The Return of Bill Blass Starring Richard Chai?

On the heels of reports last week that Peacock International Holdings was looking for a new creative director to head the Bill Blass label, it looks like they may have found their man in Richard Chai.

Fashion Week Daily reports that industry sources have said that Mr. Chai has conducted several interviews with Peacock concerning the position of creative director of the label. Of course, both Chai's camp and Peacock have remained mum on the rumor. Says a Chai spokesperson, "I'm afraid we can't comment at the moment". "We can't comment on who we're interviewing for the position," said Scott Patti, executive v.p. of licensing and sales for Peacock. Bill Blass will return on the runway regardless of who is chosen as head designer.

On the surface, Mr. Chai appears to be a good fit for the label. His trademark American sportswear is aesthetically similar to the Bill Blass brand. His resume includes launching the Marc by Marc Jacobs, a stint at TSE, winner of the Ecco Domani award in 2005, a finalist in the the CFDA/Vogue Fashion Fund and a collection for Target's Go! International last fall. Mr. Chai also brings with him a loyal fan base which includes Vogue editor, Anna Wintour and Julie Gilhart, fashion director for Barneys New York.

But will this be enough for Mr. Chai to be able to function at Bill Blass? As we all know, when companies purchase fashion labels, conflict arises between management and the designer with struggles over creative control. So, will Peacock let Richard Chai be Richard Chai, or will they
force him to be beholden to the bottom line?

Executive Shuffle Complete at Estée Lauder

Estée Lauder Companies Inc. has announced the completion of its senior management succession plan, which will put into motion the company's four-year makeover strategy.

Chief Operating Officer, Fabrizio Freda, 51, will take over as Chief Executive Officer, while current CEO, William P. Lauder, 48, will become Executive Chairman and serve as Chairman of The Estée Lauder Companies’ Board of Directors. Leonard Lauder, the current Chairman of the Board will remain on the board and serve as Chairman Emeritus. Mr. Freda will also join the board.

The appointments will take effect on July 1, 2009 at the start of the company's fiscal year 2010.

It'll be interesting to see how Mr. Freda will maneuver throughout the EL corporate culture. He's a non-Lauder, only the second to take the helm of the ship, and surrounded by Lauder family members either on the board or employed in the company. Will they allow Mr. Freda the freedom to implement new strategies, such as implementing market research strategies he learned during his tenure at Proctor & Gamble? Stay Tuned....

Tiffany Stock Surges Despite 4Q Loss

Photo: Reuters/Fred Prouser

Tiffany & Co. shares rose 15.52%, or $3.14, to close at $23.37 after the company reported fourth-quarter profit that beat Wall St. estimates. This was the company's biggest gain in five months.

Excluding one-time charges, such as staffing reductions, earnings per share (EPS) was $0.85, beating average analysts' estimates of 78 cents per share according to Reuters Estimates.

Taking aggressive steps to lower costs was a contributing factor to the company beating expectations. Tiffany announced that it will close all 16 Iridesse pearl jewelry stores, which have operated at a loss since opening in 2004. They have offered early-retirement packages to 800 U.S. of its employees, with 600 accepting the package. The company says both actions will reduce it's workforce by 10%, creating a savings of $60 million for the year. In other cost saving measures, the retailer has suspended its share repurchase program, and lowered management incentive compensation.

However, the company is quick to say that the outlook is dim.

"We have not yet seen signs of an upturn in our business with worldwide sales in the quarter-to-date declining more than 20%, which is in-line with our expectation", says Michael J. Kowalski, chairman and chief executive officer.

Tiffany forecasts a decline in worldwide sales of 11%, and earnings of $1.50 - $1.60 per share for the fiscal year ending in January 2010.

For the fiscal fourth-quarter, which ended January 31, net income dropped a little over 75% to $31.1 million, or $0.25 per share compared to the previous year's $127.4 million, or $0.96 per share. Earnings for the full year were down 32%, $220.0 million, or $1.74 per share, vs. $323.5 million, or $2.34 per share from the previous year. Sales were in line with company expectations.

Fourth-quarter worldwide net sales plummeted 20% to $841.2 million, with sales declines in the Americas region having the biggest impact.

Sales in the Americas took the biggest hit out of the company's three regions. Fourth-quarter sales of $458.9 million were down 29%, and fiscal year sales were down 10% at $1.59 billion. U.S. same-store sales dropped 33% in the fourth quarter and 16% for the year. Despite being a major tourist attraction, sales at the New York flagship store were down 34% and 9%.

In the U.S., there were declines in every price range, however the declines were "somewhat smaller" in sales below $500 and larger in sales about $50,000, said Mark Aron, Tiffany's vice-president of investor relations.

In the Asia-Pacific region, sales declined 3% to $279.7 million in the fourth quarter, while sales increased 8% to $922 million for the year. In Europe, fourth quarter sales where down 2% at $95.3 million and up 17% to $284.6 million for the year.

Net inventories increased 17% to $1.6 billion due to lower than expect sales towards the end of the year, particularly the holiday season, the opening of new stores and an increase in raw material inventories.

Despite low sales, the company has no plans to follow the current trend of discounting prices that their competitors have embraced. "We did and will continue with our full price philosophy in order to maintain appropriate margins and very importantly to maintain the integrity of the Tiffany and Company brand", said Tiffany CFO, Jim Fernandez.

I agree with this strategy. Tiffany & Co. isn't just a company, it's a strong, iconic brand that people will always be willing to pay full price for. Everyone wants the "blue box".

Even though the luxury sector is going through turbulent times, people still want high quality clothing and jewelry that is timeless. In this morning's conference call, the company noted that they experienced "strong sales" of Tiffany Charms and their Atlas 1837 and Somerset Collections. The new Tiffany Metro and Tiffany Keys collections have also shown promise, according to Mr. Aron. What do all of these collections have in common? Understated, classic and timeless luxury. If they stick with promoting these lines, they just might beat expectations in the first quarter.

Apparel Sales Continue To Suffer Despite Overall Industry Increase

U.S. retailers reported their same-store sales for February and the results were better than expected.

Reports show overall retail industry same-store sales increased 0.3%, beating analysts' predictions of a decline of 1.3%, according to Thomson Reuters. The increase was due to Wal-Mart clobbering expectations by posting a 5.1% same-store sales increase, as well as retailers controlling inventory.

A few retailers beat Wall Street estimates by either posting gains, or posting declines that were less than expected. Aeropostale reported an 11% increase in same-store sales which was higher than the 6.9% increase analysts predicted. Gap Inc. said sales fell 12%, beating estimates of a15.4% decline. Limited Brands Inc., the parent company of Victoria's Secret, dropped 7% which was better than analysts' estimate of a 7.6% drop.

So, is this a sign that the apparel sector is beginning a turnaround? Not necessarily. Despite these bright spots, reports show that apparel was down 5.6% and department stores declined 9% compared to the previous year.

Macy's Inc. reported same-store sales down 8.5% for February, more than the 7.3% analysts predicted but within management's expectations. However, online sales -- which include macys.com and bloomingdales.com -- increased 16.2%.

Luxury retail continues to struggle the most as a result of consumers opting for food and necessities instead of discretionary items like high end clothing. The International Council of Shopping Centers reports February same-store sales for luxury stores dropped 19.2% compared to a 0.1% drop of all the chains it monitors.

Saks Inc. was the worst performer in the sector with a 26.8% drop in same-stores sales in February, experiencing weakness across all merchandise categories, particularly women's apparel. Eveningwear, fragrance, women's and men's accessories and their OFF 5TH stores showed relative strength for the month.

February same-store sales for Neiman Marcus tumbled 20.9% with weakness in across all regions and merchandise categories.

Nordstrom, Inc. reported February sales decline 15.4%, more than the 13.6% drop analysts predicted.

Teri Agins Stays At The Wall Street Journal

WWD reports that veteran fashion reporter, Teri Agins, will remain at The Wall Street Journal although in a limited capacity. Ms. Agins will continue to write her weekly "Ask Teri" column, as well as additional freelance articles for the paper.

With the elimination of the paper's fashion and retail bureau last month, Ms. Agins' future at the Journal , as well as several other reporters in the bureau, was up in the air. A spokesperson for WSJ tells WWD that she will continue as a contract employee, while former Fashion and Retail staffers were reassigned to other divisions of the paper. Unfortunately, Francine Schwadel, Cheryl Lu-Lien Tan and Jennifer Saranow are no longer with the company.