Will PVH Make A Play For Warnaco?

Looks like PVH is doing a little window shopping.

She was hardly the first to raise the possibility, but Wells Fargo Securities analyst Evren Kopelman played matchmaker Monday in a research note on what a PVH Corp./The Warnaco Group Inc. marriage might look like.

Think $9.3 billion in sales for the combined company and $1.4 billion in EBITDA in 2013 for an acquisition in mid-2012, making it the second largest apparel firm after VF Corp., which just grew larger with its planned $2.2 billion acquisition of Timberland.

The speculation follows PVH’s chief executive officer Emanuel Chirico’s recent comments that PVH would begin eyeing acquisitions again later in the year.

Warnaco has long been speculated as a possible target of PVH, Calvin Klein’s owner, since it holds the license for Calvin Klein jeans and owns the Klein underwear business.

Presuming that Polo Ralph Lauren Corp. would take back the Chaps license under a change in control provision, the Wells Fargo analyst pegged an EBITDA multiple of 8.8 times, or a $3 billion deal at $70 a share, for Warnaco.

When PVH acquired Tommy Hilfiger last year, one attraction was its European platform. The analyst reasoned that Warnaco would be attractive because of its business in Asia and Latin America, where PVH has less exposure.

Chanel Issues Recall of Silk Scarves and Garments

Chanel, Inc., in cooperation with the U.S. Consumer Product Safety Commission (CPSC) has issued a recall for 120 silk scarves and 34 garments, due to a violation of Federal Flammability Standard.

The recall includes scarves, dresses, skirts and blouses made of 100 percent silk that were manufactured in France or Italy and sold in Chanel Boutiques, Neiman Marcus and Maxfield stores for $430 to $3,650 in March and April 2010.

Consumers should immediately stop using the garments and contact the firm to receive a full refund.

For more information, contact Chanel customer service at (800) 550-0005 or ConsumerRelations@chanelusa.com

Prada's IPO Debut? Eh.

A souvenir Prada bag is offered to the Hong Kong Exchange during

the debut of Prada SpA at the Hong Kong Stock Exchange June 24, 2011.

(Photo: Bobby Yip/Reuters)

Good thing Prada lowered expectations.

From WSJ.com:

Prada, the first Italian company to list in Hong Kong, ended its first day of trade at 39.60 Hong Kong dollars (US$5.08), 0.3% higher than its IPO price of HK$39.50, after hitting an intraday high of HK$40. The shares stayed afloat as the Hang Seng Index staged a rebound, climbing 1.9%, although the benchmark index is still down 6.4% this month on growing worries about the European debt crisis and concerns about slowing Chinese growth.

"The rebounding market today helped the debut performance of Prada," said Ben Kwong, associate director of KGI Asia Ltd.

Hmm...

Very interesting that H&M announces it's collabo with Versace one day before releasing its Q2 earnings, which are expected to drop for a record-breaking third consecutive period:

Earnings at H&M (HMb.ST), the world's second-largest fashion retailer, are expected to have dropped in the second quarter as the firm chose not to pass on higher costs such as cotton and Asian wages to price tags.

The Swedish budget apparel firm, with some 2,300 stores in 40 countries, will publish its March-May report on June 22 after unveiling last week a mere 2 percent year-on-year rise in sales to 27.6 billion crowns amid slack spending in Europe.

The mean forecast in a Reuters poll of analysts is for a 16 percent drop from last year in pretax profit to 5.89 billion crowns ($921 million). The gross margin is estimated at 62.0 percent, down from 65.9 percent a year ago.

Yarn House Rules

All fashion industry eyes are on Vietnam where the seventh round of the Trans-Pacific Partnership (TPP) trade negotiations are taking place this week.

Reps from nine countries, including the U.S., have gathered in Ho Chi Minh City in hopes of coming to an agreement on a trade deal before the Asia-Pacific Economic Cooperative (APEC) meeting in November.

Fashion industry execs are paying close attention to the U.S. stance on textile and apparel import issues, particularly the rule of origin:

Importers plan to push negotiators in Vietnam for a “flexible” rule of origin that does not restrict where the fabric and yarns are made in order to qualify for duty free benefits. The rule-of-origin debate has pitted apparel importers against the U.S. domestic textile industry, which is advocating a “yarn forward” rule of origin that would require apparel to be made of fabric and yarn supplied by the U.S. or the other TPP partner countries.

“When you have a rule that is more restrictive and burdensome, it discourages trade and investment from occurring,” said Steve Lamar, executive vice president of the American Apparel & Footwear Association, who will also be in Vietnam this week, adding that AAFA member companies often use U.S. yarn and fabric and forgo duty free benefits in other trade deals because the rules are so burdensome.

But a yarn forward rule is a linchpin for U.S. textile industry support.
A bipartisan group of 52 House lawmakers, many from traditional textile states, recently sent a letter to U.S. Trade Representative Ron Kirk making their support of any deal contingent upon a yarn-forward rule of origin, exclusion of certain products from tariff reduction or elimination, tariff reductions for specific sensitive imported products versus phaseouts for groups of products, and strong customs enforcement language to prevent transshipments from China.

“It makes no sense in our opinion to disenfranchise textile producers in the U.S. so Vietnam [a nonmarket economy that subsidizes its exports] can source product components from China and ship products to the U.S. duty free,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition. “What we know is that the yarn forward rule of origin will create an environment that gives support to expanding our export markets.”