Wednesday, October 21, 2009

PPR Falls in Paris on Missed Sales Estimates, Gucci’s Decline

PPR Falls in Paris on Missed Sales Estimates, Gucci’s Decline

By Ladka Bauerova

Oct. 21 (Bloomberg) -- PPR SA, the owner of the Gucci brand, fell the most since July in Paris trading after reporting revenue that missed analysts’ estimates, hurt by declining luxury-goods orders in the U.S. and western Europe.

Sales dropped 7.6 percent to 4.56 billion euros ($6.8 billion) from 4.94 billion euros a year earlier, Paris-based PPR said yesterday after stock markets closed, below the 4.63 billion-euro median estimate of three analysts surveyed by Bloomberg. At Gucci Group, which accounts for almost a fifth of revenue, the sales drop accelerated to 6.4 percent.

Chief Financial Officer Jean-Francois Palus blamed the shortfall on a “low point” in demand from third-party luxury retailers such as U.S. and western European department stores. Gucci’s figures were worse than those posted earlier this week by PPR’s largest rival, LVMH Moet Hennessy Louis Vuitton SA, whose Louis Vuitton brand posted growth on “exceptional” demand for its handbags in China.

“The market may have expected a positive surprise” for PPR after Vuitton’s figures, Citi analyst Thomas Chauvet said in a note this morning, calling the figures “a bit light.”

PPR shares fell as much as 6 percent, the most since July 2, and were down 3.49 euros, or 4.1 percent, to 81.68 euros at 10:38 a.m. in Paris. The stock has gained 75 percent this year, outperforming LVMH, which has risen 52 percent.

Gucci Group’s decline was paced by a 3.2 percent drop at the core Gucci brand. Excluding currency moves, Gucci brand stores open at least a year saw their sales decline 8 percent. Palus said a lull in tourism by rich shoppers, especially from Russia and the Middle East, hurt Gucci Group outlets in Monte Carlo, Cannes and Paris.

Analysts including Luca Solca of Sanford C. Bernstein said PPR sales may rebound in the fourth quarter, as wholesale customers are likely to replenish their inventories.


Tuesday, October 20, 2009

Coach 1Q Profit Dips As Sales Rise; Beat Wall St. Analysts Estimates

Coach Inc.'s new pricing strategy is starting to look promising, as the luxury accessories company posted FY 1Q profits and sales that beat Wall St. estimates.

The company reported a fiscal first-quarter earnings drop of 3.4% to $141M, or  $0.44 per share, vs. $146M, or $0.44 per share in the previous year.

Sales for the quarter rose 1.2% to $761.4M from $753M in fiscal 1Q '08. 

Analysts surveyed by Thomas Reuters expected $0.39 per share, and sales of $753.8M.

Lew Frankfort, Chairman and Chief Executive Officer of Coach, Inc., attributed the recent decision to revamp Coach's pricing strategy, and the introduction of the Poppy line, to this quarter's better-than-expected results:
“We experienced sequential improvement in our North American retail business this quarter, as the initiatives put into place earlier this year proved successful. Specifically, Coach benefited from the well received launch of the Poppy collection and other products at particularly compelling prices.”
Analysts also noted that Coach increased usage of 20% off coupons for their outlets stores, which helped to drive demand.

Direct-to-consumer sales, which include their China business, rose 10% to $654M for the quarter vs. $592M for the previous year. Total sales in Japan, Coach's second largest market, declined 3%, minus exchange rate fluctuations. Comp. sales in North American fell 1.1%, an improvement from the 6.1% decline in the previous quarter. China continued to show strength with double-digit same-store sales growth.

Indirect consumer sales, which represents 15% of Coach's business, dropped 33% to $108M as a result of reduced shipments to U.S. department stores.

As a result of the rapid growth the company is experiencing in China, Mr. Frankfort said Coach plans to open their first Mainland China flagship store in Spring 2010 in Shanghai. To help manage their growth in China, they also plan to open an Asian distribution center in Shanghai.

The company announced plans to open their first stand-alone men's store in NYC this Spring.

Despite beating analysts expectations, investors were apprehensive about the company's expansion, causing the stock to slip 2.8% during midday trading.
"Expectations for Coach have risen pretty noticeably, so anything that detracts from that basis is going to be viewed as a negative," said Wall Street Strategies analyst Brian Sozzi. (SOURCE:

However, analysts remain upbeat:
"They're very well positioned to have a strong holiday," Needham & Co analyst Christine Chen said. "They should be able to return back to positive same-store sales ... because the product seems to be gaining traction with consumers." (SOURCE:
For the holiday season, Coach plans to implement the same marketing strategy used to introduce Poppy, concentrating more on email campaigns, online ads, fashion blogs and social networking sites, like Facebook.
The company also plans to launch several new items including new accessory groups, Waverly and Gramercy, a new tote group, Alex and new Poppy items under $100.

Coach shares were down 3.2% to close at $33.41.

Disclosure: Haute Retail holds positions in Coach, Inc.

LVMH Beats Estimates on Vuitton, Says Cognac Sales Picking Up

LVMH Beats Estimates on Vuitton, Says Cognac Sales Picking Up

By Ladka Bauerova

Oct. 19 (Bloomberg) -- LVMH Moet Hennessy Louis Vuitton SA, the largest luxury-goods maker, reported third-quarter revenue that beat analysts’ estimates after “exceptional” demand for Vuitton bags in China, and said cognac demand is improving.

Sales slipped to 4.14 billion euros ($6.2 billion) from 4.16 billion euros a year earlier, the Paris-based company said today after markets closed. That surpassed the 4.07 billion-euro median estimate of five analysts surveyed by Bloomberg News.

Sales of Louis Vuitton apparel and accessories posted “double-digit” growth, LVMH said. Demand for cognac “significantly” improved as wholesalers in the U.S. began to replenish their inventories during the quarter, the company said, echoing the outlook from smaller liquor rival Remy Cointreau SA released last week.

“I can’t say the crisis is over yet, but we are beginning to see some light at the end of the tunnel,” Chief Financial Officer Jean-Jacques Guiony said during a conference call. “Louis Vuitton’s performance in China was exceptional.”

LVMH shares rose 2.45 euros, or 3.4 percent, to 74.90 euros in Paris trading today, the highest in more than a year. They have rallied 57 percent in 2009 after tumbling 42 percent last year, when Lehman Brothers Holdings Inc.’s bankruptcy spooked luxury-goods buyers.

Revenue at the company’s fashion and leather goods division gained 5.3 percent, fueled by Vuitton sales. Wholesale sales of other LVMH fashion brands including DKNY and Fendi had a “double-digit” decline in the third quarter, though they improved in September, Guiony said.

Revenue at LVMH’s wines and spirits division, which makes Veuve Clicquot champagne and Hennessy cognac, fell 8.6 percent in the quarter as drinkers in the U.S. and Russia cut back. Unlike cognac, the champagne market “remains difficult” as some consumers switch from LVMH’s expensive vintages to cheaper brands, Guiony said.

Watch and jewelry sales, which make up about 5 percent of total revenue, dropped 22 percent, while perfumes and cosmetics slid 4.6 percent. The retail unit, which includes the Sephora cosmetics chain and Duty Free Shops, climbed 2.5 percent.

Friday, October 9, 2009

US Retail Sales Rise In September, Raise Holiday Hopes

US retail sales rise in Sept, raise holiday hopes

By Jessica Wohl

CHICAGO, Oct 8 (Reuters) - U.S. retailers gave investors an early Christmas present, posting their first monthly sales increase in more than a year and suggesting wounded consumers might begin to heal in time for the crucial holiday season.

Chains such as Macy's Inc (M.N), Abercrombie & Fitch (ANF.N) and Kohl's Corp (KSS.N) surprised Wall Street on Thursday with better-than-expected September sales as shoppers headed back to stores for back-to-school purchases.

"It signals a bottom," said Wharton School marketing professor Stephen Hoch. "This month was not just not as bad as we thought it could be, but it was actually not so bad."

But retail experts cautioned that the sales results did not yet presage a consumer-driven recovery to the U.S. economy. The International Council of Shopping Centers said October same-store sales should be about flat with a year earlier.

"It might be too early to say consumers are actually coming back to the stores and spending more," said Booz & Co Principal Marcelo Tau. "I still feel that there is a lot of pressure on consumers."

Based on 30 retailers, sales at stores open at least a year climbed 0.6 percent, compared with expectations for a 1.1 percent decline, according to Thomson Reuters data. Nearly 80 percent of the companies beat expectations.

Thursday, October 8, 2009

Irving Penn, Iconic Fashion Photographer, 92

(Photo: Irving Penn/ tfs: Gold Star)

From The New York Times:
Irving Penn, Fashion Photographer, Is Dead at 92

Irving Penn, one of the 20th century’s most prolific and influential photographers of fashion and the famous, whose signature blend of classical elegance and cool minimalism was recognizable to magazine readers and museumgoers worldwide, died Wednesday morning at his home in Manhattan. He was 92.

His death was announced by Peter MacGill, his friend and representative.

Mr. Penn’s talent for picturing his subjects with compositional clarity and economy earned him the widespread admiration of readers of Vogue during his long association with the magazine, beginning in 1943. It also brought him recognition in the art world; his photographs have been exhibited in museums and galleries and are prized by collectors.

His long career at Vogue spanned a number of radical transformations in fashion and its depiction, but his style remained remarkably constant. Imbued with calm and decorum, his photographs often seemed intent on defying fashion. His models and portrait subjects were never seen leaping or running or turning themselves into blurs. Even the rough-and-ready members of the Hell’s Angels motorcycle gang, photographed in San Francisco in 1967, were transformed within the quieting frame of his studio camera into the graphic equivalent of a Greek frieze.

Instead of spontaneity, Mr. Penn provided the illusion of a seance, his gaze precisely describing the profile of a Balenciaga coat or of a Moroccan jalaba in a way that could almost mesmerize the viewer. Nothing escaped the edges of his photographs unless he commanded it. Except for a series of close-up portraits that cut his subjects’ heads off at the forehead, and another, stranger suite of overripe nudes, his subjects were usually shown whole, apparently enjoying a splendid isolation from the real world.


Tuesday, October 6, 2009

Jimmy Choo Expands Into The World of Fragrance

Jimmy Choo, the UK luxury accessories company best known for its sexy shoes, has entered into a worldwide license agreement with Inter Parfums SA.

The 12-yr agreement will begin on Jan. 1, 2010 and will include the creation, development and distribution of fragrances under the Jimmy Choo brand.

Tamara Mellon, founder and president of Jimmy Choo states, "It has always been my vision to fully accessorize the woman, and fragrance is an integral part of the modern wardrobe. Through our association with Inter Parfums, I look forward to bringing this important aspect of my vision to life."

"This relationship with Jimmy Choo offers a perfect fit with our strategy of expanding our brand portfolio to include new universes and represents an important milestone in the company's development", said Jean Madar, Chairman & Chief Executive Officer of Inter Parfums, Inc. "This brand possesses the quintessential qualities to ensure the ambitious development of fragrance lines that will be supported by significant advertising commitments over the coming years".

This isn't the first fragrance licensing deal for Jimmy Choo. According to WWD, Selective Beauty, a subsidiary of  Investindustrial, held the fragrance license for the company. However, a scent was never developed. 

Macy's Inks Exclusive Deal With Ellen Tracy

After much industry speculation, Macy's, Inc. has announced they have entered into a strategic alliance with Ellen Tracy owner, Brand Matter LLC, and and its sportswear licensee, RVC Enterprises that will make Macy's the exclusive department store retailer of Ellen Tracy women's sportswear, beginning in spring 2010.

The exclusive Ellen Tracy better sportswear line will have a modern twist, focusing on separates that consist of jackets, shirts, pants, sweaters, woven tops, knit tops and bottoms. Price points will range from $99 to $149 for jackets and $50 to $99 for pants.

"Ellen Tracy is a legendary brand that is well-known to our customers and backed by an outstanding design team. In particular, Ellen Tracy delivers exceptional value to women who expect quality and want a relevant look for today's world at work and on the town," said Jeff Gennette, Macy's chief merchandising officer.

Mark Mendelson, president and CEO of the Ellen Tracy division of RVC, said, "My team and I are thrilled to bring the Ellen Tracy heritage and style to a more accessible pricepoint. We look forward to entering, building and eventually becoming one of the leading brands in the better department".

"We are excited to form this long term tri-partnership with RVC and Macy's. Macy's is the preeminent national department store in the United States and we believe that the Ellen Tracy brand will add significant accretive sales to the better sportswear floor", says Bill Sweedler, co-chairman and CEO of Brand Matter.

Initial launch of the exclusive sportswear line will begin in 100 Macy's stores and online at in March 2010, with plans for additional stores in the future. Macy's flagship stores in Herald Square in NYC, Union Square in San Francisco, State Street in Chicago and Dadeland in Miami are among those who will carry the Ellen Tracy shops in the initial launch.

This is a major coup for Macy's that could put them ahead of their competitors. When Ellen Tracy decided to move from bridge to better sportswear, a huge gap was left for retailers, since, for years, the brand served as an anchor for the bridge floors of department stores like Nordstrom, Lord & Taylor, Saks, Bloomingdale's and Dillard's. These department stores have been scrambling for a replacement ever since. Now, that Macy's will be carrying the brand exclusively, retailers are doubly concerned.

Ellen Tracy will be among a group of exclusive brands in partnership with Macy's, including Tommy Hilfiger, Martha Stewart Collection, Rachel Rachel Roy and Donald Trump.

 (SOURCE: Macy's Press Release)

Monday, October 5, 2009

Coach Slaps Target With Another Lawsuit

It's back to the courtroom for Coach, Inc. and Target.

WWD reports that the luxury accessories maker has filed a complaint with the U.S. District Court in Manhattan alleging that Tarjay "has sold knockoffs of its Patchwork and Ergo designs" in its stores. Coach claims that they saw the items for sale at the retailer over the summer.

Brand attorneys for Coach wrote, “Target is not authorized by Coach to manufacture, distribute, advertise, offer for sale, and/or sell merchandise bearing Ergo Designs or the Signature Patchwork Designs or designs confusingly similar there to". Target has made no comment.

This latest lawsuit comes almost three years after an earlier courtroom drama between the two companies. In 2006, Coach filed a $1M trademark infringement suit against Target, accusing them of selling a Coach handbag at a Target store in Largo, FL. The case was dismissed.