Friday, April 30, 2010

HR Quarterly Round-Up: Revlon, Avon


Revlon 1Q Profit Falls On Expenses, US Sales Down (Businessweek): Revlon Inc.'s first-quarter profit tumbled on Thursday, pressured by higher expenses as U.S. sales for the beauty products company declined.

Avon Products 1Q Profit Takes a Hit From Currency (Crain's NY Business): Avon Products Inc. said Friday that first-quarter profits fell 64 percent as the company was hit hard by a devaluation of Venezuela's currency.

Thursday, April 29, 2010

HR Quarterly Round-Up: Iconix Brands, Jones Apparel Group, PPR

Iconix 1Q Profit Rises 58 pct, Raises Outlook (AP): Apparel maker Iconix Brand Group Inc. on Tuesday said first-quarter earnings rose 58 percent as it earned more money from licensing and other revenue. The company raised its outlook and announced it would acquire licensing rights to Snoopy, Charlie Brown and the rest of the "Peanuts" gang for $175 million in cash from E.W. Scripps Co.

Jones Apparel 1Q EPS Up, A Positive For Dept Stores (WSJ): Jones Apparel Group Inc. (JNY) posted sharply higher first-quarter profit and increased full-year revenue guidance, potential positive indicators for big retailers that will be reporting results in the next few weeks.

PPR First-Quarter Sales Gain 1.2% on Asian Demand for Handbags (Businessweek): PPR SA, owner of the Gucci luxury- goods brand and Conforama furniture stores, reported a gain in first-quarter sales that beat analysts’ estimates on demand for handbags in Asia.

Fern Mallis Leaves "The Tents"

Fern Mallis, senior V.P. of IMG Fashion and founder of Mercedes-Benz New York Fashion Week, is leaving IMG to start her own consulting firm, Fern Mallis LLC.

This is major news. Ms. Mallis was the major force behind the creation of New York's Fashion Week in 1993 which changed the landscape of American fashion forever. When Ms. Mallis conceived the idea of having fashion shows in Bryant Park, some in the industry scoffed, saying New York wasn't considered a "fashion capital" a la Milan and Paris. However, the success of the Bryant Park shows turned New York's fashion week into one of the most important in the industry.

So, the big question is: How will Ms. Mallis' departure affect IMG and Mercedes-Benz Fashion Week? The good news is that IMG has signed on to be Ms. Mallis' first client, which will help with Fashion Week's transition from Bryant Park to Lincoln Center. A potential drawback is IMG will not be naming a successor to Ms. Malin's position, choosing to spread the duties of spokesperson for IMG Fashion among several executives, thus losing an ambassador for Fashion Week. But according to Crain's New York Business, fashion insiders are not worried as long as Christina Neault, executive producer for IMG Fashion, stays on:

“For any of the designers, Christina is the person we have a day-to-day relationship with,” said Amy Smilovic, head designer of contemporary brand Tibi, adding that Ms. Mallis was more like a fairy godmother designers approached when they wanted to first show at the tents. “As long as you’ve got that face that you deal with day to day and you can count on them, then I feel everything will go smoothly.”


Wednesday, April 28, 2010

Estée Lauder 3Q Earnings Double Driven By 10% Sales Jump

Strong sales growth overseas and in the U.S., coupled with a stringent cost cutting plan, helped to double Estée Lauder Companies' third quarter profits, according to an article in Crain's New York Business.

Third quarter earnings rose more than 50% to $57.5 million vs. $27.2 million from the previous year. E.P.S. doubled to $.28 compared to $.14 E.P.S. last year. Excluding one-time costs, profit was $.34 per share, beating Wall St. estimates of $.32 per share.

Net revenue jumped 10% to $1.86 billion from $1.70 billion a year earlier, coming under analysts' prediction of $188 million in sales.

Skin care was the best performing product category, with 15.6% growth at $819.8 million, bolstered by strong sales of EL's Advanced Night Repair Synchronized Recovery Complex. Particularly encouraging are the sales numbers for the La Mer skin care line, one of the company's Prestige lines with prices starting at $100, which posted double-digit sales with strength in North America.

President and CEO Fabrizio Freda said in a conference call with analysts, "We believe that consumers are beginning to reconsider luxury products. It certainly bodes well for our entire Prestige portfolio".
The international launch of Pure DKNY and the rollout of Coach Signature fragrances to the U.S. bolstered EL's Fragrance category to an 18.7% sales increase of $222.8 million. Makeup sales rose 2.3%  to $710.8 million on the strength of M*A*C and Bobbi Brown cosmetic brands.

Regionally, the biggest rise was in Asia/Pacific to $371.1 million in sales, an increase of 20.3%. In Europe, the Middle East, and Africa, sales jumped 13.5 to $662 million. Sales in the Americas rose 3.1% to $829.1 million.

In an interview with WWD, Mr. Freda, says the company will continue to invest in marketing spending, and concentrate on brands, opportunites, regions and beauty concerns that are most important to the company,  Mr. Freda also said growth through acquisition isn't off the table:

“We’ve always said [mergers and acquisitions] are part of our strategy,” Freda told WWD, adding the company will pursue opportunities that widen its reach by category, distribution channel and in geographic scope. “Skin care and Asia are our priorities, but we also will look more broadly,” said Freda. (SOURCE: WWD)
For FY2010, EL forecasted sales to grow between 4% and 5% in constant currency. Earnings, excluding one-time items, are projected to be between $2.65 and $2.75 per share.


Thursday, April 22, 2010

L'Oreal Acquires Essie Cosmetics

After much speculation, L'Oreal USA has purchased Essie Cosmetics, one of the biggest, chicest names in the nail care industry, reports WWD. Purchase price was not disclosed, however due to Essie being a "specialized brand", industry analysts estimate that L'Oreal paid between $50-60 million for the company.

Essie Weingarten, who founded Essie, and her husband Max Sartino, CEO of the company, signed multi-year deals with L'Oreal and will stay on with the brand.

Analysts believe this deal offers several growth opportunites for Essie such as expansion into cosmetics, increasing the brand's international presence, and it allows Essie to tap into L'Oreal's vast salon network distributions to boost domestic growth. This deal also helps L'Oreal increase its market share of the nail polish market, which currently stands at 9.2% according to an article at Crain's New York Business.

I have several concerns: I hope that the quality of the product won't suffer. I'm also concerned about the possibility of the Essie brand branching out into cosmetics. L'Oreal already has a brand portfolio that covers cosmetics (i.e. L'Oreal, Lancome, Maybelline, Shu Uemura...etc.). However, what's missing from their portfolio is a brand that exclusively addresses foot and hand care needs. Keeping Essie as solely (no pun intended) a nail and hand care brand will help them compete against Coty which controls 45% of the market.

Tuesday, April 20, 2010

Coach 3Q Profit Soars 37%; Looks To Europe For Expansion

A return to their affordable luxury price points has paid off for Coach Inc., as increased demand in North America helped the company to a strong third quarter.

Earnings for the leather goods maker jumped 37% to $158 billion from $115 billion from the previous year, beating Wall Street estimates, according to Reuters. Sales for the quarter topped off at $831 million compared to $740 million in fiscal 2009, with E.P.S. totaling $0.50 compared to $0.36 a year ago. As a result, the company doubled its cash dividend to $0.60 per share annually, implemented a $1 billion stock repurchase program, and upped its China sales target by a year.

"Our growth demonstrates our ability to manage our business nimbly, while investing prudently for the future". says Lew Frankfort, Chairman and CEO of Coach Inc.

Part of that investing includes the company's expansion into Western Europe. Via an agreement with French department store group, Printemps, Coach will open at least 14 locations in Printemps stores throughout France over the next three years, the first being a 1700 sq.ft. shop in Paris this June.  

Coach also entered into an agreement in principle to create a joint venture with British retailer Hackett Limited to open Coach stores in the U.K., Spain, Portugal and Ireland. The first locations in the U.K. and Spain are expected to open in the next twelve months.

On Thursday, Coach will celebrate the grand opening of its brand new Shanghai flagship store. The flagship is located on tony Huai Hai Middle Road, which is enroute to becoming the Fifth Ave. of Shanghai, with luxury brands such as Cartier and Tiffany & Co. pitching a tent there.

Shares of Coach closed at $42.03 with a 15 cents gain.

(Disclosure: Haute Retail holds positions in Coach Inc.
Photo: Coach Flagship Store in Shaghai/WWD

Wednesday, April 14, 2010

HR Quarterly Round-Up: LVMH, Givaudan, Talbots

(Photo Credit: Mitchell Feinberg/LVMH)

LVMH's Revenue Jumps on Restocking (WSJ): France's LVMH Moet Hennessy Louis Vuitton (MC.FR) Tuesday fueled hopes for a swift rebound in the luxury-goods sector after it posted an 11% surge in first-quarter revenue that beat expectations.

Givaudan Sales Up 9.2 Percent (WWD): Givaudan reported its first-quarter sales increased 9.2 percent year-over-year to 1.07 billion Swiss francs, or $1.01 billion at average exchange. The Swiss firm’s fragrances and flavors divisions both contributed to growth.

Talbots' profit shows proof of turn, shares rise (Reuters): Women's clothing retailer Talbots Inc (TLB.N) posted a much better-than-expected quarterly profit and forecast higher sales as its turnaround efforts take hold, sending its shares up nearly 5 percent.

Monday, April 12, 2010

Jil Sander Launches Lower-Priced Line

Citing the desire to widen it's customer base, Jil Sander announced the Spring 2011 launch of Jil Sander Navy, their new lower-priced line, reports WWD.

The line will be designed by Raf Simons and is described as "relaxed" and "sporty-chic". Prices will be 40% lower than their signature line, which has a price point ranging between $322 and $3,895. The collection will include trenchcoats, jackets, t-shirts, jeans, dresses, skirts, and pants, as well as accessories and shoes. Fabrics will consist of lightweight jersey and knits with an emphasis on abstract prints.

This is the first major launch under Alessandro Cremonesi, who took over as CEO of the company last July. “This is a strategic first step to grow the Jil Sander business as we aim to reach out to a vaster clientele. Not only does it address market needs, but it will complement the pre-collections and the runway offering", Mr. Cremonesi told WWD.

The line will hit all Jil Sander stores and retailers who presently carry their signature line in January. Initial focus will be on the U.S. and Japan markets to take advantage of the department store and speciality boutique dominance in those countries.

(Photo credit:

Monday, April 5, 2010

Richemont Purchases Net-A-Porter for $341 Million

Natalie Massanet
(Photo: The Wall Street Journal/Reuters)

WWD reports Richemont has purchased the remaining 67 percent of, becoming the majority shareholder of the high fashion e-tailer, and thus increasing its presence in the world of e-commerce. 

The Swiss luxury goods group, which already owned 33 percent of Net-a-Porter, purchased the company from a group of private shareholders for approximately 225 million pounds, or $341 million  The Wall Street Journal reports. The deal values the internet business at 350 million pounds, or $532 million. Natalie Massanet, who founded Net-a-Porter, is stand to gain 50 million pounds, or $76 million from the sale of her company, and will stay on as executive chairman, according to WWD

For years, luxury companies have been apprehensive about entering e-commerce, siting concerns that easy access to luxury brands would ruin their prestigious image, and turnoff their high-end clientele. Then along came Ms. Massanet, who proved that with the right combo of retail and editorial, people are willing to purchase expensive goods online. This "luxury marriage" will allow Richemont to benefit from Net-a-Porter's e-tailing innovation as they venture into e-commerce with their Cartier brand, while Net-a-Porter will be able to tap into the emerging luxury market in Asia via Richemont's commercial presence in the region.

Friday, April 2, 2010

HR Quarterly Round-Up: Prada, Movado, Harry Winston

(Photo: Lionel Bonaventure/Getty Images)

Prada's Profits Increase, Revenue Slips (WWD): Leveraging the performance of its retail network, Prada SpA posted a 1.4 percent increase in net profits to 100.2 million euros, or $140.2 million, in the year ended Jan. 31.

Movado Q4 Loss Narrower Than Expected; Backs FY11 View (Reuters): Watchmaker Movado Group Inc reported a narrower-than-expected quarterly loss, helped by cost cuts, and reaffirmed its outlook for the current fiscal year.

Harry Winston Retail Loss Grows, Sales Rise (WWD): Harry Winston Diamond Corp.’s retail segment more than doubled its fourth-quarter operating loss despite a pickup in demand.