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Kering SA has a spring in its step. The luxury goods and footwear group reported a 16% jump in fourth-quarter revenue, helped by a resurgent performance at Gucci, its flagship brand.

Revenue rose to EUR3.18 billion ($3.60 billion) from EUR2.74 billion in the same period a year earlier, helped by strong demand in Western Europe and Japan.

Kering, which owns Gucci, Bottega Veneta, and Yves Saint Laurent among other brands, said that organic revenue growth, which strips out the effect of fluctuating exchange rates, rose a more modest 8%.

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Puma, Kering’s sports-shoe brand, and Yves Saint Laurent logged the highest growth during the fourth quarter.

But better-than-expected results at Gucci suggest the brand is on its way up. The Milan-based business, known for its double-G logo handbags, had fallen out of favor with fashion-conscious consumers in recent years and faced slack demand in China where a crackdown on corruption has curbed the practice of exchanging gifts.

Gucci sales rose 13% in the fourth quarter, though its organic growth was a more modest 4.8%.

“Gucci has come in with a significant number of new styles that are starting to turn heads–at the same time, it is benefiting from promotions on its former collections,” said Luca Scola, analyst at Exane BNP Paribas.

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Kering shares were 2.0% higher on the Paris bourse in early trading.

Last year, Gucci installed new brand Chief Executive Marco Bizarri who in turn hired a new creative director, Alessandro Michele. Mr. Michele’s first collections, which appeared in stores during the end of the third quarter of 2015, have garnered high praise from fashion critics and have also proved popular with consumers.

“These results come amid a more complex economic and geopolitical environment, accentuating the shifts taking place in our sector,” said Chairman and Chief Executive François-Henri Pinault. “I am confident that the work of our creative teams and the commitment of all our associates will enable us to extend our growth trajectory in 2016 and beyond.”

Yves Saint Laurent’s organic growth was 27% as the fashions of designer Hedi Slimane continue to be very popular with consumers. Puma grew 12% on an organic basis.

Kering’s full-year net profit rose 32% to EUR696 million from the EUR528.9 million the year before when losses at businesses that the company has since sold weighed on its bottomline. Pretax profit fell 25% on a 15% rise in revenue after Kering wrote down the value of goodwill at Puma and other brands as well as incurring restructuring costs at Gucci.

By Nick Kostov

Samsonite International SA is buying Tumi for about $1.8 billion in cash, seeking to expand its presence in the luxury bags market.

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The company said Thursday it’s paying $26.75 per share for Tumi, a 33 premium over its closing price Wednesday, before The Wall Street Journal reported the companies were in merger talks.

Tumi Holdings Inc. is based in South Plainfield, New Jersey. Its luggage, backpacks and briefcases are sold in 2,000 locations worldwide, with sales totaling $548 million last year.

Samsonite said it expects the deal to lead to cost savings in sourcing, logistics, sales and marketing, distribution and even product development.

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The combined company will list on the Hong Kong Stock Exchange, where Luxembourg-based Samsonite’s stock trades.

Reported by Associated Press @AITbags

Hermes, the makers of the iconic Birkin bag and silk scarves, defied expectations and beat profit forecasts in 2015.

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The luxury goods maker said in its 2015 results statement that sales in Europe and Japan were so good that it offset cratering revenue in China, which was hit by the huge anticorruption and anti-extravagance campaign led by President Xi Jinping.

Here are the highlights:

1.Revenue rose 18% year-on-year to €4.84 billion.

2.Operating profit hit €1.54 billion — ahead of analyst expectations at €1.52 billion.

3.Net income rose to €973 million, up from €859 million the previous year.

4.Japan sales grew by 18% — this is massive compared to Asia sales growth of just 5%.

It’s an impressive set of results. Especially since luxury goods have become less accessible to the growing Chinese middle class and less acceptable for members of China’s elite after the corruption crackdown.

Still, Bain & Company’s 2014 China Luxury Market Study, which was released at the beginning of last year, showed that China’s luxury-goods industry accounted for 29% of the global market. So being able to grow a luxury brand in this environment is a big deal.

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It is the latest luxury goods company that has managed to capture wealthy clients’ imagination again with iconic products.

Last month, luxury and sportswear group Kering showed in its 2015 financial results that people are also loving Gucci once more and its sales in Europe and Japan are helping offset the decline in revenue in China.

Revenue in the fourth quarter jumped 16%, mainly because of the resurgence in popularity for its Gucci brand. Gucci sales rose 13% in the fourth quarter.

Kering also owns brands such as Bottega Veneta and Yves Saint Laurent, but Gucci was its star performer.

It added that shoppers in Western Europe and Japan were buying more. In fact, overall luxury goods revenue in Western Europe rose by 13%, and Japan posted a “third year of strong growth” with a 13.7% rise in sales.

Overall, Kering said sales in 2015 rose by 15.4% to €11.5 billion (£8.9 billion, $12.8 billion) from the previous year.

Contributed by Lianna Brinded

 

LESBOS, Greece (AP) — They are a poignant symbol of Europe’s refugee crisis: Mountains of life vests strewn on the beaches of Lesbos, and piled high at dumps on the Greek island that doesn’t know what to do with them.

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Now some of those refugees are working on a solution.

A group of volunteers at a refugee shelter on the island has launched a project to make handbags, totes, and messenger bags out of the brightly colored vests, hoping to raise money for charity efforts on the island.

At a tiny makeshift workshop, Afghan tailor Yasin Samadi works with a sewing machine to make a small orange dispatch bag, as children and other curious onlookers wander in and out, drawn by the bursts of noise from the machine.

“If there’s work here, I will stay here,” says the 27-year-old from Kabul, who’s been living with his family at the shelter, known as the PIKPA camp, for 18 months. “If not, we’ll need to leave.”

Lesbos has been at the center of the refugee crisis that escalated dramatically last year. More than 500,000 refugees and other migrants arrived to the island in 2015, nearly half the total number of people who traveled to Europe.

The numbers peaked at 7,000 per day in October, with people traveling in dinghies and boats that were barely seaworthy, and many wearing counterfeit-brand life vests bought in shops on the Turkish coast.

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The bags are due to go on sale by mail-order later this month, priced between 10 and 30 euros ($11-$32.5), organizers of the project said.

Greek volunteer and English teacher Lena Altinoglou said the bag project was aimed at helping refugees cover their living expenses and retain a sense of dignity.

“These people don’t want to become beggars … It’s important for people here to able to work, create something, to make a living and help other (refugee) families,” she said.

“These life vests remind us of the crossing from Turkey to Lesbos, which is a dangerous journey. Many do reach our camp safely, but others don’t. So it’s a reminder of the need to find a better solution.”

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Prada’s answer to stagnating sales was unveiled on Thursday with a handbag-heavy Fall-Winter collection that the company’s executives hopes will mark a revival in the fortunes of the fashion heavyweight’s flagging fortunes.

Miuccia Prada’s latest offering had a post-World War II feel about it with sailor and nurse-style caps abounding alongside cape-shaped coats and pencil skirts designed to emphasise the slender waists of more austere times.

Leather coats and jackets, which came with fur trimmings, and a tweed overcoat also harked back to a less centrally-heated era.

Prada could do with this collection being a major hit after two consecutive years of stagnating sales and no sign of an end to the slowdown in China that is hitting it particularly hard.

– ‘See now, buy now’ –

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Against that backdrop, it was perhaps significant that almost every model who strutted down the catwalk at Prada’s Milan HQ Thursday was clutching one of the company’s pricey handbags, the accessory which more than any other has powered its growth over the years.

And in another telling sign of the times, two of those bags are to be made available to buy from Friday rather than being held back from release when the Fall/Winter collection goes on sale in four months time.

The move may seem insignificant to the wider world but it is being hailed as big news by fashion insiders who have billed it as the company’s first tentative dip into “see now, buy now”.

The trend has already been embraced by Burberry and Tom Ford and which, if it takes off, has the potential to completely transform the way upmarket designer clothes are produced and marketed.

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– Fendi’s furry friends –

Elsewhere on day two of Milan fashion week, Karl Lagerfeld produced a very fluid, wavy collection for Roman house Fendi with star American model and TV star Kendall Jenner providing a touch of celebrity glamour.

Thigh-high boots in an array of colours provided the eye-catching highlight and even they had a ruffled look about them.

Furs abounded, often with vibrant dashes of colour, and the collection also drew inspiration from Japan, generally in its fluidity and particularly in the form of the flowers on a baby doll dress that were modelled on an 18th-century Japanese wallpaper print.

But the nod to Japan which delighted Fendi fans the most was the presence of Piro-chan and her male counterpart Bug-kun — mascots modelled on the furry handbag charms which have become cult items in Japan, a key market for the Rome-based house.

Elsewhere, Costume National designer Ennio Capasa celebrated 30 years with the brand with a collection that featured much asymmetry and had a very deconstructed feel in keeping with two of the women who inspired it: Icelandic singer Bjork and Yoko Ono.

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Massimo Giorgetti’s reinvention of the Emilio Pucci house style meanwhile continued with another sporty collection for the LVMH-owned group. Zipped knitwear and leggings that could have passed for ski pants set the tone.

Handbag and accessories maker Kate Spade & Co reported a 7.6 percent rise in quarterly sales, driven by demand for its kate spade new york line of products in North America.

Net income fell to $61.5 million, or 48 cents per share, in the fourth quarter ended Jan. 2 from $126.5 million, or 99 cents per share, a year earlier.

The company’s profit in the year-earlier was boosted by a benefit of $88 million due to a tax gain.

Net sales rose to $429 million from 398.6 million.

Sales at stores open for at least 14 months, including online sales, rose 14 percent. Analysts on average had expected a rise of 11.4 percent, according to Consensus Metrix.

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(Reporting by Subrat Patnaik and Yashaswini Swamynathan)

In April, Elle writer Justine Harman spotted a classic, nylon box-shaped Kate Spade bag .

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The bag, she noted, was knocked down from its original price of $250 to a staggeringly low $39.99. (That particular discounted bag has now been sold, but remaining “vintage” Kate Spade items are still marked down pretty low.)

While this discovery delighted some millennial women who grew up begging their parents for one of these handbags, others might have noticed that this dramatic price dip is indicative of something bigger: The designer handbag industry is losing its luster.

As with all trends, there’s an ebb and flow. Not everything can stay relevant forever. Kate Spade has adjusted to a more colorful, bright, fun look, but the company’s offshoots, Kate Spade Saturday, targeted towards millennials, and Jack Spade, which tapped into the men’s industry, shuttered all their doors in the winter, The Wall Street Journal reported.

In April, Bloomberg noted that Michael Kors was the top handbag for teens, replacing Coach. Kate Spade was in third place.

But Michael Kors’ sales growth has been eroding, and prospects do not look good for the brand.

The brand’s inventory has risen, suggesting that the brand’s products aren’t flying off shelves.

It might be because the brand is too popular — or too widely purchased. This is in part due to the presence of outlets — which Michael Kors has aplenty — which can ultimately be brand killers. Outlets devalue a brand, encourage people to not buy at full price, and make luxury items too accessible.

Further, widespread popularity is the “kiss of death for trendy fashion brands, particularly those positioned in the up-market younger consumer sectors,” industry expert Robin Lewis wrote on his blog. Lewis compares Michael Kors to Tommy Hilfiger, which reached its peak in the late 1990s.

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Michael Kors is considered an aspirational brand, with consumers paying a premium for its label. Once everyone has the product, it is no longer considered cool.

Other brands that have experienced this phenomenon include Juicy Couture, Jordache, and Coach — which Michael Kors dethroned as the most popular high-end handbag brands for teens, as Bloomberg has reported.

But Coach’s woes are undeniable. CNBC reported the bizarre disparity for Coach: Sales still dipped amid shares rising. On a recent earnings call, CEO Victor Luis attributed this to how the brand has been cutting back on flash sales.

Sweeping up shoe brand Stuart Weitzman at least helped slightly; “the acquisition of Stuart Weitzman in early May contributed $43 million to fourth-quarter and full-year revenue,” CFO Jane Hamilton Nielsen said on the call.

But it might not just be handbags that are at a loss. This pattern is indicative of a much larger trend.

After all, millennials spend their money differently than the generations preceding them did. Old-school retailers like Gap have suffered compared to fast-fashion companies like Zara and H&M, which allure millennials with their quick turnaround and low-price. Traditional retail has been struggling as a result.

And those traditional retailers who attempt to cater to millennials instead of baby boomers or Gen Xers face huge possible risks: Millennials don’t spend that much money as it is. Saddled with debt, this generation isn’t spending money on luxury items. And by alienating consumers who do have money, retailers inadvertently put themselves in a precarious situation. Who will buy from them?

Hilary Stout illustrated this problem in The New York Times in June: “After all, the millennial generation has less wealth and more debt than other generations did at the same age, thanks to student loans and the lingering effects of the deep recession,” she wrote.

And Forrester researchers highlighted in a study that baby boomers, between the ages of 51 and 69, are the “biggest spenders” because they have extra cash from decades of saving and investing — something millennials just can’t afford.

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Additionally, millennials are flat out not spending on apparel. A study by Morgan Stanley highlighted that millennials are instead choosing to spend money on expenses like rent, cellphones, and services.

Macy’s CFO, Karen Hoguet, even blamed Netflix on the sales slumps. “I think part of that is the customers are buying other things, whether the electronics, cable services, Netflix, whatever,” Hoguet said.

Ultimately, there’s a limited market for selling clothing — let alone designer handbags.

The biggest threat to the industry could be “HENRYs” — a term luxury expert Pam Danziger coined, standing for “high earners not rich yet.” These people make over $100,000, and, as she told Bloomberg, are “making very careful decisions” when it comes to spending. But because they’re not picking up designer products, the luxury brands are feeling the burn.

“Today, those people feel decidedly middle class and not at all luxury class,” Danziger told Marketplace.org.

Which begs the question — why buy luxury items? Especially when you can sweep your favorite items from the aughts on eBay for under $40.

Then again, while some of Kate Spade’s bags are relics of the past on the internet, its more fashion-forward bags are thriving — proving that the handbag industry can, in fact, save itself from an ominous fate.

“In wholesale, our business was primarily driven by strong performance in handbags, with data showing a continuing increase in market share, representing a key opportunity for growth as we build on our still modest penetration of market share,” CEO Craig Leavitt said on a recent earnings call for the company.

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Contributor: Mallory Schlossberg

 

Marc Jacobs is betting big on accessories — this time under the label’s new one-brand, multiple price points approach.

With a spring collection exhibiting a new double-J signature hardware bit applied to a wide range of functional shapes and sizes in brightly colored fabrications – the majority of which will be priced under $500 – the Marc Jacobs brand, like many in fashion, looks to generate the majority of its sales in the category.

Chief executive officer Sebastian Suhl said that ideally, the label’s leather goods will account for 70 percent of the brand’s overall sales, while footwear would represent an additional 15 percent share. Such a proportion of accessories would even exceed Michael Kors’ current sales breakdown, which in 2015 owed 68.4 percent of brand sales to accessories.

The focus on accessories fits in with the company’s goal of one day going for an initial public offering, hoping to mirror Kors’ success on the stock market. No time frame has been set for a possible IPO, though.

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“Accessories are our biggest category without question – they are a top priority from a business perspective,” Suhl . Presently, leather goods account for about 60 percent of the LVMH Moët Hennessy Louis Vuitton-owned brand’s sales.

Marc Jacobs found immense success through the early Aughts with bags boasting its signature oversize push-button hardware. The designer’s spring assortment, which rolled into stores late last week, is the first collection to exhibit the label’s restructured pricing approach and new logo. The label would fold its diffusion Marc by Marc Jacobs label into its higher-end one to create a unified brand with varied pricing.

The CEO said that 70 percent of the brand’s spring accessories assortment is priced under $500 – a ratio that will continue in future collections. However, special pieces constructed of exotic skins and boasting elaborate embroidery can be priced in excess of $5,000. As observed at the brand’s 163 Mercer Street store, the varied price points are merchandised beside one another without differentiation.

Included in the new assortment is the brand’s new “Gotham” leather satchel collection, priced between $300 and $600. Each has a woven strap. The “Snapshot” range of camera bags comes in bright leather ($295) and checkered sequin fabric ($550). A more ladylike “J, Marc” range of shoulder bags is styled in aged, embroidered python for $5,500, as well as simple black leather with a chain handle for $490.

Suhl said of the new “J, Marc” embellishment — two linear “J” letters that connect in a loop: “It doesn’t look like a logo per se; it’s an interesting, simple embellishment.”

Jacobs explained of the designs: “We approached everything – shoes, bags – in the same way. They needed to have an authenticity and integrity of what they should be. Everything is very considered. From the sole of a shoe to the stitching on the sole of a shoe, and it doesn’t matter whether it was a shoe made in China or a shoe embroidered in France and made in Italy. There was the same amount of attention to detail in every single thing.”

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“It’s a unique selling proposition,” Suhl said of the brand’s “democratic” approach, which he says has been intrinsic to the Marc Jacobs label since its inception.

But with this broad range, what will incentivize high-end consumers to buy into the brand’s more expensive products when $300 merchandise sits beside them on a shelf?

“It’s a totally different product,” Suhl said of the higher-end designs. “The bag we have at $5,000 is crocodile and has all kinds of embroidery. In any industry, any brand will have different price points – like with cars you have one [model] for $200,000 with one next to it priced at $30,000. If you do it right, it should be obvious why one is more expensive than the other.”

He was resolute that “this is not what other brands are doing. We are not about taking a super commercial bag and trying to make a few more expensive bags to up our image. It is something the [Marc Jacobs] brand has been doing naturally for 15 years.

“Marc Jacobs is the first designer fashion house that offers a significant portion of product at democratic prices,” said Suhl. “We are definitely doing a designer story in terms of positioning and how we present ourselves in department stores.”

Though the brand’s prior duality when it operated the Marc by Marc and Marc Jacobs labels allowed it representation on both the designer and contemporary floors of department stores, Suhl said that the new unified brand will look to designer real estate in third party retailers going forward. This same designer mentality will apply to the label’s markdown approach, which will now operate on a semi-annual schedule, rather than in a constant flux as often happens in the contemporary market.

“[Our department store placement has] shifted quite a bit. We were very much on the contemporary floor and will be shifting to the designer positioning It’s a designer brand. It’s one that, again, is the only designer brand able to market most of its product at a democratic price point.

“You will see us positioned in a designer environment…we don’t want to confuse the consumer by putting ourselves amongst brands that have nothing to do with us,” said the CEO.

Suhl, who joined Marc Jacobs from Givenchy in July 2014, said that when reviewing the brand’s analytics, he felt that, “We are a very unique American fashion house in the sense that less than half of our business is in the U.S.”

The label’s geographical reach is evenly spread between Asia, Europe, and the Middle East — and is locally merchandised to suit cultural preference.

But there is one overall common thread, seen in the brand’s online traffic. “If you look, we have a very strong Millennial female base – 80 percent of our customer online is a women between 18 and 36 years old,” said the CEO. “The majority of what we are doing is a young trendy person.”

The demanding age group “expects much more of a [brand] world, it necessitates a proper collection,” Suhl said, when asked if the label is on a quest to produce a new “It” bag.

“We are not working to create an ‘It’ bag; we are working to create a collection of product that stands for something, for Marc Jacobs specifically, with designer quality, designer experience, at mostly democratic prices. We are after more of a perennial approach. We are not looking for a short one-off,” he said.

With an overall accessories market that’s in a state of muddled confusion that reported last week, Suhl still feels that Marc Jacobs can accomplish success in the category. “I think for sure what’s been missing [from the market] is that there has never been a brand able to bring a designer sensibility with a democratic price point with attention to function and merchandising. I know it’s unique. We are definitely doing that.”

Contributor: Misty White Sidell

Paris (AFP) – British singer Jane Birkin has asked luxury manufacturer Hermes to remove her name from its crocodile-skin handbag after learning of the “cruel” methods used to make the iconic accessory.

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Costing tens of thousands of euros, the Birkin bag is a symbol of wealth and is much-loved by celebrities, but the version made out of crocodile skin has attracted the ire of animal rights activists.

“Having been alerted to the cruel practices reserved for crocodiles during their slaughter to make Hermes handbags carrying my name… I have asked Hermes to debaptise the Birkin Croco until better practices in line with international norms can be put in place,” Birkin said in a statement.

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Rights group PETA (People for the Ethical Treatment of Animals) recently published an expose on crocodile farms from Texas to Zimbabwe where the animals are allegedly crammed into barren concrete pits before being “crudely hacked” to death.

PETA said it takes two or three crocodiles to make one of the cherished handbags.

“At just one year old, alligators are shot with a captive-bolt gun or crudely cut into while they’re still conscious and able to feel pain,” said PETA.

“The investigator saw alligators continuing to move their legs and tails in the bleed rack and in bloody ice bins several minutes after their attempted slaughter.”

Aside from being the muse for the Hermes handbag, Birkin is best known as the former wife of French singer Serge Gainsbourg.