
the objects in her museum between
sips of cranberry juice that has been
brought to her on a silver tray.
“Decorative arts is not as
highly considered as modern art or
paintings. It was considered like
an everyday use and, therefore, not
beautiful. Which I think is totally
wrong. When you have a carving of
ivory or wood, they’re as beautiful
as a painting and I don’t see why
they shouldn’t be as highly prized,”
says David-Weill, who, in her role as
president, oversees the Musée des rts Décoratifs, Musée de
la Mode et du extile and Musée de la Publicité, in addition
to a library and school of design. “ ur museum is more like
your house because it’s been a mixture of what people gave
us. nd people gave us what they thought were their most
beautiful objects…so we have anything that man created
since medieval time up until today. It’s really the history of
the creativity and imagination of man. nd his designs and
goal to make everyday life more beautiful.”
n Saturday, David-Weill hoped to spread her mission to
C
mo
ie
weill
b
le
ew Yorkers when she hosted a casual dîner de famille for
scar and nnette de la enta, ina Griscom and eonel
Piraino, rédéric and Marie Malle and Pierre Durand in
the Millbrook home of igel and Julia Widdowson, both
members of the museum’s International ommittee.
“ mericans are more open, they’re more used to giving
money to museums,” she explains of her outreach. Indeed,
unlike most state-owned rench institutions, es rts
Décoratifs is private and therefore relies heavily on donations
from friends and, by proxy, the efforts of its president.
(She initiated a five-year renovation of the museum, which
reopened in September 2007.)
“I’m just begging,” quips David-Weill of her pitch. “I try
to explain that the decorative arts is very important because
it’s an important way for artisans to express their imagination
and that shouldn’t die.”
ers is an approach honed by
years in the museum world. Prior to
arriving at es rts Décoratifs, DavidWeill was president of the riends of
the entre Pompidou for 10 years.
“ he idea was to explain to the
rench people that modern art was
very important and very beautiful,
so I took them around the world to
see modern art collections,” she
says of her time there.
here is no better testament
to David-Weill’s balance of
contemporary and decorative tastes
than her own home. giant JeanMarc attier rococo painting greets
guests to her apartment (once
owned by Bill Paley); her study
holds a Picasso, a Miró and a work
by the fro- uban Wifredo am
(one of David-Weill’s first modern art
purchases); ouis Quatorze chests
mix with orots and a van Dyck in
her living room, and her hallway
is lined with pieces as varied as
uremberg silver and Mesopotamian
Hélène David-Weill
and Sumerian objects.
s she fingers her collection, her
eyes light up and she offers a few token personal tidbits: She
was raised in an 18th-century house in eastern rance. She
was introduced to modern art by Michel who is a trustee of
the Metropolitan Museum of rt. er eldest of four daughters
works with 17th- and 18th-century paintings at Sotheby’s ew
York. She divides her time between ew York and Paris, where
they have an apartment in Saint-Germain-des-Prés.
“ nd now you know everything,” she smiles. r as much
as you ever will.
id
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COSTUME CHANGE: While accessories aficionados await the first
fruits from Camille Miceli in her new role as the artistic director
of hristian Dior’s costume jewelry lines, the style maven’s former
employer, ouis uitton, is said to have tapped her replacement.
Word has it former Marc Jacobs collaborator Clare Corrigan will fill
Miceli’s shoes as uitton’s costume jewelry designer. he British
accessories designer worked for four years on Jacobs’ signature
runway jewelry, as well as his home collection, before going on to
launch her own modern jewelry line, usch, last year.
el
nd
F
Emma
Roberts in
Emporio
Armani.
L
Roberta Armani
in Giorgio
Armani and
an Emporio
Armani jacket.
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party HO OS B K IS EN SOMOD WH LEN; av -
L
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y
x
Rose
Byrne in
Emporio
Armani.
8
WWD, WEDNESDAY, NOVEMBER 25, 2009
Media/Advertising
U.K. Magazines Branch Into Retail
The Monocle shop.
Wallpaper’s Wallspace at La Rinascente.
By Nina Jones
LONDON — Wallpaper, the London-based design magazine, has built its reputation on
the slick edit of hard-to-find design products and trends that it showcases each month.
So for editor in chief Tony Chambers, it made sense for Wallpaper to “bring the pages
to life,” in the form of a shop called Wallspace, which opened recently in the new
Design Supermarket area of Milan department store La Rinascente.
“We’re making the stuff we like more readily accessible,” said Chambers, adding
the area would carry items such as electronics by the Japanese label Plus Minus Zero,
porcelain rice bowls by Alexa Lixfeld from Germany and David Chipperfield’s Tonale
homeware for Alessi.
“With the strength of the Wallpaper brand, it’s sort of a seal of approval,” he said.
Chambers added he anticipates the retail area — which was created by La
Rinascente’s chief executive officer Vittorio Radice, formerly of Marks & Spencer
and Selfridges in the U.K. — will provide a similar boost to the magazine’s profile.
“It’s quite important for a publication to be a brand,” said Chambers.
Gord Ray, publishing director of Wallpaper, said the concept could eventually
provide revenue for the title. “In the first instance it’s a branding exercise, but we are looking at ways for it to switch to be a
A Jake and Dinos
revenue generator. However, our revenue model won’t suddenly
Chapman print.
switch to becoming a retailer,” he stressed, adding the magazine
is also looking at launching the Wallspace concept in another city
during 2010.
Wallpaper isn’t the only magazine that’s parlayed its title
into retail. Since its launch in 2007, Monocle — launched by
“
It’s quite important for a publication
to be a brand.
”
— Tony Chambers, Wallpaper
­­
Wallpaper and Wink Media founder Tyler Brûlé — has offered exclusive products for sale via its Web site, such as a leather notebook designed with Valextra, watches made with the Japanese
company Beams, and wool scarves with Drakes. The magazine
now has its own brick-and-mortar boutiques in London and Los
Angeles that stock similar merchandise to the site, as well as
back issues of the magazine.
Meanwhile, Jefferson Hack, editor in chief of Another Magazine, recently launched
an online store, shop.anothermag.com, which offers limited edition art prints by artists including Jake and Dinos Chapman, alongside a line of products such as a scented
candle with Colette — formulated to mimic the fragrance of newsprint; a neoprenelined CD case by Raf Simons, and a laptop case by Gareth Pugh made with manufacturer Incase.
Hack doesn’t view the project as a commercial endeavor. “It’s not really just about
selling the products; it’s more about having fun with the idea of how fashion and
product design intersect,” said Hack, adding he believes he’s just as likely to lose
money on the products. “The most commercial benefit is being able to create fun, instore and window projects at Colette, Opening Ceremony, Joyce and Liberty [where
the products will be sold]. That means the actual print issue of Another Magazine gets
maximum visibility at retail, directly influencing the sales of the fashion featured in
the magazine in some of the most difficult retail times ever.”
While these fashion and design titles are creating retail spaces and products as an
extension of the brand, publishers are jumping into retail as a way to get an insight
into the behavior of potential readers and customers — or to convert their community
of readers into customers.
Earlier this year, News International Ltd., the British division of Rupert Murdoch’s
News Corp, took a minority stake in Brand Alley, an online private sales site for de-
signer clothes, homewares and accessories. Rob Feldmann, ceo of Brand Alley UK
Ltd., said while Brand Alley doesn’t share data with News International, it talks to the
publishing company about the trends the site is seeing in buying habits.
“If Brand Alley looked at the purchases in Manchester, we’d see in that demographic it’s women aged between 35 and 45, mostly working mothers, who are spending between 80 and 100 pounds [between $133 and $167],” said Feldmann. “That might
be helpful to News International if they’re trying to find that sort of reader for Sunday
Times Style or the News of the World’s Fabulous magazine, they might then do an
event in Manchester. We are very data-driven and publishers are interested in finding
out about consumer habits,” added Feldmann.
Feldmann said insight into customer behavior could potentially help News
International target offers to its readers. He pointed to a venture News International’s
Fabulous magazine and Brand Alley had partnered on in September, when the site
held an online designer shoe sale with Fabulous to raise money for U.K. charity
Wellbeing of Women. Visitors to Fabulous’ Web site were given the option to click
through to Brand Alley’s site to buy discounted designer shoes in aid of the charity,
and were then given the option to become Brand Alley members.
“To keep their circulation up newspapers want to offer something special to readers,” Feldmann said. And the designer sales
concept seems to be a popular model for publishers to present
to their readership. As reported, Daily Candy will launch a private sales Web site, Swirl, later this month and last year German
publishing group Gruner + Jahr, which publishes titles such as
Brigitte and Stern, took an undisclosed stake in Madrid-based private sales site Buy VIP. The Spanish online designer sales company has a similar members-only model to Brand Alley.
Meanwhile Bauer’s U.K. arm, which publishes Grazia, POP and
More, took the step of launching its own private sales Web site,
Cocosa, late last year. “Cocosa excited Bauer as it was a new service for our existing consumer base and opened up a new e-commerce revenue stream that would allow us to both generate significant profits…and to learn from for further initiatives,” said Andrew
Robb, managing director of Cocosa, who added the site now has
around 115,000 members “and is showing good revenue growth.”
Robb said the site was originally designed with the Grazia reader
in mind, but Cocosa’s membership has turned out to be “even more
affluent than the already sophisticated Grazia audience.”
Bauer has added a retail element to that title, too. Last month,
Grazia partnered with eleven British retailers including Topshop
and Whistles, to design a piece for each of the labels. The pieces
were sold both in the individual retailers’ stores and via Grazia’s
Web site. The project was an editorial promotion as a opposed to a revenue generator
for Grazia, and was promoted in the magazine’s pages and on its Web site. According
to Grazia’s editor in chief Jane Bruton, the project served to highlight the potential of
the magazine’s readers to become customers of the retailer. “[The collection] underlines Grazia’s unique relationship with fashion retailers in driving women directly
into their stores,” she said.
Desmond O’Rourke, course director of the master’s program in publishing at the
London College of Communication, believes publishers moving into new business
areas is an inevitable result of the dip in advertising revenues. “Publishers are trying
to get to grips…with the Internet seeping advertising away. They’re beginning to realize they’ve got intangible assets in their brand equity and that they should leverage
their brand,” said O’Rourke, adding readers aren’t necessarily wary of their news
providers branching into commercial endeavors. “We’ve got quite a literate consumer
culture, who know and recognize what advertising is.”
However, O’Rourke did underline that any retail or product related project should
have a “synergy” with a magazine’s brand. “It’s very important to make sure you don’t
devalue the brand, and you don’t want to compete directly with your advertisers,”
he said. “I think there’s increasingly a blurring [between advertising and editorial].
Whereas people [once] said ‘we have media companies,’ they’ll increasingly say ‘we
have brands that can articulate values across different media.’”
WWD, WEDNESDAY, NOVEMBER 25, 2009 9
WWD.COM
BYRNE SAYS BYE: Though John Byrne said just two weeks ago he would, in
fact, stay with BusinessWeek after Bloomberg completes its acquisition
of the title in December, the executive editor and editor in chief of
businessweek.com has reversed field, stating he is leaving to start his
own digital media company in California. His move comes a week after
Bloomberg appointed Time deputy managing editor Josh Tyrangiel to editor
in chief of the magazine. Byrne sent a memo to staffers on Wednesday; the
news was reported on businessweek.com on Tuesday afternoon.
In a Nov. 6 Memo Pad item, Byrne, through a spokeswoman, denied
he would be moving out west to live with new bride Katherine Rodler in
San Francisco, after The New York Times wedding announcement on Oct.
16 said he planned to relocate. But he wrote in his latest memo: “After
spending 22 years of my professional life at BusinessWeek, I’ve decided
to move on when Bloomberg becomes its new owner next week.” Byrne
joined the magazine in 1985, left in 2003 to become the editor in chief
of Fast Company, and rejoined in 2005 as executive editor. “I’m flattered
and thankful that Bloomberg provided me an opportunity to stay with
BusinessWeek, but my passion to chase this entrepreneurial venture feels
like the right move at this stage in my career,” he wrote. — S.D.S.
OLIVER’S ACTORS: Oliver
Peoples is adding two
Elijah Wood and
more screen stealers to its
Shirley Manson for
advertising roster. For its
Oliver Peoples.
2010 campaign, the Los
Angeles-based eyewear
firm partnered once
again with photographer
and director Autumn de
Wilde and cast actor
Elijah Wood and Garbage
vocalist Shirley Manson
to star in a short film
based on the collection.
Past campaign stars have
included Zooey Deschanel
and Robert Evans. Shot at
Silver Lake’s Paramour
Estate, this year’s short
showcases the duo
in a variety of vintage
styles that match Oliver
Peoples’ retro-inspired
spring collection.
“I was eager to be involved in a project that had so many
dimensions,” Wood said. “And working with Autumn, you know exactly
what you are signing up for — a creative journey with a gold mine at
the end.” The Oliver Peoples 2010 campaign launches this month on
oliverpeoples.com. — Caroline Tell
J. CREW DRESSES MARTHA: J. Crew’s creative director, Jenna Lyons, will
appear on “The Martha Stewart Show” on Black Friday, the biggest
shopping day of the holiday season. Martha Stewart wore a look from J. Crew
while interviewing Lyons on her inspirations for the winter 2009 collection
and showed looks from the latest catalogue. The show also aired images
of Lyons’ turn as model in the next catalogue, along with her brother and
father. Stewart took a keen interest in Lyons’ attractive sibling, asking “Is
he married? Girlfriend? Because we have so many women here looking for
handsome guys like him. We’re always looking.” — S.D.S.
— Jennifer Weil
BEAUTY BEAT
Inter Parfums Reiterates Full-Year Guidance
PARIS — Inter Parfums SA on Monday confirmed its guidance for 2009 and said it expects to close
2010 with sales of more than 265 million euros, or $395.7 million at current exchange, on growth
of more than 9 percent at constant exchange rates.
The Paris-based subsidiary of Inter Parfums Inc. expects to end this year with sales between
250 million euros and 255 million euros, or $373.3 million and $380.7 million, representing a marginal year-over-year decline.
The company said it is strengthening its prospects through the addition in June of Burberry’s
full makeup line and further expansion of its portfolio. This includes having inked a fragrance licensing agreement with Jimmy Choo this fall. Another deal with a major luxury brand is expected
in early 2010, stated Inter Parfums.
Expected to bolster its sales next year are numerous initiatives, including Burberry Sport
women’s and men’s fragrances in February and Van Cleef & Arpels’ Oriens women’s fragrance
line in March.
— J.W.
Quiksilver Goes Big for 40th Anniversary
By Natasha Montrose
PARIS — The Grand Palais, the
elegant glass-domed exhibition hall here that is home to
Chanel fashion shows, art exhibitions and swanky antique
fairs, took on a different character last weekend as surfwear
giant Quiksilver celebrated its
40th anniversary, complete with
what was billed as the biggest
vert ramp in Europe.
Over two days, thousands
of skate and extreme-sport enthusiasts wheeled their way to
the event to catch a glimpse of
Tony Hawk and Kelly Slater,
along with a fashion show and
a live art performance by graffiti artist-nightclub impresario
André Saraiva.
“It brings together skate,
music and art,” said Quiksilver
chief executive officer Bob
McKnight. “We are excited to
celebrate [the] anniversary with
the greatest global athletes who
create the story of Quiksilver.”
Along with Slater, Reese
Forbes, Alex Olson, Jérémy
Florès, Robby Naish and Kassia
Meador were among the brand’s ambassadors
who took to the runway or ramp for Quiksilver
and Roxy, the Huntington Beach, Calif.-based
firm’s women’s label. They then gave way to
Hawk and his crew, Sergie Ventura and Jean
Postec, who wowed fans with their skating skills.
Chichi Menendez of Fandango.com teamed up
with Quiksilver to mount an exhibition chronicling 40 years of urban, sport and surf fashions
— from psychedelic board shorts to today’s hightech helmets with built-in MP3 players.
A seven-time surf world champion, Slater has
Photos by Feli e anguinetti
TIME CUTS: Elsewhere at Time Inc., another round of staffers was let go on
Tuesday. At Fortune, about 14 people were let go, including three assistant
managing editors, because the magazine didn’t get enough volunteers to
accept buyout packages. In all, about 20 people will leave the magazine.
Also, Sports Illustrated will part ways with about 10 staffers across the
group, including SI Kids, Golf and their related Web sites, most of which
went voluntarily. But the involuntary departures were mostly at si.com.
Fortune and Sports Illustrated were believed to be among the hardest
hit of the magazines in the company’s latest round of layoffs, which has
cut nearly 400 employees this month as Time seeks to cut $100 million in
costs. Time magazine and People didn’t have layoffs Tuesday, as both titles
were said to have reached their goal of voluntary buyouts. Time had wanted
a dozen volunteers. At People, about 15 employees have volunteered to take
the package, including staffers across editorial, art and photo. More than
half of those had been with the magazine for more than 10 years. People
had been looking for just eight volunteers to take packages. Among the
bigger names said to be leaving the magazine include film critic Leah Rozen.
Rozen had been with People since 1991 and also has a weekly segment on
CNN’s “Showbiz Tonight.” — Stephanie D. Smith
PARIS — A.S. Watson Group on Tuesday opened a Watsons Your Personal Store in Shanghai, marking the chain’s 500th location in Mainland China. The debut is a significant landmark in ASW’s
two-year plan to have 1,000 stores there and more than 10,000 globally, the company stated.
“Despite the global economic recession, we managed to maintain our growth momentum while
having tight control on costs,” said Dominic Lai, group managing director, at the opening of the
Watsons location in Mall 818, according to an ASW statement. “In the first six months of this year,
we achieved a like-for-like positive sales growth of 4 percent in a market context which remains
challenging, especially in some parts of Europe. I am pleased to see that, in many places, our
growth rate exceeds that of the market.
“Next year alone we will accelerate growth by opening 67 percent more new stores than this
year, representing two new stores a day throughout the year,” he added. “Store openings aside,
our game plan is to deliver sales growth by focusing on building customer loyalty and growing
basket size. We are investing significantly in building our customer relationship management
platforms and our loyalty programs in more and more markets.
“Currently, we have 28 million customers in our database,” said Lai. “And to drive differentiation, we will increase collaborations with strategic suppliers to improve category management
and bring more innovative products to our customers at great value. Increasing our own brand
product offers is also high on the agenda.”
Citing a recent report from Euromonitor International, ASW called Watsons the leading retailer in Mainland China’s health and beauty market that’s worth 500 billion yuan, or $73.2 billion
at current exchange. More than three million people shop weekly at Watsons, which is in 80 cities
(including 60 percent of cities in Mainland China).
For its part, ASW counts 8,600 stores in 34 Asian and European markets. Alongside Watsons,
ASW’s retail holdings include Marionnaud, ICI Paris XL and The Perfume Shop. Overall, ASW
boasts 25 million customers a week.
S
NO WEDDING PARTY: InStyle Weddings will cease publication after its next
issue, which will hit newsstands Dec. 25 and run through March 5. Nine
people have been laid off. The economic downturn has been particularly
brutal for the weddings market, with Condé Nast Publications closing
Elegant Bride and Modern Bride earlier this year, and Time Inc. execs
concluding InStyle Weddings was no longer a viable business. Time Inc.
launched the wedding title in 2000 as a onetime issue, and in 2005 went
to four times a year on newsstands.
InStyle will continue to publish special issues, such as InStyle
Hair, which launched earlier this year and sold 220,000 copies on the
newsstand, and InStyle Makeover, which has sold 259,000 copies this year.
In the third quarter, the average issue of InStyle sold 772,000 copies on
the newsstand.
As media players continue to downsize their exposure to the wedding
market, American Media Inc. recently disclosed plans to launch
Shapebride, an extension of Shape magazine that will arrive on newsstands
Valentine’s Day weekend. — Amy Wicks
Watson Opens 500th China Unit
p
MEMO PAD
The illuminated roof of Grand
Palais (above) and skaters on the
vert ramp (left).
been sponsored by Quiksilver
for 19 years and said he just
inked another five-year contract
that could include a signature
clothing line.
Other Quiksilver brand ambassadors are pursuing collections under the company
banner. Meador is the second
female surfer after Tory Bright
to design a collection for Roxy.
It’s slated for spring-summer.
“I have just designed a wetsuit line, and am
designing a signature line with T-shirts and leggings,” she said. “Everything is in a gray scale.
It’s for the urban surfer.”
Team riders Forbes and Olsen are working on a new line of skate gear and denim for
Quiksilver for fall 2010.
“Everything will be rider focused, so it’s
good to include the riders in the clothing process,” Forbes said. “Our denim has a feature
called Coolmax, that’s integrated into the clothing so one can skate and sweat all day.”
e nes ay, november 25, 2009
WWD.COM
China’s luxury consumption, now centered in
first-tier cities like Shanghai, is expected to
expand into second- and third-tier cities.
d
d
w
Marketing
China’s Luxury Scene Growing With Young Adults
t
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t
s
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Chanel’s Beijing boutique, Dior in Shanghai and Miu Miu in Shenzhen are a few of the many
luxury destinations dotting China’s first-tier cities.
“gorgeous” wood furniture, a big flat-screen TV, and a
4-by-5-foot kitchen, with a small sink, a small Haier refrigerator and a flat-top grill without a vent.
As 2009 draws to a close, China will rank as the world’s
second-largest luxury goods market, topped only by Japan,
with consumer purchases totaling between $5 billion and $6
billion, based on estimates of the World Luxury Association,
China Market Research and Goldman Sachs. China surpassed the U.S. in January to take the number-two spot.
Purchases of luxe fashion accessories — handbags
for women and watches for men — typically serve as
the entry point for future purchases of luxury apparel,
often bearing the same designer names as the favored
accessories, Pao said, citing “The China Luxury Panel”
survey of 448 individuals — most of them women ages 20
to 39 — with high net worth.
C
st
A
L
1. Food/dining
2. Traveling
3. Home decor
4. Music
5. Film
6. Fashion
7. Literature
8. Art
9. Architecture
10. Sports
Source: Pao Princi le, “The hina
uxury Panel,” July- ugu 2009
p
l
Top 10 Lifes y e n eres s
Among Aff uen Chinese
t
Young adults reared by mothers and fathers who were
“prodigious savers,” the urban Chinese in their 20s and
30s are receiving some funds from their parents — cash
flow that is propelling luxury spending, said Michael
Silverstein, a senior partner and managing director at
The Boston Consulting Group, who visited Beijing and
Shanghai in the summer. “The vast majority of luxury
goods [in China], around 75 percent, are purchased by
people under 40,” he said. “This is a young movement.”
This youthful appetite is not lost on the world’s major
luxury brands, pioneers in China such as Louis Vuitton,
Lanvin, Hermès, Gucci, Chanel, Prada, Cartier and Tiffany
& Co. “The desire to differentiate among ‘one-childs’ will
spur new merchandising and marketing efforts,” Pao forecast. “Much of the luxury [consumption] flow goes to Hong
Kong, now,” rather than to the Mainland.
Roughly 300 million affluent and wealthy Chinese —
including many of the 37.9 million in this cohort born
since 1979 — are considered the most likely consumers of
luxury in a population of 1.35 billion. The majority of this
group is between 20 and 40 years old, while their counterparts in the U.S., Japan and Europe are mainly people
acquiring luxuries much later in life, ages 40 to 70.
With housing and food available in China at far
lower costs than is common in developed nations, annual household income of about $6,000, or 40,920 yuan,
allows for savings and discretionary spending that could
include luxury goods, Silverstein said. Such luxuries encompass $400 Chanel sunglasses as well as $200 Adidas
and Nike running shoes, also seen as premium products
in the emerging economy.
“People are very brand-conscious and buy highly visible things they can wear around,” he said, citing “watches
L
The X factor in China’s burgeoning luxury
consumption is the country’s one-child generation — a
group of people who tend to be highly individualistic and
perceive luxury goods as a way to set themselves apart.
The population policy, in place in China’s cities for
30 years, has created a value system among these millions of only-children that is “more self-indulgent and
self-interested” than the more communal ways of their
predecessors, said Patti Pao, president and founder of
strategic consultant Pao Principle and author of a new
“China Luxury Panel” report.
“The one-child generation will have a huge influence,” said Pao, who was born in the U.S. after her
parents fled Mainland China for Taiwan when the communists took power in 1949. Theirs is often a sensibility
inclined to “bring on the Balenciaga, bring on the Yves
Saint Laurent,” she added, in contrast to the rising tide
of young adults globally who are clamoring for the fastfashion, designer one-offs of stores such as H&M and
Zara, and the cheap chic of players like Uniqlo.
Among this group of wealthy individuals, almost nine
in 10 women had bought a luxury handbag in the previous 12 months, and seven in 10 had bought two of them.
Six in 10 of the men had purchased a luxury watch.
In a list topped by food/dining, apparel ranked as the
sixth most “intriguing life sector” for the consumers Pao
Principle surveyed in July and August. Traveling placed
second, followed by home decor, music and film.
About half of the middle- to upper-class panel participants had annual income of between $7,300 (50,000 yuan)
and $29,300 (199,999 yuan) and seven in 10 were college
graduates. In an economy forecast to grow 6 to 7 percent
this year and 10 percent in 2010, how quickly luxury consumption expands in China will depend, in good measure, on how quickly the business sector creates senior
management jobs and incomes, Silverstein said.
And if high-end consumption keeps slowing down
elsewhere, new attempts to market prestige products
in China are likely to accelerate. “Super high-end apparel probably will suffer more than luxury overall”
through 2010 worldwide, said Claudia D’Arpezio, a partner in Bain & Co.’s Milan office. “People are still trading
down a lot from pure luxury brands on the high end.
In Europe, more democratic-but-fashionable chains are
growing and increasing market share a lot.”
At the same time, the nature of luxury itself is fast
changing. “As we move into the 21st century, many are
saying that time is a luxury,” Weiner noted. “Luxury
can be reducing stress, increasing the quality of relationships, getting more sleep at night.” In such an environment, people may be heading to new points on the
luxury landscape, Weiner suggested, such as opting for
more sophisticated electronic media and mobile communications devices, or spending more money in the
virtual reality area.
t
that show big logos” as an example. In addition, Pao said
the “really flashy” clothes, the “really short skirts” or the
pairing of jeans with a Chanel jacket and Balenciaga bag
prompted her to think: “You go out in public like that?”
“They look weird, but they look cool,” she added of the
eclectic sensibilities. “They are much more aspirational.”
About 40 percent of Chinese consumers’ luxury purchases are transacted in Mainland China, 48 percent in
Hong Kong, and the balance are made elsewhere, Pao
explained. Roughly 60 percent of luxury spending in
China stems from existing family wealth, with the rest
paid for with earned income, according to the Hong
Kong Trade Development Council.
“You have four grandparents and one child, so there’s
going to be a lot of attention and money lavished on that
child,” Edie Weiner, president of futurist Weiner, Edrich,
Brown Inc., observed of the one-child generation.
“They totally distort their spending to get things
they really want — big-screen TVs, high-end bikes,
leather couches,” Silverstein recalled of his recent visits to middle-class homes. It was not unusual, he said
of such trade-offs, to visit a home with a leather couch,
By Valerie Seckler
The latter has become a concern of the Chinese government, Weiner added, as its affluent population boosts
spending for cyber currency it can use in virtual communities — tax free and posing the possibility of inflation.
In the meantime, long-term commitments of seven to
10 years have been staked by key luxury concerns. “Big
brands like Louis Vuitton and Hermès are prepared to
make money there,” Pao said. “They are investing for
growth over the next 10 years,” a period in which prestige consumption is expected to move from first-tier cities like Beijing, Shanghai, Guangzhou and Shenzhou
into second- and then third-tier cities.
For now, they’ll be buttressed by the hundreds of millions
of consumers in China who desire what Silverstein described
as authentic foreign luxury brands: “The people have a
hunger for wealth and prosperity that is unbreakable.”
Pho o by o Mak/ edlink/ orbi
10 WWD,
In Print & Online: January 14 | Space Close: December 21
For more information on advertising, contact Christine Guilfoyle,
publisher, at 212-630-4737, or your WWD salesperson.
PHOTO BY KYLE ERICKSEN
YOUR FASTEST CONNECTION
TO THE GLOBAL YOUNG
CONTEMPORARY MARKET
12 WWD, WEDNESDAY, NOVEMBER 25, 2009
Black Friday Showdown for
Continued from page one
“While Coach does not go ‘on sale’ in our retail stores, we do expect that the atmosphere will likely remain very promotional at retail, irrespective of cleaner inventories, as the customer has been trained to wait for promotions,” he said. “We’re
confident that this holiday will be better than last.”
Even as the consumer “is feeling somewhat better about the economy…she is looking for innovation, relevance and value — prices need to make sense,” Frankfort
said. “She is also looking to be surprised and delighted. Playing it safe won’t work
for retailers.”
More stores are opening on Thanksgiving Day and the deals will continue until
Cyber Monday, traditionally the busiest day for e-commerce. Wal-Mart Stores Inc.,
applying price-cutting pressure on all fronts as it seeks to grab the biggest chunks of
consumers’ disposable incomes, will get a jump start on Thanksgiving Day when it
offers 50 online-only specials with savings of as much as 40 percent on electronics,
video games and toys.
“The starting gun is firing earlier,” said Bill Lewis, executive vice president of
Karabus Management. “The race is much more value driven with more online advertising. Consumers are using mobile devices to check prices. The consumer will
comparison shop more and exchange more to get the best price.”
Wal-Mart made the first warning shot, pledging to match local competitors’ advertised prices other than limited-quantity doorbusters.
Kmart began its “Better Than Black Friday” doorbusters program on Nov. 6, along
with “Blue Friday” specials throughout the month. Products include $15 Protégé
boys’ basketball shoes, $6.99 men’s Basic Editions jeans and Little Letters Learning
Laptops at 50 percent off.
Since mid-November, Sears Holdings Corp. has been advertising “Black Friday
Now” doorbusters each Saturday on products ranging from home electronics and
jewelry to apparel. The retailer, which is also touting its layaway policy, is suggesting
customers reserve their gifts early, pay for them over time and pick them up right
before the holidays. A Black Friday VIP Sweepstakes on Facebook and Sears’ Web
site gives winners a $500 gift certificate and the chance to shop the retailer’s Black
Friday deals today.
Kohl’s Corp. will have more than 300 items specially selected for Black Friday.
Stores will open at 4 a.m. that day. The company is also offering specials on its Web
The new guiding principle is the need for the
“majority
of sales to be profitable.
”
— Bill Lewis, Karabus Management
site beginning at midnight on Friday.
Sam’s Club will open on Friday at 5 a.m. and
serve a hot breakfast to members only, along with
savings on 40 items. Advertised specials include
Vizio 47-inch LCD TVs for $997; a three-piece 1/3carat diamond and sterling silver bracelet set,
$148, and toys for $15 and $20.
And, borrowing a page from the mass crowd,
Lord & Taylor for the first time will open at 5 a.m.
instead of 7 a.m. Mary Beth Sheridan, executive vice
president of stores, said the retailer is responding to
the competition. Also on Friday, L&T will give doorbuster gift cards good for $20 off on purchases of $40
or more to early-morning shoppers.
Sheridan said L&T is doing what it takes to gain
share. “We looked at what happened last year and
thought it through,” she said. “We asked what time
our core customer will come out, not necessarily
when Wal-Mart is opening. And we looked at the
best way to hand out the doorbuster cards and handle crowd control.”
The retailer’s Black Friday strategy also includes
“Two-Day Specials” offered on Friday and Saturday,
such as women’s private label cashmere sweaters for
$59.99; men’s Black Brown 1826 cashmere sweaters,
$89.99; women’s down jackets, $69.99, and wool peacoats, $89.99. Fine jewelry promotions include $299.99 diamond-stud earrings.
Macy’s will open at 5 a.m. on Friday and a variety of special items will be available
until 1 p.m. Among the offerings will be 1/2-carat diamond pendants in white gold,
$299, down from $700; men’s Timberland puffer jackets, $39.99, reduced from $99.50;
Tommy Hilfiger men’s leather bomber jackets, $99.99, regularly $350, and DKNY women’s down coats, $79.99, regularly $265.
In its third-quarter earnings conference call on Nov. 11, the company said it was
slightly positive about the fourth quarter.
“We are encouraged by recent trends and now expect the fourth-quarter sales to
exceed our prior plan, as sales did in the third quarter,” said chief financial officer
Karen Hoguet. “We are now assuming that comp-store sales will decline in the fourth
quarter only 1 to 2 percent. This would translate to minus-2.1 percent to minus-2.6
percent for the fall season, which is obviously much better than our prior guidance of
minus-5 to minus-6 percent.”
Retailers have strategized this year to avoid a repeat of last season, which was
notable for markdowns of as much as 60 to 80 percent as retailers sought to move
overstocked inventory amid the throes of the economic meltdown.
However, with unemployment at a 26-year high of 10.2 percent, home foreclosures
rising and the economic recovery struggling for traction, Karabus Management’s
Lewis said there will be deeper promotions to get customers into stores as the hunt
for value dominates.
“Retailers are trying to make their margins back on the balance of the [merchandise],”
he said. “The new guiding principle is the need for the majority of sales to be profitable.”
Wal-Mart and Target Corp. exchanged opening salvos on electronics, which are
expected to drive volume. For Black Friday, Wal-Mart advertised an 8GB iPod Touch
for $195 with a free $50 gift card to spend at iTunes. Target’s sales flyer announced a
Pre-Black Friday shoppers outside Macy’s at Herald Square.
free $30 gift card for customers purchasing a 32GB iPod Touch for $295,
and a free $15 gift card for buyers of the 8GB iPod Nano, $145.
The holiday may be won or lost on doorbusters. Wal-Mart’s Black
Friday doorbusters include an Emerson 32-inch LCD HDTV for $248; a
Sony Bravia 46-inch LCD HDTV, $798; a Magnavox Blu-Ray disc player,
$78, and a Nintendo DS Lite, $98.
Many of Wal-Mart’s U.S. stores will be open 24 hours for the day-afterThanksgiving event.
For the first time, Target stores nationwide are opening an hour earlier at 5 a.m. on Friday. This is the first holiday season Target is matching
competitors’ prices, excluding limited-time sales like early-bird sales and
doorbusters. The first 500 shoppers will receive a free reusable Marcel
Wanders shopping bag. Consumers who spend $100 or more on Friday
from 5 a.m. to noon will get a $10 Target gift card, a spokesman said.
“Target, Kohl’s and Best Buy will be impacted by Wal-Mart in a big
way,” said Isaac Krakovsky, vice president of Karabus Management. “Also
Toys ‘R’ Us, sporting goods retailers and grocers. They’re everybody’s competitor.”
Projections for the season are uneven.
Apparel has lagged in the recovery, but on Thursday, J. Crew Group Inc. provided
some hope for holiday when it reported profits more than doubled in the third quarter
as sales advanced 14 percent. The retailer forecast fourth-quarter profits of 37 cents
to 42 cents a diluted share, compared with a loss of 22 cents a share a year ago.
The National Retail Federation is projecting a 1 percent decline in holiday sales to
$437.6 billion. The NPD Group forecast 0.5 to 1.5 percent growth with a focus on traditional gifts such as sweaters, fragrance, music, books, movies and wallets. Karabus
Management is estimating flat to 1 percent growth. All of those forecasts would be an
improvement from the 3.4 percent drop in sales last Christmas.
“While Black Friday is still an important business indicator, it is not an obvious
one,” said Marshal Cohen, chief industry analyst at NPD. “There may be some panic
when the rush seems lighter than in past years, but based on our holiday market research, that doesn’t necessarily mean less business in the long run.”
In addition, consumer confidence took a positive turn this month, rising to 49.5
from 48.7 in October, as fewer shoppers surveyed by The Conference Board expected
a worsening in the business and labor markets over the next six months.
But shoppers’ read on the current economic situation remained at a 26-year low and
retail stocks wavered Tuesday, with the S&P Retail Index down less than 0.1 percent for
the day, to 404.02. “Income expectations remain very pessimistic and consumers are entering the holiday season in a very frugal mood,” said Lynn Franco, director of the group’s
Consumer Research Center. This month’s 49.5 reading still ranks below September’s
reading of 53.4 and August’s mark of 54.5. Confidence bottomed out at 25.3 in February.
The index is compiled from a survey of 5,000 households, and its rise this month
came entirely from the forward-looking Expectations Index, which advanced to 68.5
WWD, WEDNESDAY, NOVEMBER 25, 2009 13
WWD.COM
Retailers
Pent-up Demand: Is it the Real Thing?
By Evan Clark
from 67 in October. The Present Situation Index dipped to 21 from
21.1, remaining at levels not seen since 1983.
Respondents expecting business conditions to worsen over the
next six months fell to 15.1 percent from 18.2 percent, and the number of consumers anticipating fewer jobs fell to 23.1 percent from
26.1 percent.
Retailers are managing their inventories closely. But there are
lingering questions about whether efforts to avoid markdowns with
less product in the stores might result in sacrificing sales.
“Retailers have controlled their supply chain and inventory levels appropriately,” Lewis said. “In the past, when borrowing and
debt wasn’t as much of an issue, retailers wanted to have as much
inventory as possible and never miss a sale. Retailers are not allowing themselves to be in a position where too much inventory
dictates the need for markdowns. They’re willing to take the risk
of running out.”
Michael Gould, chairman and ceo of Bloomingdale’s, is encouraged by consumer response to the store’s offerings.
“November has been outstanding,” he said. “There’s newness
in the store. Our contemporary business has come back to life, our
jewelry business has come back to life and our watch business has
been outstanding. David Yurman, Chanel, Louis Vuitton and our
home store have had a very good month.”
Gould said there hasn’t been a pressing need to be promotional.
“Our inventories are in good shape. We’re less promotional than
last year.…Our margins were appreciably better in the third quarter.
We’re going to do what’s right for our customer. We’re not going to be
discounting cosmetics or any other crazy things people are doing.”
Nordstrom Inc. revised its year-end comp-store sales guidance to
a 6 to 7 percent decrease from a decline of 9 to 12 percent.
“We tried to be careful to get our price points really sharp this
holiday season,” said a spokesman. “We’re going to be careful about
not becoming overly promotional. We don’t feel we’re in a situation
like last year, which was such an anomaly in terms of the competitive markdowns we faced. We don’t think we’ll be confronting that to
the same degree as we did last year.
“We’re in a strong inventory position and will be able to ensure
a fresh flow of merchandise throughout the season. We’ve been encouraged by recent results in the third quarter and October. We’re
also keeping things in perspective. We know customers remain cautious, but we’re also seeing our customer responding to newness in
our stores. Where there’s great fashion that can be had at a value,
there’s activity.”
In the luxury sector, “it seems to take a little less energy to get
consumers excited than it did at this time last year, so I’m encouraged by that,” said Michael Celestino, executive vice president of
Barneys New York. “We’re less promotional. There seems to be less
price resistance. In some cases, prices in the vendor community
have come down a little to help things. The consumer who’s wanting
to spend a little bit is driving the luxury business right now.”
So far for the season, women’s designer, jewelry, cosmetics and
the Co-op have shown strength. “We’ve had success during the regular-price season,” Celestino said. “I’m cautiously optimistic. Some
of us feel like we’ve maybe turned the corner. But the economic
indicators are a mixed bag.”
The first six months of 2009 were “really tough,” said Susan
Davidson, ceo of Scoop. “Our performance has improved from
month to month.”
Scoop on Black Friday plans to give customers a 25 percent-off
gift card to be used in December. “We’re trying to force them into
the store on Friday and giving them a gift card to use in December,”
she said. “I don’t think promotions are enough. We will never have
as many promotions as the department stores. Last year at this time
you were able to buy merchandise at 60 to 70 percent off at Bergdorf
Goodman and Saks Fifth Avenue.”
Rather than focus on markdowns and giveaways, Davidson said
she’s tried to make the stores more exciting. “I know it’s going to be
promotional. It’s a market share game. We have a major focus on an
enhanced shopping experience, from visuals to service.”
photos by john aquino
— With contributions from E.C.
A holiday window at Barneys New York.
The positive effects of perceived pent-up consumer demand could be lost in
the Great Tradedown.
Analysts and economists agree shoppers are getting tired of reining in spending. But even with
their self-control weakening, a budget-breaking spree seems unlikely. Consumers are more likely to
shop the off-price channel, snatch up discounted goods or treat themselves to a special gift.
“We do see demand increasing,” said Christine Day, chief executive officer of Lululemon Athletica
Inc. “It is driven by less inventory and choices — a higher sense of urgency to buy and careful investment in a few good pieces for the woman that has not bought for herself in quite a while.”
Like others retailers, Day isn’t looking for consumers to return to a credit card-propeled shopping
existence anytime soon.
“I hear more conversation about saving for a carefully thought-out purchase, and I think that will
stay with us for a while,” she said.
The total amount of outstanding consumer credit fell at an annual rate of 7.2 percent in
September and has dropped for eight consecutive months — the longest string of declines since
1943, when the Federal Reserve began keeping records.
Because they’re either unemployed or underemployed, being more cautious and saving more or simply
unable to get credit as banks remain risk-averse, shoppers are not borrowing as much.
The persistent and intense pressures in the economy
are a major factor in the erosion of spending power.
Unemployment is at a 26-year high of 10.2 percent and
real average weekly earnings are down 1.9 percent from
their recent high in December, according to the U.S.
Labor Department.
But Steven Wieting, an economist at Citi, said in an
analysis last month that sales appeared to be benefiting
from pent-up demand that built when consumers reduced
spending even faster than the job market declined. Sales
of discretionary goods fell 9 percent last year, more than
twice the peak rate of job losses this year, he said.
“However, upward momentum in consumption is likely to run into a 7 percent rise in total consumer energy
costs in the month of November,” Wieting said.
Even if consumers cut back more than they actually
needed to as the economy worsened, their ability to ramp
up spending is, at the least, in question.
Still, the urge to splurge could be growing.
“If you think about self-control like a muscle, every
time you exert self-control, you’re exerting some of that
muscle,” said Deborah MacInnis, an associate editor at
the Journal of Consumer Research and professor at the
University of Southern California. “Eventually if you exert
too much control over too long a period of time, that muscle weakens.”
The more consumers withhold, the more deprived
they feel and the more likely they are to lose their restraint, said MacInnis.
“Clothing is really a very powerful area in which pentup demand could manifest itself,” she said.
That’s because people decide what to wear every day,
keeping fashion top of mind. Apparel is also consumed
publicly and is vital to projecting one’s image. “If we have
discretionary income, it’s easier to allocate it to clothing
rather than a vacation,” MacInnis said.
But instead of losing control and spending like it’s
1999 or even 2007, she said people giving in to their need
to spend would turn instead to an off-pricer or treat
themselves to a special purchase.
Comparable-store sales jumped 9 percent at T.J. Maxx
and Marshalls during the third quarter, proving that offprice selling is alive and well even as other channels
flounder. And the basic instincts of American consumers
— the need to treat themselves after a year of restraint —
could be what Lululemon is seeing in the yoga world. It
also helps account for the resurgence of boots.
“We can’t keep women’s boots in stock,” said Wesley
R. Card, ceo of Jones Apparel Group, which owns Nine
West, at the WWD Apparel/Retail CEO Summit this month. “They’re just blowing out.”
Others have reported strength in boots, but this spending is not seen as a sign of a broader return
to consumption.
“I don’t believe the pent-up demand is going to create a sudden outflow like water breaking a
dam,” said Arnold Aronson, managing director of retail strategies at Kurt Salmon Associates. “It’s
going to be slow and gradual and it’s going to take time, and there’s not going to be any miracles.”
Shoppers will start with affordable items that are functional and have value that can be measured, he said, noting boots as a good example.
“You get a big return on investment when you buy a pair of boots, especially in the fall and winter
and usually you can carry them over into the next season,” Aronson said.
This kind of pragmatism seems to be the new rule.
“This is a reversion to more rational behavior — it’s not spending high on the hog all the time,”
said Margaret A. Gilliam, analyst and president of Gilliam & Co., an advisory firm. “Stock market
movements to the contrary, I don’t think this recovery has legs as far as the consumer is concerned.
There’s just too darn many headwinds — higher taxes everywhere you look.”
The S&P Retail Index closed above 400 for the first time in more than a year this month. Stores
posted third-quarter profits driven by cost cuts and lower inventories, which helped sales dollars
flow to the bottom line. But that all speaks more to the industry’s productivity and investor expectations than a fundamental sales improvement.
And fashion is still more of a want than a need.
“It’s been a year since things have really fallen off a cliff, and it’s not like we’ve got holes in our
pants and our shirts just yet,” said Paul Lejuez, an analyst at Credit Suisse. “People may have a willingness and just not the ability [to spend].”
That willingness, assuming it’s still there, carries the industry’s hopes.
“We will always be consumers,” said Marshal Cohen, chief industry analyst at The NPD Group.
“The American consumer has an incredibly short memory. When the next big item comes along, they
will be the first to get it.”
— With contributions from Alexandra Steigrad
14 WWD, WEDNESDAY, NOVEMBER 25, 2009
WWD.COM
For full daily stock changes and more
financial news, see WWD.com / business-news.
Financial
Losses Widen at Zale, Shrink at Signet
Volume
Amt
Last %Change
44.0
1728199
22.71 +10.56
4.98
4.51 Zale (ZLC)
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841227
4.97 +10.44
7.49
6.77 Retail Ventures (RVI)
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487081
7.37 +8.54
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315064
13.43 +6.08
20.23 19.40 Orchids Paper (TIS)
10.4
36682
20.22 +3.59
15.75 14.54 American Eagle (AEO)
23.6 11988383
15.01 +3.23
32.75 32.03 Carrefour * (CA:PA)
47.8
5398978
32.53 +3.09
13.45 12.67 Stage Stores (SSI)
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0.38
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7796
0.37 +2.81
0.35 Phoenix Footwear (PXG)
440.00419.50 Asos * (ASC:L)
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COMPANIES
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Quarterly losses declined at
ignet Jewelers td. but grew at Zale
orp. as the specialty jewelry retailers
sought to weather the downturn by cutting costs, lowering inventories and improving margins.
Bermuda-based ignet, which operates as Kay Jewelers and Jared the
. . and
Galleria of Jewelry in the
H. amuel, rnest Jones and eslie
avis in the .K., said uesday losses in
its third quarter narrowed by more than
half to $10.5 million, or 8 cents a diluted
year ago, it reported a loss of
share.
$23.6 million, or 18 cents a share.
n the three months ended ct. 31,
ignet’s sales fell 2.5 percent to $613.7
million from $629.3 million in the year
prior. ales at the firm’s .K. stores slid
4.7 percent to $154.4 million while . .
sales gave up 1.7 percent to $459.3 million. ame-store sales fell 1.9 percent
in the period.
ignet’s third-quarter consolidated
gross margin fell to 27 percent from 27.8
percent, but the firm said merchandise
margins improved by 140 basis points in
its . . division.
“While we’re promoting more, we’re
engineering a lot of the market,” chief
executive officer erry Burman told
WW . Burman said the firm is taking
advantage of lower diamond prices,
among other merchandise strategies, to
improve margins. “We’re passing much
of our supply chain expertise onto the
consumer,” the ceo added.
he firm also has concentrated on
cost controls. s a percentage of sales,
ignet cut selling, general and administrative expenses by 240 basis points to
32.1 percent of sales in the quarter.
he company said it expects to reduce its net debt by between $300 million and $350 million in the year versus
earlier projections of $175 million to
$225 million. Burman said the firm had
made freeing cash flow a priority and
wanted to be in position to take advantage of any upturn when it occurs.
o that end, as of ct. 31, ignet
reduced year-to-date inventories by
15.9 percent to $1.3 billion from $1.55
billion.
ooking toward the make-or-break
0.16
0.13 NexCen (NEXC)
T
S
10 Best Performers
holiday season and current quarter,
Burman said the firm had increased its
promotional cadence compared with
last year, but the industry shouldn’t be
as strained this ecember.
“Jewelers were at a competitive disadvantage because fashion retailers had to
slash their prices,” the ceo said of 2008.
“ t’s unlikely that we’ll have the same
pressure this year. We’re also not facing
as many going-out-of-business sales.”
Whitehall Jewelers, another mallbased competitor, was in the midst of
liquidating last holiday season.
ear-to-date net income rose 54.8
percent to $46.9 million, or 55 cents,
while sales receded 6 percent to $2.09
billion. omps fell 3.4 percent.
Zale orp., meanwhile, posted a
larger first-quarter loss on smaller revenues, but beat analysts’ expectations
for the period.
he allas-based firm saw its loss
grow by 19.1 percent to $57.6 million, or
$1.80 a share, in the three months ended
ct. 31, from a loss of $48.4 million, or
$1.52 a share, in the 2008 quarter.
ales fell 9.6 percent, to $329.2
million from $364.1 million, and declined 6.8 percent on a comparablestore basis.
hough expanded, the loss could
have been worse. nalysts polled by
ahoo Finance had, on average, expected Zale’s loss per share to total $2.02.
he firm achieved a slight gain in
gross margin in the quarter to 48.6 percent from 48.5 percent and reduced
G& as a percentage of revenue to 60.5
percent from 61.3 percent. Zale said inventories as of ct. 31 totaled $902 million, a year-to-date reduction of about
$100 million.
he company said sales and margins
both improved as the third quarter progressed and that it’s positioned to improve on its holiday performance.
“We will not offer the same level of
broad discounting this holiday season
as we did in 2008, which will help us
expand our gross margin,” said eal
Goldberg, chief executive officer.
Zale’s shares gained 47 cents, or 10.4
percent, in ew ork tock xchange
trading uesday, ending the day at $4.97.
ignet’s stock closed at $26.32, down 56
cents, or 2.1 percent.
By Matthew Lynch
T
Schumer Cries Foul Over Adidas NBA Move
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By Arnold J. Karr
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urprisin analysts it a t irdquarter profit, urban apparel specialist iti
rends nc. said it expects to maintain its
positive same-store sales momentum during the holiday season.
For the three months ended ct. 31, the
avannah, Ga.-based specialty retailer generated net income of $606,000, or 4 cents
a diluted share, versus a year-ago loss of
$687,000, or 5 cents. ales rose 21.4 percent, to $127.4 million from $104.9 million,
and increased 6.3 percent on a comparable-store basis. omps were up 19 percent
for accessories, 7 percent for men’s wear
and 6 percent for women’s wear.
nalysts surveyed by ahoo Finance,
on average, expected iti rends to lose
1 cent a share on sales of $121 million.
n uesday, shares fell 27 cents, or 1
percent, to $27.72.
Gross margin improved to 37.4 percent
of sales, from 36.9 percent in the year-ago
quarter, as selling, general and administrative expenses grew more slowly than
sales, expanding 20.4 percent to $79.7
million, and shrinkage declined.
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Citi Trends’ Profit Up, Firm Looks to Holiday
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* Editor’s note: European stocks are quoted in the currency of their principal exchanges. Shares on
the London Stock Exchange are quoted in pence, Richemont and The Swatch Group are quoted in Swiss
francs and Hennes & Mauritz is quoted in Swedish kronor. All other European stocks are in euros.
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WASHINGTON — en. harles chumer
( ., . .) on uesday urged didas to
keep production of B and W B uniforms and apparel in the . . after
the activewear firm’s contract
manufacturer in upstate ew
ork said production was moving to hailand.
didas has an exclusive
contract with the B to supply the league’s teams with
their official uniforms.
“ t’s flat wrong for didas to
move the production of jerseys worn
by B players outside the nited tates
when there are . . companies that have
done this work so well and for so long,”
chumer said. “ nd to do it in this economic climate adds insult to injury.”
He called on the company to reverse
its decision and continue producing jerseys in the . .
didas said it was moving production
“to facilities located closer to the source
of uniform materials.”
didas signed a six-year exclusive
manufacturing contract, with a fiveyear extension, with merican lassic
utfitters in January 2008 to produce
B and W B jerseys and all jerseys
worn by players in the B ’s development league, said ob Knoll, senior
A
N
vice president of merican lassic,
based in erry, . .
t was the company’s first such contract with didas and the activewear
giant was its only client. merican
lassic utfitters employed more
than 100 workers in its plant in
erry until didas terminated
its contract six to eight weeks
ago, telling the contractor it
was moving its production to
hailand, Knoll said.
merican lassic was re.J. iebe
cently bought by
thletic Mfg. o., a t. ouisbased company hoping to expand its
professional sports lettering business
and become more vertical.
“We’re not going to let this business
fail,” said Knoll, adding that the company has furloughed about 10 employees as a result of losing its contract with
didas. “We would rather focus on finding new business and not spend years
in court fighting a battle over something
that may not happen.”
Knoll said he supports chumer’s efforts to persuade didas to “change its
mind and bring production back into the
facility” but he is not holding out a lot of
hope. He said the company can “keep its
workers going past the first of the year”
while the salesmen “beat the bushes” to
drum up new business.”
N
By Kristi Ellis
10.57 10.00 Freds (FRED)
he company attributed the increases
to a strong back-to-school season and depressed year-ago results because of “abnormally high gasoline and food prices.”
uring a conference call,
avid
lexander, chief executive officer, noted
same-store sales were down 1 percent in
ovember because of a slowdown in outerwear. f outerwear dollars had been flat,
overall comps would be up 2 percent.
“Most of our markets have experienced a very warm ovember,” he said.
“ n the few areas that we have seen cold
snaps, our outerwear selection has been
very well-received. o we believe that
this business will come around.”
he firm projected full-year earnings
per share of between $1.30 and $1.35,
implying fourth-quarter earnings of between 72 cents and 77 cents, based on its
anticipated comp gain of 1 to 3 percent
during the current quarter. However, analysts had estimated fourth-quarter earnings of 78 cents a diluted share.
For the nine months, net income expanded 15.5 percent to $8.5 million, or 58
cents, while sales added 11.8 percent, to
$382.1 million.
WWD, WEDNESDAY, NOVEMBER 25, 2009 15
WWD.COM
Architect Portman Gets Hometown Salute Miller Departs Vera Wang
By Elizabeth Thurman
LAURA LEE MILLER RESIGNED
as the Vera Wang Group’s president
of licensing and marketing and will
advise the company as a private
consultant.
Miller has started her own consulting firm, BrandSolutions, and her
former employer is her first client.
She plans to use her experience in
strategic brand marketing and licensing within the fashion, beauty, fragrance and home furnishings sectors
to guide other companies as well.
Miller is the third senior executive to exit a full-time post since
Mario Grauso joined the company
as president in October. Constance
Darrow resigned last month as
president of creative direction, and
Elizabeth Musmanno departed as
senior vice president of worldwide
marketing and communications.
ATLANTA — John Portman is a hometown boy who made good, and his vision has helped reshape
“Laura Lee has been a strategic partner for me over the last
10 years and [has] brought great
branding and marketing acumen to
the business....I am pleased we will
continue to tap into her experience
on a client basis,” Wang said.
In 2004, Miller joined Wang and
helped turn the licensing business
into a $350 million retail operation
across 14 categories. Her business
plan capitalized on Wang’s brand equity as a bridal authority and a fashion
designer by lining up licensing partnerships with other top brands such
as Coty, Wedgwood and Serta. Miller
first linked up with Wang in 1999,
when she was president of Unilever
Prestige, where she licensed the Vera
Wang brand in 1999 and launched a
global portfolio of fragrances in 2002.
— Rosemary Feitelberg
Conference Spotlights Heirlooms and Sustainability
NEW YORK — “Heirloom: Style, Materials and
Photo by Jaime ardiles-arce
the urban landscape.
Over the last half-century, the architect and developer created the atrium concept for modern hotels, molded much of Atlanta’s skyline, designed more than 150 international projects
and built AmericasMart in Atlanta, one of the largest wholesale market centers in the world.
A retrospective exhibit “John Portman: Art and Architecture,” running through April 18 at
the High Museum of Art here, explores Portman’s legacy through hundreds of photos, models
and renderings that highlight his innovative design theory, which combines dramatic interior
spaces, natural elements and functionality.
“All my life, I have been focused on what I’m doing currently and what I’m going to do next,”
said Portman, who will be 85 on Dec. 4. “I haven’t spent time looking back. To see so much of
what I’ve done in one place, thanks to the idea of such an exhibition spawned by the High
Museum of Art two years ago, is overwhelming.”
The exhibit focuses on 15 Portman
John
projects, including AmericasMart,
Portman
which opened in 1960 as the Atlanta
Merchandise Mart with one million
square feet of wholesale space. The
complex now spans eight million
square feet in three buildings, including an apparel component.
Using the mart as an anchor,
Portman constructed the 17-block
Peachtree Center, the nation’s thirdlargest convention and trade center,
which also houses the 22-story Hyatt
Regency Atlanta, the world’s first
modern atrium hotel.
Portman extended his design vision
to projects in other major U.S. cities:
Embarcadero Center in San Francisco,
the Bonaventure Hotel in Los Angeles,
the Renaissance Center in Detroit and
the New York Marquis hotel and theater in New York’s Times Square.
In 1975, Portman designed the
Brussels Trade Mart and then turned
to Asia, building hotels and commercial centers such as the Shanghai
Centre in China and Marina Square
in Singapore, among other projects.
In addition to his architecture, the
exhibit also features about 55 sculptures and paintings created by Portman
since 1981, as well as a model of his
home, Entelechy II in Sea Island, Ga.
“I guess when you can’t keep
from being busy,” he said, “this is
A view of the atrium of the Atlanta Marriott Marquis Hotel.
what happens.”
Sustainability,” is the theme of the 11th annual New
York Fashion Conference, organized by Initiatives in
Art and Culture, that will take place Dec. 4 and 5 at
the City University of New York’s Graduate Center.
The seminar will focus on objects that are traditionally conceived as heirlooms, such as jewelry, watches
and wedding gowns, as well as the materials and craft
techniques used to create them. It will also include discussion linking heirlooms to sustainability.
The conference will begin with a reception and
viewing of the work of fashion photographer Lillian
Bassman at the Staley-Wise Gallery at 560 Broadway
on the evening of Dec. 3.
Among those participating in the conference are
Nanette Lepore and Robert Savage, president of
Nanette Lepore; Deborah Milner, designer of the Aveda
Ecoture collection; Deborah Lindquist, a designer
noted for her eco-sensitive wedding attire; Gabriella
Cortese, founder and designer of Antik Batik, and
David Wolfe, chief forecaster of the Doneger Group.
The conference fee is $350, with a rate of $100 An eco-friendly gown by
Deborah Lindquist.
for full-time students with ID.
WWD.COM/CLASSIFIEDS
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