Liz Claiborne Losses Grow

Liz Claiborne Inc. said Thursday that its second-quarter net loss widened, despite margin improvement at its Juicy Couture, Kate Spade and partnered brands divisions. The New York-based retailer amassed a net loss of $87.2 million, or 92 cents a diluted share for the period ended July 3, compared with a loss of $82.1 million, or 82 cents a share, in the year-ago quarter. Excluding items, Liz said its net loss totaled 19 cents a share, which was better than analysts’ estimate of a 46-cent loss. Revenue for the quarter slid 15.5 percent to $569.8 million, from $674.6 a year earlier, due in part to lagging sales at Liz Claiborne brands, which are licensed to J.C. Penney Co. Inc. and television shopping network QVC. read more

Chinese luxury wannabes try to shake off “Made in China” image

“I threw away the rest of my suits,” beams Buffett in the 2007 video, adding that he and Microsoft founder and Bill Gates are fans of Chinese suit maker Trands and would be great salesmen for the company based in the northeast Chinese city of Dalian. Trands is one of a handful of emerging Chinese brands that someday hope to take on the likes of Gucci, Armani and Prada in the lucrative luxury goods market. Sales of luxury goods in China grew 12 percent in 2009 to $9.6 billion, accounting for 27.5 percent of the global market, according to Bain & Co. In the next five years, China’s luxury spending will increase to $14.6 billion, making it the world’s No. 1 market. Buffett’s endorsements may make for fun Internet fodder, but analysts point out that the emerging crop of Chinese luxury wannabes face a long uphill battle in taking on the global heavyweights which have more than a century of history and huge marketing muscle. Compounding the problem is a longstanding association that equates the “Made in China” label with poor quality and mass-market goods, versus the more exclusive cachet of the “Made in Europe” moniker. ”In the short term I don’t think any Chinese luxury brands can compete with the international ones in terms of marketing, brand culture, design and quality,” said Marie Jiang, JLM Pacific Epoch analyst. China is expected to become the world’s biggest luxury goods market in five to seven years, fueled by increasingly wealthy and brand-conscious consumers who want the best of everything, said a survey by The Boston Consulting Group in January. That market has been largely dominated to date by the big Western names, most of which have shops in Shanghai and Beijing and are starting to look at smaller cities as well. But home-grown brands such as Trands are trying to raise their profile both at home and abroad to get a piece of the lucrative luxury pie. Ports, another luxury fashion maker founded in 1961, made its own splash by wooing celebrities and sponsoring clothing for the 2006 movie “The Devil Wears Prada.”

FINICKY CONSUMERS

Aspiring Chinese luxury brands may face their toughest battle on the homefront, where shoppers often prefer big international names such as France’s LVMH or Hermes that carry more prestige and more than a century of history. One of the few brands to gain anything approaching an international following is Shanghai Tang, a designer of brightly colored chic clothing featuring Chinese themes founded in Hong Kong and now with stores worldwide. ”They are brand conscious, it is a little bit of a show-off attitude and what we have seen is that when they have money, they tend to spend on well-known brands,” said Renee Tai, an analyst with CIMB-GK Research, referring to Chinese consumers. Chinese brands could face an even rougher road ahead as global brands, well aware of China’s rapidly growing wealth, launch major expansion campaigns in the country that include opening stores in second and third-tier cities. Louis Vuitton will open one of its largest stores in the world in Shanghai this year. In the past year, LV has opened stores in second-tier cities of Xian, Xiamen and Tianjin. London’s upscale department store Harrods is also rumored to be in talks with Shanghai’s municipal government to open its first store outside the United Kingdom. International brands are also adapting to China, with Hermes rolling out a new brand, “Shang Xia” offering luxury accessories at cheaper prices just for China. ”They face competition and I think in terms of them being able to take a dominant share of the market, that’s sometime off,” said Stephen Mercer a partner at KPMG Shanghai. He said Chinese luxury brands could succeed in niche areas such as spirits and jewelry, with Moutai, a Chinese spirit that was served to Richard Nixon during his famous China trip during his presidency, as one such example. read more

(wwd)Barneys Said Near Naming Mark Lee CEO

Barneys New York might have a chief executive officer at last. Mark Lee, who stepped down as Gucci’s president and ceo in December 2008, is in advanced talks to become ceo of Barneys, according to market sources. Lee’s name has been bandied about as a favorite to lead Barneys practically since his exit from Gucci, which came only a few months after Howard Socol stepped down as the store’s chief in July 2008, leaving it without a ceo ever since. It is understood a contract has yet to be signed, but executive search circles are abuzz that Lee — one of the most admired and sought-after executives in the industry — is the clear front-runner. The dapper and slim fashion veteran, who earlier this year joined the boards of Tory Burch and Italian online retailer Yoox SpA, recently has been spotted walking Barneys’ 10-level, 235,000-square-foot Madison Avenue flagship. Lee was traveling Wednesday and could not be reached for comment. A Barneys spokesman did not respond to a request for comment by press time. His appointment would certainly electrify the American retail scene — and heighten the competition in New York at a time when Saks Fifth Avenue continues its turnaround and Bergdorf Goodman is undergoing management changes, with president Jim Gold, come October, splitting his time between Dallas and Manhattan when he becomes president of Neiman’s specialty retail division, which includes Neiman Marcus stores as well as Bergdorf’s. read more

(wwd)San Francisco Merchants Indicted in Major Counterfeit Ring

Calling it the largest enforcement action against counterfeit goods on the West Coast, U.S. Immigration and Customs Enforcement said Tuesday that a long-term investigation involving $100 million of counterfeit luxury goods has led to the indictments of 11 merchants and clerks from San Francisco’s Fisherman’s Wharf district.  A 25-count indictment charges the defendants with trafficking in counterfeit goods, smuggling and conspiracy. ICE revealed details of the case late Tuesday, after it was unsealed Monday in federal court. ICE said agents seized apparel and accessories bearing fake trademarks of more than 70 brands, including Coach, Kate Spade, Nike, Oakley, Armani, Burberry, Louis Vuitton and Prada. Goods seized included clothing, jewelry and watches, scarves, handbags and wallets, sunglasses and shoes.  The investigation by ICE and Homeland Security Investigations agents into the Fisherman’s Wharf retailers started in December 2007 when U.S. Customs and Border Protection officers intercepted a container at the Port of Oakland containing more than 50,000 counterfeit accessories valued at more than $22 million. The seizure gave the agents the information necessary to target a total of eight shops, as well as nine residences and three storage units in the San Francisco and San Leandro areas over the next several months.  The 11 defendants face penalties of up to 20 years in jail and a $250,000 fine for smuggling goods, 10 years in prison and a $2 million fine for each count of trafficking in counterfeit goods, and five years in jail and a $250,000 fine for conspiring to traffic in counterfeit goods, according to ICE. The case is being prosecuted by U.S. Attorney Deborah Douglas and is part of the Justice Department’s Intellectual Property Task Force.  “To consumers who think designer knockoffs are a harmless way to beat the system and get a great deal, ‘buyer beware,’” said John Morton, director of ICE. “Trademark infringement and intellectual property crime not only cost this country much needed jobs and business revenues, but the illegal importation of substandard products can also pose a serious threat to consumers’ health and safety.”  Federal officials have increased their focus on stopping the flow of counterfeit goods into the U.S. In April alone, ICE seized an estimated $260 million of fake apparel, accessories and other merchandise, a record month for seizures. In the first half of 2010, the agency has already initiated 560 intellectual property cases. In fiscal 2009, ICE initiated 806 intellectual property theft cases, up from 643 in 2008.  The domestic value of goods seized for intellectual property violations in 2009 was $260.7 million, according to statistics from Customs & Border Protection. Sales of counterfeit goods cost legitimate businesses an estimated $250 billion a year in lost sales and revenues worldwide, and are responsible for the loss of 750,000 jobs, according to estimates from the International AntiCounterfeiting Coalition. read more

(AP)Coach 4th-quarter net income rises

Luxury handbag maker Coach says better sales in North America and Asia helped its fourth-quarter net income rise 34 percent. The increase is a sign that Coach’s lowered handbag prices and focus on growth in China is paying off. The company says net income rose to $195.5 million, or 64 cents per share. That compares with $145.8 million, or 45 cents per share, last year. Analysts expected 56 cents per share. Revenue rose 22 percent to $950.5 million. Analysts expected $888.9 million. Coach Inc., based in New York, says an extra week in the quarter boosted revenue by $70 million. CEO Lew Frankfort says market share grew in all regions. Revenue in stores open at least a year rose 6.3 percent in North America.

(wwd)Back-To-School Sales Seen Soft in July

There’s unlikely to be a breakout in back-to-school business when stores report July comparable-store sales on Thursday. Preliminary reports indicate that consumers, content in June to leave their b-t-s shopping for later in the summer, kept procrastinating last month. Evidence is growing that they might need more promotional coaxing to open up their wallets, which could hurt third-quarter margins.  “July, with scorching weather and decent traffic trends, should have ensured a solid start to the back-to-school season,” said Brean Murray, Carret & Co. analyst Eric Beder. “Instead, high inventory levels from key players, continued weak economic trends and the consumer shopping later in the season have combined to create what will probably be one of the most aggressive discounting seasons in recent memory, as there are already material price cuts on key categories such as denim and Ts.” Beder said results, particularly in the teen market, were not expected to improve through the b-t-s season, leaving retailers such as American Eagle Outfitters Inc., Abercrombie & Fitch Co. and The Wet Seal Inc. with a glut of inventory or an “unappealing” pricing model. Mike Berry, director of industry research for MasterCard Advisors SpendingPulse, was slightly more upbeat. Although apparel sales slipped 1.1 percent on a year-over-year basis in July, according to MasterCard data, sales at family retailers, a category that includes teen retailers, edged up 3.4 percent. SpendingPulse estimates total U.S. retail sales made by cash, check or credit card. Wary because of the rough-and-tumble action on Wall Street, luxury consumers cut spending last month, driving down jewelry sales 1.2 percent, including a 13 percent dive in high-end jewelry. Excluding jewelry, overall luxury spending was down 0.2 percent, according to Berry. Berry said, “Until consumers see encouraging news over a substantial period of time, they will continue to be skittish.” read more

(wwd)Madonna’s Fashion Line Draws Crowds in New York

If you are looking to dress like Madonna from her early days, here you go, oh and you must be a tween. Madonna’s new junior’s line is exclusively at Macy’s, and somehow managed to draw a crowd of mini-Madonna teeny boppers. We can’t help but wonder if they even know the songs that made Madonna a legend, and why would anyone feel the need to bring back that style?

Macy’s rolled out the pink carpet for Madonna fans on Tuesday. The performer’s enthusiasts were out in force at the Herald Square flagship for the launch of the Material Girl collection by Madonna and her daughter Lourdes, sold exclusively at the store. But while the collection generated lots of buzz at Herald Square, where all the festivities were centered, in other Macy’s outside New York, it was less of an event and drew fewer shoppers.  Nonetheless, the retailer’s executives remain optimistic about the collection, which is being produced by MG Icon, a joint venture of Madonna, her manager, Guy Oseary, and Iconix Brand Group Inc. — which has already paid Madonna and Oseary $20 million for its 50 percent stake, plus earn-outs. So while Madonna and Lourdes won’t make an appearance for the line until Sept. 22, when they meet sweepstakes winners at the flagship, they no doubt were closely monitoring initial reaction. Teens with blonde streaks in their black hair and dark eye makeup, dressed in black tulle skirts and leggings, waited for the Herald Square flagship to open. A line wound its way from Broadway to West 33rd Street. The first 200 customers on line at six Macy’s locations received a bandeau top from the collection and a $10 Macy’s gift card. Taylor Momsen, the face of the Material Girl collection in advertising and marketing, performed an acoustic set later in the afternoon on the junior floor at the Herald Square location. Like her muse, Momsen has sparked controversy lately for her provocative style choices and for smoking. “In my day, we had Madonna,” said a mother attending Momsen’s appearance with her daughter. “We talk about smoking at home and how bad it is for her. No one in our family smokes. I don’t think Taylor influences how my daughter dresses. Everyone makes their own decisions on how to dress.” “This is beyond anything I’ve seen in my career,” said Terry Lundgren, chairman, president and chief executive officer of Macy’s Inc. “We’ve had 700 million Internet impressions since the collaboration was announced. Word of mouth took off and a grassroots” campaign started. “This has such broad appeal.” read more

(wwd)Defining the New Luxury

Luxury for all? Not like it used to be. So-called aspirational customers — who helped lift the luxury category to unprecedented heights during the boom years — seem to be sitting on the sidelines in the postrecession period: still aspiring, but spending less. “The concept of luxury has restricted again,” said Concetta Lanciaux, principal of Switzerland-based Strategy Luxury Advisors, describing a shift in consumer priorities favoring heritage luxury brands or — at the other extreme — masstige retailers. It makes business more challenging for players in the middle and products that “look like luxury but it’s not luxury.” For example, designers’ second brands are “not doing as well as before [People] prefer to buy less, but a little bit higher,” she explained. “There are consumers that overreached, and during the recession they had to go back to a more appropriate spending habit,” agreed Michael Burke, chief executive officer at Fendi in Rome, noting that was particularly the case in the American market, hard hit by the financial crisis. “The market has become more polarized: either it’s entry price or true luxury….The middle has hollowed out. “You either have to be resolutely upscale, or you’re battling it out on prices,” he continued. “[Luxury goods] is not a democratic product category.” Pam Danziger, president of the Stevens, Pa.-based research firm Unity Marketing, said scores of American consumers who reached beyond their means into the luxury sphere during the boom years pre-2008 have since simply “dropped out” because of the recession. Danziger estimates consumers with household incomes in excess of $250,000 — the top 2 percent in the U.S. — spend three to four times more on luxury goods than the next affluent tier, those in the $100,000-to-$250,000 range. What’s more, given a choice between buying the “best of the best” or “better and occasional best,” the richest consumers preferred the latter option in her most recent research.
Based on a survey of some 1,200 affluent consumers in the U.S., conducted last month, Danziger is predicting “cautious behavior” even among elite consumers whose “pent-up demand” for luxury goods led to a spree early in the year that is unlikely to continue. Lanciaux also foresees a tougher second half, noting European luxury brands were buoyed in the first two quarters by a “huge restocking,” plus a rise in the value of the U.S. dollar against the euro that has since eased. read more

(wwd)Indian Cotton Harvest May Benefit Manufacturers

India, the world’s second-biggest exporter of raw cotton after China, is positioned to produce a healthy harvest this year that could help lower world prices and lift global garment manufacturers. During July, the wettest month in India’s June-to-September monsoon season, farmers planted 9.5 million hectares of cotton, up from 8 million last year. Cotton farmers have been encouraged to plant bigger crops to cash in on higher prices amid concerns over global cotton shortages. The U.S. Department of Agriculture has warned that demand this year may outstrip supply. World cotton production is forecast to increase to 113.9 million bales in 2010-11, an 11 percent increase from 102.9 million bales in 2009-10, the USDA said. However, world consumption may rise to 119.1 million bales next season from an estimated 115.9 million. A strong monsoon season, which followed last year’s drought-like weather conditions across much of India, bodes well for the cotton crop, experts said. India’s repeal of curbs on raw cotton exports also has given a boost to cotton farmers. In April, India imposed a ban on cotton exports in an effort to cool down domestic prices that had risen more than 25 percent since October. It partly lifted the ban a month later and, starting Oct. 1, will remove all limits on cotton exports. While that’s good news for Indian cotton farmers and global textile manufacturers, especially in textile-dependent countries such as Pakistan and Bangladesh, Indian garment manufacturers are unhappy the ban has been lifted. As prices rise and cotton stocks fall, their margins could suffer.  “The government should put a total, permanent ban on cotton exports,” said Rajesh Goyal, owner of Ankit International, a garment factory in the north Indian city of Jaipur that exports to the U.S. and Europe.  Goyal said it was important for the government to support India’s textiles industry, which employs 35 million people directly and 88 million indirectly. Rita Menon, secretary at the textiles ministry, said the Indian government was developing a policy to govern cotton exports. It would determine how much cotton was needed by the domestic textiles industry and how much Indian cotton farmers would produce before deciding whether export limits were necessary, she said. read more

(reuters)Chelsea Clinton Marries in ‘Royal Wedding’

Chelsea Clinton — the only child of the former U.S. president and the U.S. secretary of state — wed Marc Mezvinsky on Saturday at Astor Courts, an historic 50-acre (20-hectare) estate about 100 miles north of New York City. ”Today, we watched with great pride and overwhelming emotion as Chelsea and Marc wed in a beautiful ceremony at Astor Courts, surrounded by family and their close friends,” Bill and Hillary Clinton said in a statement. ”We could not have asked for a more perfect day to celebrate the beginning of their life together, and we are so happy to welcome Marc into our family,” the statement said. Photos showed the bride and groom walking down a broad outdoor aisle between rows of guests. Chelsea wore a strapless white gown with a fitted bodice and full skirt with platinum-colored beading at the waist and a long white veil. The groom wore a simple black tuxedo going down the aisle and in a photo with the Clinton family, and a white prayer shawl and yarmulke in separate photos with Chelsea under a flowering tree and amid wedding guests. In the one photo in which she appeared, Hillary Clinton wore a magenta gown. Bill Clinton, who is pictured walking Chelsea down the aisle, wore a simple black tux with a white boutonniere in his lapel.

GUEST LIST LARGELY SECRET

Apart from the parents of the bride, the only other high profile guests seen in Rhinebeck were Bill Clinton’s former secretary of state, Madeleine Albright, actors Ted Danson and Mary Steenburgen and fashion designer Vera Wang. Also spotted was real estate scion and movie producer billionaire Steve Bing. Chelsea Clinton, 30, and Mezvinsky, 32, have known each other since they were teenagers. He is an investment banker, whose parents Marjorie Margolies-Mezvinsky and Edward Mezvinsky were once Democratic U.S. House of Representatives members. Chelsea Clinton, who worked at a New York hedge fund and has more recently studied health policy at Columbia University, has kept a low profile since her father left the White House in January 2001, although she campaigned for her mother during her failed run for the 2008 Democratic presidential nomination. Signs and pictures congratulating the newlyweds hang in many shop windows in Rhinebeck, which has been swarmed by media around the world for an event that experts estimate to have cost between $3 million and $5 million. Airspace above Rhinebeck was closed for 12 hours on Saturday for the wedding and media were kept well away from the entrance to Astor Courts. Security in the area was comparable to that surrounding state visits.The guest list was reported to be between 400 and 500, but did not include President Barack Obama. ”Hillary and Bill properly want to keep this as a thing for Chelsea and her soon-to-be husband,” Obama said on “The View” talk show Thursday. “It would be tough enough to have one president at a wedding. You don’t want two presidents.” read more

(wired)Why Do We Care About Luxury Brands?

The pricing of fakes reveals something important about how the human mind calculates value. In many instances, we crave authenticity as an end unto itself. We want the real iPhone not because it works better but because it’s the real one. The same logic explains why we splurge on Hermes bags, Rolex watches, Prada T-shirts, fancy Bordeaux, and expensive art. (How much would you pay for a fake Picasso print?) While a Rolex is a lovely piece of time keeping machinery, the value of the watch has nothing to do with its function. Instead, it depends on the intact authenticity of the brand. It’s easy to ridicule this behavior as mere snobbery. We might look down on the pretentious fools carrying Louis Vuitton luggage, or bragging about their Vertu phone, or wearing underwear with a big logo. We probably assume that they’ve just wasted a lot of money on some costly social signaling, or that they’re using the brands to assuage their deep insecurity. Unfortunately, we’re all vulnerable to the same tendency. There’s now suggestive evidence that our faith in the authentic — especially when the authenticity is supported by effective marketing campaigns — is a deep-seated human instinct, which emerges at an extremely early age. Consider a clever experiment led by the psychologists Bruce Hood and Paul Bloom. The scientists tested 43 children between the ages of three and six. The children were shown a “copying machine” — it was actually tachistoscopes that were modified to have flashing lights and buzzers — and told that it could make an exact copy of any object. After the machine was demonstrated for the kids — the scientists “copied” a block and a rubber animal — Hood and Bloom then told the kids that the machine could also duplicate toys. A ‘‘stretchy man’’ was then placed in the box and the illusion repeated. Interestingly, the young children actually preferred the “duplicate” toy and chose it 62 percent of the time. The kids didn’t worry about the “authenticity” of the stretchy man. But Hood and Bloom didn’t stop there. They also had many of the young kids bring in their “attachment objects,” such as their favorite blanket or stuffed animal. (I still remember losing Johnny, my stuffed penguin, at the tender age of five. Grief.) The scientists then offered to “copy” the object for the kids. Four of the children simply refused — they wouldn’t let their blankie anywhere near that nefarious device. But even those kids who allowed their attachment object to be “copied” almost always refused to see the objects as equivalent. The new duplicate was a bootleg blankie, an ersatz stuffed animal. Even though the children were assured that the objects were identical, they intuitively believed that the copy wasn’t the same. It lacked a history, a bond, a sentimental attachment. It was inauthentic. The same principle applies to brands. Although we outgrow stuffed animals, we never get beyond the irrational logic of authenticity and essentialism. There are certain things whose value depends largely on their legitimacy. While I might listen to bootleg music on my iPhone, I want the phone to be genuine. I want that Apple logo to be real. Why? Because the brand has effectively woven itself into my emotional brain. Because when I see that logo, I don’t see a functional object. Instead, I’ve learned to respond to everything that isn’t functional, all those subtle connotations conveyed in the glossy ads. There are many blankets in the world. But there is only one blankie. The best brands are blankies. read more

(wwd)Retail Stocks Climb Monday

Retail stocks began August by padding their 5 percent bounce in July, rising 2.1 percent on Monday amid signs the economic recovery, while not strong or swift, is being sustained. The S&P Retail Index advanced 8.15 points to 413.21 as the Dow Jones Industrial Average picked up 208.44 points, or 2 percent, to end the trading day at 10,674.38. The Dow’s advance came on top of a 7.1 percent rebound last month. Investors were reassured, if not necessarily elated, over several pieces of economic news Monday. Federal Reserve chairman Ben Bernanke told a conference he expects a pickup in consumer spending in the “coming quarters from its recent modest pace.” The Institute for Supply Management said its manufacturing index stood at 55.5 for July, down from 56.2 in June but still above the 50 mark indicative of production growth. Additionally, The Conference Board reported online job openings increased by 139,200 in July, above the recent monthly average of 43,000. Mid-Atlantic states have been “posting steady and strong upward trends throughout the year,” noted June Shelp, vice president of The Conference Board. Liz Claiborne Inc. logged the biggest advance of the 172 equities tracked by WWD, rising 7.2 percent to $5.08. Retailers leaping at least twice as fast as retail stocks in general included Abercrombie & Fitch Co., up 5.1 percent to $38.84; Nordstrom Inc., 4.4 percent to $35.51, and Macy’s Inc., 4.3 percent to $19.46. The Bon-Ton Stores continued its recent upward trajectory with a 4.7 percent pickup to $10.01, and Zale Corp. continued to gain following Golden Gate Capital’s recent expansion of its stake in the troubled jeweler to 34.5 percent, growing 5.1 percent to $1.85. The advance in U.S. equities followed strong days for stocks in Europe and Asia. The CAC 40 was up 3 percent to 3,752.03 in Paris and London’s FTSE 100 rose 2.7 percent to 5,397.11. Frankfurt’s DAX ended the trading day at 6,292.13, up 2.3 percent. While Tokyo’s Nikkei 225 managed just a 0.4 percent gain, to 9,570.31, Hong Kong’s Hang Sang Index logged a 1.8 percent advance, to 21,412.79, and Shanghai’s SSE Composite Index enjoyed a 1.3 percent increase, to 2,672.52. read more

(wwd)Profiling China’s Luxury Consumer

Luxury brands better get to know the Chinese words er nai and xiao san. Those phrases mean mistress and third girlfriend, respectively, and are whispered on an almost daily basis by well-to-do Chinese. “With some fashion brands, we think that almost half of the sales are for mistresses,” said Rupert Hoogewerf, publisher and head researcher of the Huran Report, China’s rich list. “But this is difficult to ascertain.”
Equally difficult is defining exactly who is the consumer driving China’s supercharged luxury consumption since specifics are so hard to come by. “That is the billion-dollar question,” said Charles de Brabant, an adjunct professor of luxury branding at China Europe International Business School in Shanghai, who said many luxury brands don’t fully understand Chinese consumers’ status-motivated shopping. “The brands often say: ‘These customers are not like me. They are bling-bling. They are overnight millionaires,’” de Brabant continued. “It’s a far more sophisticated game that goes beyond the Rolex, the dark sunglasses and the souped-up Porsche.” David Stewart, a partner in Jigsaw International, a lifestyle research agency in Shanghai, said the typical consumer profiles of other markets have no correlation in China. “The luxury consumers in China tend to be younger than in other parts of the world. Some of them are independently wealthy. It’s very unclear where their money comes from,” he said. Industry observers said there are several key consumer groups driving the country’s luxury goods market, which is estimated to come in at $9 billion this year, up more than 20 percent from 2009, according to China Market Research. The shoppers range from office worker women looking to snap up a branded handbag to entrepreneurs in polo shirts eager to please their mistresses. The white-collar “aspirational” shopper is the fastest-growing group in China, according to China Market Research. In their 20s, and often not making more than $400 a month, these individuals will nonetheless save to buy a luxury bag. Ben Cavender, a researcher at China Market Research in Shanghai, predicted that going forward, this group will make up 60 to 70 percent of the overall market. The superrich are another significant category of shoppers. Mainland China has 55,000 individuals with net assets of more than 100 million yuan, or $14.7 million, according to the Hurun Report. “This higher-wealth group tends to be slightly older men, age 44, and over 15 percent of these men live in Beijing. They have their own company, but have made their money from property and investments,” said Hoogewerf. Widening the net, there are 875,000 Chinese millionaires with personal assets of more than 10 million yuan, or $1.47 million. This figure includes the 55,000 superrich individuals mentioned earlier. read more

(wsj)A Fashion Identity Crisis at Wal-Mart

Wal-Mart Stores Inc. cannot seem to find the right fit when it comes to selling clothing. By quietly ousting its U.S. division apparel chief last week, the world’s largest retailer acknowledged that its clothing strategy has been a dud. Again. Over the past decade, Wal-Mart has veered from one approach to clothing to another. The discount giant has even tried to emulate rival Target Corp. by stocking its own lines of trendy outfits. At other times the Bentonville, Ark., retailer has placed its bets on bulk packs of everyday wear, like tube socks and T-shirts. ”Wal-Mart has suffered from not knowing who they want to be,” said Allen Questrom, the former chief executive of J.C. Penney Co. who recently left Wal-Mart’s board. “They’re either trying to be too fashionable or too basic.” Some critics have said Wal-Mart didn’t listen to customers or suppliers. Company spokesman David Tovar said Wal-Mart thinks it finally has “the right team in place to lead the apparel business forward. He added that the retailer is “listening to what our customers want and speaking with all key suppliers and letting them know we’re working in a collaborative way. The retailer said last month that it was going to focus more on basics like underwear, socks, T-shirts and jeans. Part of the issue for Wal-Mart is that it devotes a relatively smaller space to apparel than Target, where apparel represents about 20% of its revenue. At Wal-Mart clothing is only 10% of sales, so fashion items can crowd out basics but the company has been reluctant to give it more space. Clothing sales, which accounted for about 10% of the U.S. division’s $258.2 billion in sales in the company’s fiscal year ended Jan. 31, were down from about 11% in the previous year, according to Wal-Mart financial documents. Kelly Tackett, a retail analyst at Kantar Retail, a retail marketing and research consultancy in Columbus, Ohio, said that with so many shoppers trading down during the recession, Wal-Mart missed an important opportunity to grow its clothing business by giving its shoppers more fashionable everyday apparel. read more

(wwd)Buranis of MBFG Arrested in Milan

The opulent lifestyles of Walter Burani and his son Giovanni appear to have caught up with them. The former executives of Mariella Burani Fashion Group were arrested Thursday by the Guardia di Finanza of Reggio Emilia, Italy, a police force under the authority of the country’s Minister of Economy and Finance.
The arrests, confirmed by a spokesman for the Guardia di Finanza, were requested by Milan prosecutors Luigi Orsi and Mauro Clerici, who have been investigating Burani Designer Holding for fraudulent bankruptcy. BDH is the parent company of Mariella Burani Fashion Group, which produces and distributes collections for La Perla and Vivienne Westwood, among others, and is under state-supported administration. Walter Burani, former chairman of MBFG, is under house arrest, while Giovanni, former chief executive officer, has been transferred to Milan’s San Vittore prison. The spokesman said the Buranis will now be interrogated by the judge for the preliminary investigations, Fabrizio D’Arcangelo. He added that Walter Burani was granted house arrest because of his age, 77, and “attenuated responsibilities.” Only two years ago, the Burani family seemed to have it all: a growing fashion conglomerate and a life in the fast lane. Tales of second-generation Giovanni Burani living in a Renaissance castle were outdone only by his father Walter’s weekends racing vintage Formula 1 cars.  But the pendulum swung — and swung hard. The once high-flying Mariella Burani Fashion Group said earlier this year it was going to be liquidated, weighed down by debts of more than $600 million, and had to pledge 66.4 percent of the company to Italy’s Centrobanca (UBI Banca Group). read more

(wwd)Congress Passes Duty Relief Measure

Congress has sent a tariff suspension bill to President Obama, ending seven months of increased duties on imported textiles, footwear and apparel components and relieving some of the cost pressures the industry has been facing. The Senate passed the measure by voice vote Tuesday night, sending the measure to the president, who is expected to sign it. The House passed the bill last week on a vote of 378 to 43. Apparel, textile and footwear companies have been paying thousands of dollars in duties on imported components and some finished products since Jan. 1 because Congress let legislation expire that suspended tariffs on hundreds of imported products. The bill, known as the Miscellaneous Tariff Bill, must be renewed by Congress periodically and is meant to help domestic manufacturers compete by giving them tariff breaks on components such as yarns and fibers, or footwear, that are no longer made in the U.S. and must be imported. The 2006 duty suspension bill expired at the end of 2009 and the new bill would extend the tariff breaks through 2012. “This legislation will bring direct and measurable benefits to our economy through job creation and the continuation of well-priced quality products,” said Kevin Burke, president and chief executive officer of the American Apparel & Footwear Association, who called on the president to sign it quickly. “Along with our thousands of employees and our millions of consumers, the U.S. apparel and footwear industry stands to benefit from today’s Senate action and President Obama’s eventual signature.” A key component of the bill is a retroactive provision that will provide full or partial refunds to companies on duties paid on all covered products since January. Textile executives applauded the legislation because it would reinstate the majority of duty suspensions for rayon fiber imports and add several new duty breaks for acrylic fibers. “We’re terribly relieved that this has been done,” said David Trumbull, vice president of trade at the National Textile Association. “Companies took money from other things they might have invested in, like new equipment or worker training, and paid higher duties, while waiting for the government to make them whole, so they really lost the time value of that money.” Footwear executives had concerns about the new bill because some of the imports received higher duties than in the past. According to the law, duty breaks in each category cannot amount to a total loss in tariff revenue to the U.S. government of more than $500,000 a year. If trade grows in a given category, lawmakers increase the duties to bring the overall tariff revenue loss back under the cap. Several hiking boot and shoe imports will see an increase in the duties in the new bill because the volume of imports reached the cap. On the positive side, the measure would still provide many duty reductions on certain imported footwear categories. read more

(wsj)Fashion Nation: What Retailers Know About Us

Luxury-spending data can tell us a lot about the state of the nation—and our own neighborhoods. Take Detroit—not the city where one might expect to see the strongest recovery. Yet when American Express Co. looked at luxury spending in top and midsize cities around the country, Detroit led the list, with growth of 18% in the first quarter of 2010 from the year-earlier quarter. Lo and behold, Ford stock is up, too, suggesting that Detroit’s local investors are feeling more optimistic than they were when auto executives were driving hybrids down to Washington to beg for bailouts. New York City, on the other hand, is still cutting back. Luxury spending was down 7.7% in the quarter. Atlanta was down the most at 18.2%. By tracking customers’ spending habits, retailers get a bird’s-eye view of tastes as they ebb and flow. Online retailers, in particular, see every click we make. They know which brands we’ve peeked at, how long we pondered, and what we actually purchased. They know the time of day and the days of the week that we shop. They know—and record—our color choices, sizes and tastes so that they can recommend clothes that are in tune with our yearnings. Our banks have nearly as much information about our purchasing habits. “We know where the customers live and we can track their behavior back to where they live,” says Ed Jay, senior vice president of American Express’s Business Insights unit, which mines its credit-card data for consumer trends and sells reports to clients. American Express says it doesn’t provide data on individual consumers. This might seem slightly creepy to pre-Facebook generations who imagine their tastes and habits are private. But all this clicking amounts to a heap of insight into what people are spending on and even what they’re thinking about. Some of the data confirm regional stereotypes. Southerners bought more white, green, and pink than other regions’ residents, for instance, according to data from private-sale site Hautelook.com, which caters to young, urban professional women. Now I know, too, why I feel like such a loner wearing brown in Los Angeles, where black, white and gray are preferred. Retailers’ data also bust a few commonly held beliefs. Though Dallas has a flashy, big-spending image, the average woman there spends less on fashion than one in notoriously frumpy Washington, D.C., according to fashion website ShopItToMe.com. The data also offer a window on populations moving among trendy neighborhoods. ShopItToMe, which notifies members of sales on their favorite brands, observed on its blog recently that New York’s “most conservative” dressers reside on the Upper West Side, which has a reputation for being culturally liberal. Of the site’s more than 600 brands, Upper West Side residents’ favorite is Gap Inc.’s Banana Republic. Meanwhile, residents across town on the Upper East Side favor flashier, more expensive apparel, such as Jimmy Choo shoes. The Web site also looks at city-by-city data. The most popular brand in every ShopItToMe city, including Cleveland, St. Louis, Boston, New York and Los Angeles? Victoria’s Secret. Everyone needs underwear. And despite the fashion press’s obsession with J. Crew, the company is among the top five brands only in New York City and Boston. Other expectations for the nation only seemto be born out by fashion data—until one looks deeper. When ShopItToMe looked at clothing sizes, the results seemed to confirm what folks say—that women are thinner on the coasts. In New York and Los Angeles, 14% of women selected size 0 tops, compared with only 5% nationwide. ShopItToMe looked at a random sample of 86,225 women who registered between June 2009 and June 2010. But that’s not necessarily because of a predominance of tall model types. Petite clothing and small shoe sizes were also popular on the coasts, raising the possibility that the women there are just smaller. Even boredom with fashion appears in demographic data. When the Affluence Collaborative, a research group, asked luxury shoppers to look at a list and choose brands they think are boring, they found that tastes differed by gender. Male luxury consumers with incomes between $75,000 and $199,000—the biggest group surveyed—said they were bored by Saks Fifth Avenue. Women in the category were bored by Best Buy. read more

Russia’s Newest Spy

Move over, Anna Chapman, there’s another “Victoria’s Secret” agent sending love to Mother Russia — and her name’s Anna, too. Around the same time Chapman and her Russian spy-ring comrades were sent home, federal agents at JFK Airport nabbed a stunning Texas beautician attempting to smuggle state-of-the-art night-vi sion gear to Moscow. Anna Fermanova, 24, who, judging from her Facebook page, shares more about her body piercing than state se crets, “knowingly and intentionally” tried to bring the highly regu lated gear to Russia, according to court papers. Born in Latvia and raised in Plano, Texas, Fermanova was stopped by agents in March at Kennedy Airport with a $7,000 Raptor 4X night-vision weapons sight and two other $4,000 devices, according to the documents filed in Brooklyn federal court. The agents allowed her to travel to Moscow, but arrested her upon her return July 15. She will be charged with attempting to export the devices, which are considered US munitions, at an arraignment in New York later this month. Fermanova, who was released on $50,000 bail and is being kept on house arrest, called the allegations “hilarious and over-dramatized.” ”I am a US citizen. I grew up in America. I am not a spy — that is just funny,” she told The Post. “I am freaking out right now.” Her lawyer Scott Palmer said there was no espionage involved and that Fermanova’s husband planned to resell the scopes to big-game hunters, according to The Smoking Gun. The vision goggles cannot be exported without advance approval from the State Department, since the items are considered weapons, officials said. Fermanova works in Moscow giving English lessons to Russian students. Palmer declined to discuss where Fermanova came up with the $15,000 to purchase the three device. Two devices were purchased for $4,000 each, and a third was $7,000. He also said Fermanova emigrated with her parents to the United States from Latvia when she was a young girl and is an American citizen. According to her Facebook page, she is a 2005 graduate of the Ogle School of Hair, Skin and Nails. Records show that she also holds a cosmetologist license in Texas. The arrest of Fermanova comes after red-headed Russian spy Anna Chapman, 28, and nine others pleaded guilty to federal charges and were deported. The ring was arrested on June 27 and released into the custody of Russian authorities after feds arranged for a spy swap earlier this month. Asked about Chapman, Fermanova said, “I don’t even know who that is.” Immigration and Customs Enforcement began to probe Fermanova in February when a confidential informant reported she was seeking to acquire the equipment. read more

(wwd)LVMH Reports 52.8% Surge in Profits

The economic recovery may be hiccuping, but the prospects for the luxury sector keep brightening. On Tuesday, LVMH Moët Hennessy Louis Vuitton reported a 52.8 percent leap in first-half profits and said July kept the same pace as the first six months of the year, when revenues rose 16.5 percent. “The numbers speak for themselves,” said a sanguine Bernard Arnault, president and chief executive officer of the French luxury giant, addressing analysts at LVMH’s art-stuffed headquarters here. “We are fairly confident for the second half.” The buoyant LVMH results follow strong showings by other European luxury players. Sales at Hermès International jumped 27 percent in the second quarter, while Burberry posted an overall 30.6 percent sales increase in its first quarter. Further good news from the luxury sector could come Friday, when French retail-to-luxury conglomerate PPR is due to report first-half profits and sales. Despite the strong first-half performance, Arnault, like other industry executives, cautioned the global economic picture remains “uncertain.” But he noted, “We have reason to believe business will be buoyant.” Indeed, he noted that “demand is greater than supply for certain products. It’s an enviable challenge, I would say.”
On cue, giant screens flashed images of new workshops and tanneries in France and Belgium for Louis Vuitton, which kept up its double-digit pace of sales growth and powered the fashion and leather goods division to a 17.7 percent gain. read more

Dolce & Gabbana to Dress Chelsea Soccer Players

The players at London’s Chelsea Football Club will have a whole new – Italian – wardrobe in time for the opening of Britain’s premier league soccer season next month. Dolce & Gabbana has signed a three-year partnership to design the players’ formal wear and to re-design the directors’ lounge at the Stamford Bridge stadium in West London, the club’s home. The announcement was made during a cocktail party at Stamford Bridge on Tuesday. “We are really happy about this partnership and to be able to link our name to such a prestigious club like Chelsea,” said Domenico Dolce and Stefano Gabbana in a statement. “Football players are style icons both on and off the pitch, and, on top of this, there is our love of England and of London, which has always been a source of inspiration for our work.” The players’ outfits include a three-piece, two-button suit in dark blue wool twill, a blue poplin shirt, and a blue jacquard tie. The team’s colors are blue and white. Chelsea’s lion crest will be embroidered on the suit’s pocket. There is also a blue wool and cashmere coat embroidered with the club’s logo. For the players’ free time, the duo has designed a blue poplin shirt worn with dark blue denim jeans and black calfskin sneakers. read more

(daily mail)Goodbye Size Zero: Plus-size designer fashion finally makes its debut

The fashion world may continue to argue the plus-size debate for years to come, but one company has taken matters in to its own hands. Saks Fifth Avenue, the ultra chic American department store, will soon be adding plus-sized clothing to the high-end floor of its world famous New York branch – a major coup for designers, shoppers and the fashion industry alike. Due to hit rails in conjunction with the Autumn/Winter 2010 collections, garments that were last season only available up to a US size 10 (UK size 14) will soon be up for grabs up to a US size 14 (UK size 18) and some styles may even be produced up to a US size 20 (UK size 24). Saks Fifth Avenue’s legendary third-floor houses collections from the world’s most exclusive and celebrated designers. Fashion powerhouses such as Chanel, Dolce & Gabbana, Akris, Armani, Carolina Herrera, Escada, Donna Karan, St. John, Oscar de la Renta, Max Mara, Valentino, Michael Kors, Yves Saint Laurent, Alexander McQueen, Fendi and Roberto Cavalli can be found covering the floor space of the internationally revered store. With such a wealth of designers soon to be available in larger sizes, designer hungry women can look forward to buying everything from trouser suits to evening gowns and everything in between. This gleam of light in the very murky waters of the plus size argument does have one catch, however. Styles are likely to be produced as one-offs or in small numbers while the trial takes place. There may be many women clamouring to get their hands on this season’s hottest items, but only a few lucky ladies will be able to bask in the glory of Saks’ plus-size designer heaven. If the trial goes well, Saks will roll out the new venture to its other US stores. Hopefully Saks’ UK counterparts will take heed and plus-size designer wear will soon be widely available on this side of the pond too. Hot on the heels of plus-size model Crystal Renn’s backlash against the Fashion for Passion campaign shots taken by photographer Nicholas Routzen, in which she was dramatically retouched, the news of Saks’ stance on the whole sizing issue is certain to reignite the ongoing plus-size debate. With designers only recently welcoming plus-size models on to the catwalks and the size zero phenomenon still going strong, Saks brings the whole debate to a brand new juncture. One most definitely providing a cause to celebrate. read more