Archive for ‘Financial News’

October 3, 2013

Marc Jacobs Is Now A Businessman

marcJacobsMarc Jacobs has announced that he is quitting Louis Vuitton after 16 years as the Chief Creative Director. He is leaving to concentrate on his own label Marc Jacobs and Marc by Marc Jacobs to take it IPO. Today he showed his last collection for LV in Paris, as usually with a lot of stage drama. Most of models were in black colors and short silhouettes, it is up to us to interpret it in our own ways.

The reason of his leave – an IPO work, promotes him from a designer or creative director to a real businessman, a CEO, Financial Director and so forth. Ambitions are set high to repeat the legacy of Tom Ford, who also once left LV for his own label management. The leave was a success for Tom Ford who went off to independent life engaging in business of fashion and designing nothing. Who wants to stand near the drawing board with seamstresses when he can rub shoulders with financiers.

Nevertheless Louis Vuitton can’t keep unquestionably the most consistent and hardworking designer in the industry forever. Marc Jacobs brand was launched a year before the aspiring designer joined LV. Over the past 16 years he was splitting his time between LV collections and Marc Jacobs. His own label did very well opening stores all over the world and licensing his name to various initiatives, sunglasses and glasses included. A few years ago Marc Jacobs name was licensed to Safilo for undisclosed number of million dollars.

Int past 16 years Louis Vuitton brand survived China and recession. China posed a tremendous threat to the brand when LV trademark was not granted to Louis Vuitton, but other company who immediately started to copy LV products and sell them as real. Sales went global and confused consumer started to under-appreciate the brand and buy fakes as real. Louis Vuitton fought back by opening stores in central malls in Asia, suing eBay and significantly lowering the prices of their products to close the gap between real and fakes. It is not clear what role Marc Jacobs played in this strategy, but he surely learned enough business lessons to continue as independent businessman.

An IPO for fashion companies is a great marketing tool. We expect to see more free press coverage over the next year, just like it was with Prada two years ago before Prada IPOed in Hong Kong. IPO certainly allowed Muccia Prada cash out big, while quality of her products decreased dramatically. Entire legacy of Prada shoes was erased in one year when entire manufacturing was outsourced to Vietnam. No more Devil wears Prada. No doubt that the pressure to decrease costs to increase profit was posed by shareholders who cared for stock more than long term legacy of the brand. Reputation of Marc Jacob brand is potentially on the line as well. Today brand is known for it’s immense creativity, fun factor, reasonable price and quality. It is still quite a niche brand, and IPO could allow it to grow in a good sense. It will all be up to Marc Jacobs.

October 1, 2013

A Real Cost of Participating in a Fashion Week

fashionWeekFashion weeks is a multi-million dollar business. Thousands of jobs got created because of this 20th century entertainment phenomena. These days every large city wants to host their own Fashion week. Paris, Milan and New York hold the largest fashion weeks twice a year. Other big cities that have a fashion week are Toronto, Tokyo, Shanghai, Berlin Los Angeles and dozen others.

Have you ever wondered how expensive is to participate in a fashion week? Do they charge fees? Do they pay any labels to participate? What is a real cost of presenting a collection at a international fashion week? Here is what we found out:

To participate well established labels don’t have to pay entry fee, nor they need to pay for the venue since tickets are sold to attend that cover these costs. They however have to pay for decoration and operations of the show they are putting. A fashion show revealing the new collection can easily cost hundreds of thousands of dollars according to Forbes. Cost is broken down between setting up the venue decor, furniture, building the runway and backstage room, hosting a reception, hiring models, stylists and make-up artists and so forth. According to Forbes interview with a famous fashion show producer Thomas Onorato, certain costs may appear surprising. Large labels can shell $20,000-50,000 just to hire a celebrity stylist or makeup artist, which in turn will pay off in increased sales if presentation goes well. Some models request a special suite, that of course, has to be built at participating label’s cost, this on the top of paying the model. A famous phrase by Linda Evangelista “We don’t wake up for less than $10,000” which was said back in 90’s gives us a rough idea how much just a few minute appearance can cost designers.

A newly emerging label has to pay differently. While it is up to them how much operating expenses they want to spend, they have to pay for venue rental on top of that. As venues compete for business, some offer value-add participation by providing services such as lighting and stage organization such as MAC and Milk in New York. But even to those, to get in, a designer has to be invited. So, you can’t be just completely new label.

As shows get larger, with close to 300 labels showcasing collections a few minutes apart during the week, scheduling of events is becoming more challenging. Paris fashion week has a reputation of a very good organization with not more than one large label showing the collection per hour. This gives media time to switch between the viewings. New York fashion week in contrary, has a bad reputation of scheduling that affects labels in the long term. If media and photographers didn’t get a chance to make good pictures there will be no publicizing later. Perhaps this is the reason why so many grand labels, such as Versace or Dior for example did not participate in the New York fashion week this year. In a slow economy labels have a choice where to put their money.

June 6, 2012

Gucci Won Trademark Lawsuit Against Guess. Is the Battle Over?

After 3 years of evidence collection and trials Gucci finally won a trademark lawsuit against Guess. We have already written about the case and presented our evidence comparing Gucci and Guess products back to back. The viewer was to analyze and make conclusions, but case definitely had grounds. Famous GG logo has been used in a very similar fashion by Guess, disregarding the fact that GG stands for Guccio Gucci and has been around for 100 years, while Guess only has one “G” in their brand name. Very minor interpretation of the logo was used by Guess in purses, shoes and glasses imitating the famous pattern style, brown/beige color combination and even font style. Gucci has used single G in bold style, and in the past few years spelled entire word Gucci in Italic font. Guess followed both examples in their products.

Among another violations were examples of Guess using red and green stripe, shapes and designs of various products and “coincidental” timing with which these were coming out – always after Gucci releases to the stores.

New Guess endeavor

While Gucci has won, they were only awarded $4.6 million dollars in damages instead of $200 that they were seeking. This perhaps has something to do with the fact that the lawsuit took stands in the United States, native to Guess. Even to be fair, trademark infringement was hard to deny, how $4.6 million figure came about is unclear.

The judge Shira Scheindlin in her final statement wrote: “Over the past three years, the parties have put in countless hours and spent untold sums of money, all in the service of fashion–what Oscar Wilde aptly called ‘a form of ugliness so intolerable that we have to alter it every six months.’ It is my hope that this ugliness will be limited to the runway and shopping floor, rather than spilling over into the courts.”

In the meanwhile this Spring one can find a new Guess collection, that to me looks way too much similar to iconic Chanel – little rectangular quilted pursues with the chain handle. Is this a beginning of a new fashion wave or targeted marketing endeavor by Guess marketing department?

March 30, 2012

Gucci Guess Trademark Lawsuit. Product Comparison

A lawsuit for trademark infringement between Gucci and Guess was suppose to be a private mitigation at first. But now, after the first hearing on March 26, the lawsuit seems to have turned into a real public war between the two brands. Only lazy publication didn’t write about it in fashion section over the past 3 days.

A month ago Gucci has filed a claim against Guess for infringing their interlocking GG logo by using it consistently in shoes and accessory products. A plaintiff Gucci is looking for immediate cease of logo use and $215 million in damages. Of course for Guess, taking all the products off the shelf that currently are in circulation with logo in question, would turn the overall damage into a billion, should they lose the case.

The history behind interlocking GG logo is out of questions, since Guccio Gucci used it since 1921 when he founded his famous namesake company. Guess, an American company, was founded 60 years later in 1981, and according to the lawsuit claim, started to heavily imitate Gucci logo and it’s use 7 years ago.

Many Guess customers have clearly enjoyed the imitation and perhaps, even bought much cheaper Guess products due to their resemblance of luxury brand Gucci. Initially Guess just adopted their own version of interlocking GG, but later turned over to imitating color combinations, ideas, shapes and details of design.

On March 26 Guess spoke out the first line of defense claiming that Gucci, over the 7 years has never issued a warning and that their products are not meant to resemble Gucci. We will very closely watch the case. Right now we can’t really predict, the outcome is really 50/50 because both companies have a point. However, the fact that the case is happening out of the New York courthouse is partially against Gucci because Guess is one of the most respected American companies. And the rule of thumb so far has been “Don’t sue American company in America”.

While Guess is in defense, let’s use our own judgment. Here is our attempt to set things straight and offer real product to product Guess to Gucci comparison.

What do you think, did Guess violate Gucci rights on the use of trademark?

Guess

Gucci

February 8, 2012

Clothing and Fashion Accessories Made in USA

With economy slowly picking up after recession and upcoming presidential elections I think big topic of this year will be “Made in USA“. Apparel industry has retreated to China over the past 20 years and up until recently we could hardly find any clothing, shoes or accessories made locally. We kept talking about lost jobs, but kept buying what’s no longer made here, in most cases not because we didn’t want, but because we didn’t know what and where.

According to NY Times in 1960 98% of all shoes sold in America were made in America. Today, less than 10% is made here. But apparel industry does exist in America. Clothing follows similar fate. Not all industries are in such a tough position, for example car manufacturing, heavy manufacturing and food industries are mostly localized still.

So if you are one of those who’d say “Common, I want to buy Made in USA, but I can’t find it!”, we would like to offer a list of companies that largely sell what is produced here. I must admit that my research showed that clothing made in USA is more of a higher end with top or shirt prices averaging $100. But in many cases quality and design wouldn’t disappoint you.

Here is a list of companies that we discovered make their clothing in the USA. Note, unfortunately none of these companies make everything in USA, but according to our research, they do make either some or large percentage. Please e-mail them when considering buying specific item.

Ella Moss

http://www.ellamoss.com

Average price for a top: $120

Style: semi-casual

Target market: mid-age women

California inspired style, simplistic and classic. Ella Moss clothing caters to mid age women who prefer semi-casual style. There are many items to mix and match that will help you look professional and non-conventional at the same time. Many fabrics are natural such as cotton, semi-natural rayon etc.

Eileen Fisher

http://www.eileenfisher.com

Average price for a top: $200

Style: casual, comfortable

Target market: mid-age women

Self-made, successful entrepreneur Eileen Fisher shares her passion through her environmentally inspired designs. Huge advocate for woman rights, Fisher styles are to deliver comfort at all costs. Most of items are very zen. Their website has four words to describe what they create: Simple. Sensual. Beautiful. Timeless. Functional.

Nicole Miller

http://www.nicolemiller.com/

Average price for a top: $200

Style: dressy & evening

Target market: young & rich

Hippie inspired Nicole Miller designs are for free spirited girls. Long skirts, colorful striped cardigans are mixed with classic little black dresses and evening gowns. Nicole Miller also has a wedding dress collection that is quite a treat. Clothing collection is on the pricey side though – a simple cardigan sells for over $500, but hey, if you can afford it, perhaps it will be your way to support Made in USA niche market.

Kate Spade

http://www.katespade.com/

Average price for a top: $250

Style: dressy & casual

Target market: young and mid-age posh women

Kate Spade is one of the most known New York designers who grew her company to multi-billion dollar empire. Perhaps, recently company is most known for its signature colorful leather bags and shoes. Note, most of shoes are made in Italy, while many clothing items are made in the USA. Company is positioned towards high end with average dress price $500. Also, you will find a very large choice of accessories such as jewelry, hats and eyeglasses. If you are into shopping or searching for ideas, Kate Spade is one to visit for sure.

Theory

http://www.theory.com/

Average price for a top: $250

Style: semi-casual, business

Target market: mid-age working women

Relatively young, only 15 years old company, Theory took the stage by their urban modern designs. There is a big men collection and quite frankly ladies designs are also more gender neutral driven. But, this is what urban and modern all about nowadays, especially in our highly emancipated society.

7 for All Mankind

http://www.7forallmankind.com

Average price for a top: $70

Style: casual

Target market: teen to young professionals

This company has reinvented jeans as we knew them. One of the first jeans companies that took a stage as high end offering their premium quality, Made only in USA, awesome jeans for $200 a pair. 15 years ago spending that much money on jeans was unspeakable, but today, this is about average what an urban chick will spend. Jeans made our culture, framed our spirits and continue to remain the prime bottom element of our daily attire. Note, company also has a small collection of other clothing such as tops, shirts and jackets, but they are not made in USA. All jeans are!

Joes Jeans

http://www.joesjeans.com/

Average price for a top: $1oo

Style: casual

Target market: young men and women

Another high end jeans manufacturer, a direct competitor to 7 jeans. This brand offers more variety of styles that are both artsy and even a bit Japanese inspired. As compared to other jeans companies, Joes has much more other clothing apart from jeans. All jeans are Made in USA.

Helmut Lang

http://www.helmutlang.com/

Average price for a top: $200

Style: casual

Target market: free spirited mid-age people

A company with rich international history Helmut Lang will surprise you with some striking designs. It is a treat for an eye to see some fresh ideas such as disproportional lines and avant-garde twists in much casual collection this year. Helmut Lang – a company founder is Austrian. Company was briefly owned by Prada and now is in hands of Japanese corporation. What started with slick conservative suits, now turned into crazy casual stretched tops and tees. Enjoy while it lasts.

Another notable companies, that manufacture in the USA are:

Citizens of Humanity

http://www.citizensofhumanity.com

Hudson Jeans

http://www.hudsonjeans.com/

J Brand Jeans

http://www.jbrandjeans.com/

If know of any more companies who manufacture clothing in USA, post a comment and we will gladly add it to this list. I really hope it can grow to couple of hundreds!

September 9, 2011

John Galliano is Guilty

Yesterday Paris court has issued a guilty verdict on John Galliano. The punishment, as expected is rather symbolic – 6000 euro. John Galliano now is officially convicted by court in a hate crime and will bear a criminal record for the rest of his life.

The loudest fashion scandal of 2011 is now over. It began in late February of this year, when John Galliano has been arrested for anti-Semitic accusations spoken while drunk in Paris bar in the midst of Paris Fashion Week. The arrest would not have been so unusual if not Galliano had been fired by the House of Dior, subsidiary of LVMH the following night. The act followed by the video leak where John is taped in a drunk state yet in another bar where he clearly favours Hitler. Galliano’s black stripe of events continued with him being removed as a lead designer from “John Galliano” fashion brand, also owned by LVMH as part of Dior suite. The one day trial took place on June 22 where the details of the event were discussed including detailed analysis of Galliano’s childhood, early years as designer, his private life and his recent career.

John Galliano scandal is one of the loudest in the fashion history and the most covered by press in the history of modern media. The amateur video that became a grand evidence of true Galliano’s beliefs has been watched over 1 million times. There is no fashion magazine or blog that didn’t cover the event as it progressed over the course of past 7 months.

While there are few popular fashion figures such as top model Kate Moss and Voque Editor Anna Wintour, who came to defence and support the disreputable designer, the shade of shame will be hanging over his name for a while. By most part this is because he has yet to admit his wrongdoing, to apologize or to demonstrate sorrow for the things he said on public about Asians and Jews. One would think that logical way to rebuild reputation is to spend time with related charities, accept interview invites or do at least something. Until any of this happens, John Galliano page in now part of history in fashion world.

August 4, 2011

Counterfeiting in Italy is a National Problem

Counterfeit stand on the busy Rome street

Items of Italian fashion are among the most counterfeited in the world. In fact luxurious fashion brands such as Louis Vuitton, Prada, Gucci and Hermes make up at least 30% of all fashion fakes sold today. This is not news, not a secret any more. Corporations file countless lawsuits each year, often publicize their success in press to raise awareness among consumers that something is being done. Just recently Canada made news for the largest anti-counterfeit law suit win in favor of LVMH and Burberry. Total $2.6 million was awarded to the plaintiffs payable by three Canadian corporations that were accused of distribution of fake LV and Burberry goods.

Here in North America we are very counterfeit conscious  and even know that we, consumers, can be arrested for buying a fake LV purse or Gucci belt.

What is a real eye opener is that while corporations fight counterfeiting in North America and Asia they already gave up to fight it in their own country. If you ever visited Naples, Rome, Venice or other touristic Italian city you see counterfeit stands on the busiest streets of the city, most within minutes from flagship stores. Why this is happening?

There are several answers. One would be that law in certain European countries does not protect corporations against this “economical” crime. There are much stricter laws in the USA, Canada and China that in Italy for example. Another reason is that law, even when present, is not reinforced by local police in Italy. In fact, you hardly see police officers in spots one would think are most logical – metro stations, airport, major tourist attractions. And of course, the last, but not least reason – corruption. Local police in Italy is getting a cut of the profits for letting counterfeit goods sell on the streets.

What is also interesting that fake goods sold in Italy, are not necessarily made in China. According to a bestselling book Gommorah by Roberto Saviano which is now put in award winning film, many of fake goods in Italy are actually made in Italy. Saviano made an extensive research on Naples criminal society that surrounds drug dealing, human trafficking, racketeering and robbery with one Italian “family” Cammora. Saviano touched down on counterfeiting too. There are many very small factories that take orders from large and small corporations along with street vendors. It would not be a surprise that a fake shirt could be made by same factory as a real one. Of course, quality standards may not be met to the same degree and Saviano explains that orders to factories come with very distinct descriptions to what is needed to be done.

So with our eyes wide open, we continue to shop in flagship stores and large department stores, eventually training our eye to recognize real goods to the point that we can tell whether that new LV purse on a shoulder of a girlfriend is a fake or real by just looking. Even she bought it in Italy label says “Made in Italy”, we now know it may still be fake unless she shows a box and a receipt from the flagship store.

June 22, 2011

A Real Cost of Canada Post Strike

Canada Post, a Crown Corporation has been on strike for over 2 weeks. First rumors about possibility of strike appeared last year. Situation heated up by May of this year and on June 2, 2011 strikes began starting from Windsor, London and by mid last week, entire union was on strike.

While there is a lot of speculation on the fact that mail is declining business and no one needs flyers any more, national postal service is a basic necessity.

  • Many people felt the real inconvenience when their pay checks didn’t arrive in the mail putting their mortgage payments at risk or incurring interest for overdue bills.
  • Businesses suffered the most. Much buzzed story about bumble bee queens that were stuck at the warehouse facing imminent death.  Many other animals were stranded in dark rooms without food or water and limited air. Large shipments of live fish were delayed – both exotic and feeder fish that is used to feed another aquarium fish, leaving some again, with no food.
  • Online retailers were forced to look for alternative ways to deliver mail that in many cases are more expensive, thus losing revenues.
  • Lost sales tax due to lost retail opportunities would add up to the list of overall losses.
  • Some business, such as honey production may even need to lay off their own workers as they now are facing production deficit.

In our own calculation the real cost of the Canada Post strike is close $1 billion not including the losses of the Crown corporation.
According to Globe and Mail, Canada Post corporation alone lost close to $100 million in revenues due to cancelled contracts. I am sure that class action law suits to follow from businesses around the country.

While public opinion divide and some people support the strike idea citing to the fight for the general standard of living, others disagree referring to the fact that a country with true capitalistic system has no place for unions. Obviously in Canada human rights law is one of the most extensive in the world. There are laws protecting workforce from abuse, mis-pay and setting one of the highest in the world standard of working conditions. Minimum wage in Ontario is $10.25 per hour.

According to Toronto Star, the government had threatened back to work legislation if strike continues. The legislation assumes penalties for the union including up to $50,000 a day for union or company official, and up to $100,000 a day for the company or union. Individuals could face up to $1,000 a day. Whether the legislation would be effective we shall see, until now UPS is our only option.

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May 26, 2011

Prada Plans for IPO

Prada – one of the world’s largest private fashion brands has announced yet another attempt to go public. Prada, currently trading on Milan stock exchange has announced plans for IPO at Hong Kong Stock Exchange. Listing date is currently set to June 23 or 24, 2011.

According to recent valuation company is worth anywhere from $10 billion to $15 billion. It has been announced that 20% of stock will be put up at Hong Kong Stock Exchange.

Company has attempted an IPO 4 times in the last 10 years. Most recently, just in 2008 when decision was made to postpone the initiative due to economic crisis. The main goal for IPO is to pay off company’s outstanding debt of $1.4 billion. Over the years of industry struggle Prada was able to sustain firm market standing due to focus on purse and shoes. Over 2010 company reported 150% profits and sales increase. Full year sales for 2010 totalled $2 billion.

Company is currently operated by Patrizio Bertelli, husband of Miuccia Prada – a granddaughter of the founder and a Chief Creative Designer as of 1978. Along with anchor brand Prada, company also owns Miu Miu and two shoe companies – Church’s and Car Shoe.

The Asian IPO is deemed to have a marketing benefit to promote Prada boutiques opened across China, Hong Kong and South East Asia over the past decade. If IPO promotion is done right company may enjoy steep sales increases due to better brand awareness. It could be the most effective marketing technique since “Devil Wears Prada” film. Company is set to open 90 more stores in Asia in the near several years – an unprecedented increase for a foreign brand. This expansion strategy

Prada PS 01MS

Prada PS 01MS - 2011 Collection

is necessary to compete with LVMH Moet Hennessy Louis Vuitton – one of the word largest fashion conglomerate that is exercising very aggressive Asian market penetration strategy.

Prada accessories are among most desired on the market. The collection of Prada eyewear was first launched in 1999 now expanded into Prada and Prada Sport product lines. Prada sunglasses are also among most popular among men. The brand following its minimalistic style and toned down colors has created a large variety of unisex glasses models and men sunglasses that capture a large portion of market share from Hugo Boss, Tom Ford and Dior Homme – other luxury eyewear rivals.

May 8, 2011

LVMH Invests in Asia

Louis Vuitton Hennessy Moet is the largest luxury brand retailer in the world. French owned LVMH, is publically traded on Euronext – European Stock Exchange under symbol MC. In the last year company posted over €37 billion in assets. Among companies largest subdivisions are well known luxury brands Luis Vuitton, Dior, TAG Heuer, Marc Jacobs and recently acquired Bulgari. A company is big on acquisitions, and over the last few years has been making on average 3-4 large buyouts per year.

But large acquisitions are not the only mechanism for LVMH to keep organic growth. Private investments via its Venture Capital funds is another, very active method for effective growth. Being a global company LVMH has interest in international emerging brands, lately specifically Asian based labels.

L Capital Asia fund is created to do just that – swallow emerging Asian companies in China, India and South East Asia. L Capital Asia is currently a $650 million fund and is head quartered in Singapore. Fund capital was syndicated by LVMH and US and Asian investors with LVMH investing close to 10%.

According to Ravi Thakran, the fund’s managing partner L Capital Asia is concentrating on brands that offer unique products and have capable entrepreneurial managers. Unlike its parent group LVMH, which concentrates on the top tier of the luxury sector, he said the fund focuses exclusively on promising Asian labels looking for a big breakthrough, particularly in the Chinese and Indian markets.

To date L Capital Asia fund has invested $23.5 million in Charles & Keith, Singaporean shoe retailer. The deal was announced on March 22, 2011. LVMH acquired 20% of stake in Charles & Keith.
In the prior deal, announced on February 11, 2011, LVMH purchased significant minority stake in Gitanjali Gems – Indian jewellery brand for $100 million.

Other deals totalled $90 million of stakes in two Singaporean fashion companies and a Hong Kong-listed watch and jewellery company. Very active fund is currently working of another number of deals to be announced shortly via LVMH press centre.

Based on these deals we see that fund is concentrating on well established companies with wide retail operations and proven market success. This investment strategy is in line with LVMH overall investment history where company biggest value add is in growing operations for its subdivisions utilizing the economy of scale for bulk purchased ad space in print media, TV and runway show participation.

In the past few years company showed that they are very serious about their presence in Asian market. According to recent studies conducted by ARC China, sale of luxury goods almost doubled in the past year. Greater China represents 28.0 percent of sales for Swatch, 18.0 percent for Gucci, 14.0 percent for Bulgari and 11.0 percent for Hermes.

LVHM showed zero tolerance for any hint on destructing their reputation among Chinese consumers. Recent fire of John Galliano from House of Dior who publically offended Asian men and Jewish woman, followed shortly by removal of the designer from his own label John Galliano. Sharon Stone remarks against Chinese people after the earthquake in 2008 resulted in stripping of all her Dior ads the following day after the incident in every Chinese mall.

Thus LVMH has set their long term strategy to tapping into fastest growing consumer market in Asia proactively – by not just opening retail locations for their primary brands in China and India, but also investing in promising Asia based labels to grow them at home and world wide.