Power Moves | Galliano Joins Margiela, Guillaume Henry to Nina Ricci, Gap’s CEO

John Galliano Set to Join Maison Martin Margiela

PARIS, France — John Galliano will join Maison Martin Margiela as creative director, the brand’s owner, Renzo Rosso’s Only The Brave (OTB) group, has officially confirmed. The announcement follows weeks of market speculation that the appointment was imminent.

Galliano will oversee the design of all Margiela lines, including couture and women’s ready-to-wear. He will debut his first designs for the house during Paris Couture Week in January.

“Margiela is ready for a new charismatic creative soul,” said Renzo Rosso, president of OTB. “John Galliano is one of the greatest, undisputed talents of all time. A unique, exceptional couturier for a Maison that always challenged and innovated the world of fashion. I look forward to his return to create that fashion dream that only he can create, and wish him to here find his new home.”

The news marks Galliano’s return to fashion, following his unceremonious dismissal from Christian Dior in 2011 after the designer was recorded making racist and anti-Semitic remarks in a Paris bar.

The appointment is a surprising choice for Margiela, whose Belgian founder was known as fashion’s invisible man. Galliano, on the other hand, is renowned for his showmanship and the appointment suggests that Rosso has big plans for the Margiela brand.

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The China Edit | Alibaba IPO, Hermès Expansion, Krizia, Angelica Cheung

“Alibaba, With Its I.P.O., Mints Millionaires and Risk-Takers” (Dealbook)

“This leafy manufacturing hub two hours southwest of Shanghai is best known for its scenic lake, Buddhist pagodas and tangy fish-head soup. With the Chinese e-commerce giant the Alibaba Group poised to start trading on Friday, Hangzhou will earn another accolade: the city that minted thousands of Internet millionaires.”

“In China, Hermès Paces Itself” (The Business of Fashion)

“As Hermès opens its first ‘maison’ in China, BoF sits down with Weiming Cao, the company’s president for Greater China to discuss the new store, the company’s expansion strategy and building a multi-local luxury brand.”

“Luxury Brands in a Quandary as China’s Wealthy Young Develop Resistance to Bling” (The Guardian)

“Behind the glamour and gloss, however, there was discernible anxiety that the mighty Chinese consumer, responsible for one third of luxury goods and fashion sales, is not living up to expectation as a consumer of fashion and bling – and could even be developing a resistance to ostentatious western brands.”

“Chinese Designer Zhu Charms Milan Fashion World with Plans for Krizia” (South China Morning Post)

“Zhu Chongyun, the glamorous Chinese entrepreneur and designer who has taken over Krizia, has vowed to maintain the historic fashion house’s made-in-Italy heritage.”

“Media People: Vogue China’s Angelica Cheung” (WWD)

“Angelica Cheung has been editor in chief of Vogue China since the magazine’s launch in 2005. Before that, she was the editorial director of Elle China and editor in chief of Marie Claire in Hong Kong. Today, Vogue China publishes about 400 to 500 pages a month and is considered one of the most successful international editions of the magazine. Cheung said the title has a readership of 1.2 million through a combination of its print, Web site and tablet editions. This September marked Vogue China’s ninth anniversary.”

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The China Edit | ‘KOLs’, Rutson Exits Lane Crawford, Hermès Profits Up

“Op-Ed | Digging For Diamonds Among China’s ‘KOLs’” (The Business of Fashion )

“Engaging local influencers, or Key Opinion Leaders (‘KOLs’), has long been a useful marketing tool for luxury brands active in the China market. With big-ticket purchases motivated largely by recommendations from friends, celebrities and popular bloggers, self-proclaimed influencers have turned sponsored Weibo posts, event appearances and paid photo shoots into full-time jobs.”

“More Mega-Change in the Retail World: Sarah Rutson Leaves Lane Crawford” (The New York Times)

“Another major shake-up is in the works in the world of global department stores: After 21 years, Sarah Rutson, fashion director of Lane Crawford, Asia’s most recognizable luxury emporium, is leaving to ‘pursue new personal opportunities,’ according to an announcement from the store.”

“Hermès Posts Rise in Profit, Despite Slowing Sales in China” (The New York Times)

“Hermès, along with other purveyors of high-end fashion and luxury goods, like Burberry of Britain and Richemont, the Swiss conglomerate that owns Cartier and Van Cleef & Arpels, have begun to feel the pinch of a slowdown in spending on luxury goods in mainland China, one of the world’s largest markets for such goods, as the government in Beijing has cracked down on lavish gift-giving.”

“China the Perfect Fit for London’s $6,000 Luxe Tailors” (CNBC)

“The traditional royal green and wooden décor of some shops contrasts with some of the newer stores revealing the legacy of the Row whose reach expands to the U.S. But now the master tailors are looking towards China to tap the growing appetite for bespoke suits in world’s second-largest economy.”

“Wanda, Tencent and Baidu Take on Alibaba with $814M E-Commerce Deal” (Bloomberg)

“Dalian Wanda Group, China’s biggest commercial land developer, is joining with Tencent Holdings Ltd. and Baidu Inc. to form the 5 billion yuan ($813 million) venture. Wanda will have a 70 percent stake while the other two companies will own 15 percent each, Wanda said in a statement.”

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The China Edit | Discount Goods, Travel Retail Down, Daigou Crackdown

“Chinese Fashionistas Get Best Deals on Gucci, Hermès Bling” (Bloomberg)

“Sales in China of goods from Europe’s most prestigious fashion houses have been damped by the government’s anti-graft campaign, which has curbed gift-giving. And steep import and consumption taxes on luxury goods bought in China have led an increasing number of wealthy locals to shop more while overseas. Left with stacks of unsold merchandise in their mainland stores, high-end brands are resorting to something they rarely had to do earlier: price-cutting.”

“Chinese Are Traveling More But Shopping Less” (The Wall Street Journal)

“Almost 100 million Chinese took trips abroad last year, accounting for 9% of international trips outside China, according to the World Tourism Organization. They outspent travelers from other countries, accounting for 27% of the value of all tax-refund claims made in 2013 with Global Blue, which processes refunds at airports for shoppers visiting from abroad. But the shopping craze is losing its momentum.”

“Shoppers or Smugglers? China Cracks Down on ‘Daigou’ Boom” (CNN)

“Chinese are the biggest buyers of luxury goods globally, making 29% of all purchases, according to consultants Bain & Company, and these purchases are increasingly being made abroad, mostly by tourists, but also by people like Zhang. Many young Chinese studying in places like New York, London, Paris and Tokyo have started ad hoc businesses, with Bain saying that Chinese luxury sales will become increasingly reliant on this kind of ‘parallel trade.’”

“Amazon in Shanghai E-Commerce Pact” (BBC)

“Amazon’s branch in China has signed a memorandum of understanding with the Shanghai FTZ and Shanghai Information Investment Limited. The deal paves the way for Amazon to bring millions of its e-commerce product offerings from around the world directly to Chinese customers.”

“Sending the Right Message in China” (The New York Times)

“Face is very important. You should never make your team or your friend lose face. What exactly should you do to avoid such mistakes? It’s difficult to explain, because it’s something very subtle. I think when non-Chinese C.E.O.s come to China, they should pay particular attention to their translators. It’s not what they are saying, but how their translators convey the message that is important.”

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Aeropostale Rehires Former CEO Julian Geiger

NEW YORK, United States — Teen apparel retailer Aeropostale Inc said it had reappointed Julian Geiger as chief executive as it seeks to win back customers and stanch six quarters of losses.

The company’s shares rose as much as 11 percent in extended trading on Monday.

Geiger, 63, was CEO of the retailer from 1996 to 2009, and drove up sales at Aeropostale to $1.9 billion in 2008, from $140 million in 1998. Geiger, who joins with immediate effect, will also continue to serve as a member of the board .

Geiger replaces Thomas Johnson, who has held the position since 2010.

The company has struggled to keep pace with changing fashion trends and attracting its mostly teen customers, who are cutting back on spending amid a weak job market and low wage growth.

Like other teen apparel retailers, Aeropostale has also been losing out to fast-fashion brands such as H&M, Forever 21 and Inditex’s Zara, which bring the latest styles from the runway to their stores within weeks.

Aeropostale said it expects a loss of 42-45 cents per share, excluding items, for the second quarter ended Aug. 3. It had earlier forecast a loss of 55-61 cents per share.

Analysts on average were expecting a loss of 58 cents, according to Thomson Reuters I/B/E/S.

Morgan Stanley analysts had warned in May that the company could raise going concern doubts next year as it burns up cash amid mounting losses.

Many large retailers that cater to low- and middle-income consumers reported disappointing quarterly sales at their established stores last week, pointing to a cutback in spending on discretionary items.

The teen retailer said revenue fell 13 percent to $396.2 million in the second quarter. Sales at stores open for at least a year fell 13 percent, making it the eighth straight quarterly comparable sales decline.

Rival American Apparel Inc also said same-store sales fell 6 percent, while revenue was flat in the second quarter ended June 30.

Urban Outfitters Inc also reported flat same-store sales growth in the quarter ended July 31.

Excluding items, Aeropostale expects operating losses between $36 million-$38 million in the quarter, lower than its previous forecast of $49 million-$54 million.

Aeropostale shares were up 3.7 percent at $3.36 in after- market trading. Up to Monday’s close, the stock has fallen 64 percent this year.

By Ramkumar Iyer; Editor: Maju Samuel

Copyright (2014) Thomson Reuters. Click for restrictions

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The China Edit | Alibaba’s Catch-22, Gritty Paris Repels Tourists, Gold Down

“Op-Ed | Alibaba’s Catch-22” (The Business of Fashion )

“Stuck in a ‘catch-22’ in its relationship with luxury brands, Chinese e-commerce juggernaut Alibaba should take a page from Google, maximising revenue in the short term, while buying critical time to build enduring relationships with Western brands, argue Brian Buchwald and Joshua Neckes.”

“Gritty Paris Slows Flow of Chinese Tourists” (Bloomberg)

“First-time visitors from China arrive in Paris expecting to see a quaint, affluent and friendly European city with smartly dressed men and women smelling of Chanel No. 5. Instead, they discover the French capital’s grittier side.”

“Western Brands Strive to Click With Chinese Shoppers” (The Financial Times)

“On Tuesday, Topshop and Miss Selfridge, two of the UK’s best-known fast fashion brands, became the latest to announce they are launching online in China, on the heels of Asos, the online clothing retailer, and brands from Gap to Burberry. But while the online fashion market in China may have huge potential, it is also fiercely competitive and price-sensitive, mainland retail analysts say.”

“Gold Loses Shine as Chinese Curb Jewellery Purchases” (The Financial Times)

“India regained its position as the world’s leading gold buyer in the second quarter as Chinese demand for jewellery, gold coins and bars dropped sharply from record levels amid a government crackdown on corruption.”

“Hong Kong Cuts 2014 Growth Forecast After Unexpected Contraction” (Bloomberg)

“Hong Kong cut its economic growth forecast for the year after an unexpected contraction in the second quarter as a slowdown in China crimped the purchases of luxury items and weighed on local sentiment.”

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The China Edit | Tastes Shift, Topshop On ShangPin, Kering VS Alibaba

“Decline in Asian Luxury Sales Points to Maturing of Consumer Tastes in Region” (South China Morning Post)

“Although it appears prestige brands are bearing the brunt of a sustained crackdown on luxury gifting on the mainland and a subsequent fall in tourist spending in Hong Kong, industry experts say that’s only part of the story. They point to a longer term trend of slowing Asian sales growth among leading brands, which suggests a shift in priorities among mainland consumers as tastes mature and a sense of ‘logo fatigue’ sets in.”

“Topshop and Miss Selfridge in Online Push Into China” (The Financial Times)

“Sir Philip Green’s Topshop and Miss Selfridge brands are to push into China with an agreement to launch on the ShangPin.com fashion retail website next month. Sir Philip has long held the ambition of taking Topshop into China and already has two stores in Hong Kong.”

“Alibaba Cooperates With Kering After Fakes Suit Withdrawn” (Bloomberg)

“Alibaba Group Holding Ltd., China’s biggest e-commerce company, is cooperating with Kering SA to stem the sale of fake products after the maker of Gucci withdrew a lawsuit that alleged Alibaba participated in violating trademarks.”

“Why Ebay Tells Manufacturers in China What You’re Searching For” (The Atlantic)

“For eBay, sharing people’s search terms with manufacturers is revolutionizing the way it does business. Exporters in China have found a huge opportunity to cater to U.S. buyers on the site, especially those shopping for clothing and accessories, cell phones, jewelry, computers, and other consumer electronics, according to data from eBay that outlines sales revenue among Chinese exporters who used the site last year.”

“Shanghai’s Fashion Future” (The Telegraph Luxury)

“Increasing numbers of Chinese students are coming to London to study fashion. Cheryl Leung visited three Central Saint Martins graduates who have returned to China and are reinventing Shanghai as the Paris of the East.”

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Gap Sales Jump 3 Percent On Banana Republic, Old Navy

SAN FRANCISCO, United States — Gap Inc. said Thursday that its sales edged up 3 percent in the second quarter as growth at Old Navy offset lower sales of the company’s namesake brand.

It also forecast second-results above Wall Street expectations and its stock rose 5 percent in extended trading.

The San Francisco-based retailer owns the Gap, Banana Republic, Old Navy, Piperlime, Athleta and Intermix brands.

Gap reported after the market closed Thursday that its sales for the second quarter increased 3 percent to $3.98 billion compared with $3.87 billion for the second quarter last year.

The company said it expects adjusted earnings per share for the quarter of 68 to 69 cents, excluding gains from real estate assets. Analysts polled by FactSet are forecasting earnings per share of 66 cents. The company is due to report is second-quarter results on Aug. 21.

It also said its July sales grew 5 percent to $1.17 billion.

Gap said that its revenue from stores open at least a year, considered a key indicator of retail performance because it strips away the impact of recently opened or closed stores, increased 2 percent for July as positive results for Banana Republic and Old Navy offset lower sales for Gap stores.

The company has more than 3,100 company-operated stores and more than 350 franchise stores, along with its online shopping sites.

Shares of Gap Inc. rose $2.05 to $42.25 in after-hours trading, after slipping 27 cents in regular trading.

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All Eyes on Egypt

CAIRO, Egypt — There was a time, long before the recent revolution but still within living memory, when this arresting and chaotic city was the most fashionable place in the Middle East. Glamorous Egyptian musicians dominated the Arab music scene while the country’s film stars reigned supreme as style icons across the entire region. From far and wide flocked the great and the good to the Belle Epoque splendour of Cairo’s trend-setting boutiques on Fouad Avenue, a decadent promenade designed in the sumptuous French style.

“Fashion and luxury retail boomed here in the 1940s,” says Susan Sabet, the Egyptian founder of pan-Arab fashion magazine Pashion. “Until the nationalisation of private businesses, the famous Sednaoui department store founded by Elisa Sednaoui’s ancestors even sold Christian Dior. And my own husband’s grandfather was the importer of Bally at the time, for example.”

“Cairo’s couturiers and tailors, mainly of Greek and Italian origin, made the most beautiful gowns for local high society as well as for the affluent of the region. The Egyptian cotton trade was flourishing and supplying the world with the best quality available. Then, the decline began with the 1952 Egyptian Revolution.”

Since then, Cairo has admittedly lost much of its lustre. But Egypt looms very large in a region where, for the greater part of 5000 years, it was either the dominant power or the ultimate prize. As the most populous Arab country and one of the Middle East’s most diversified economies, its influence is still palpable all around the world.

Yet what makes Egypt alluring for most of the business bigwigs is not its enchanting past or even the debt we owe it as a cradle of human civilisation. It is the country’s vast potential as a market of 90 million consumers of all income levels who, due to the political rollercoaster of the past five decades, remain largely underserved, underestimated or untapped altogether.

Revolutionary Times

Today, Egypt is emerging out of the shadows of yet another painful revolution, but, this time, it appears that the fortunes of the fashion industry might be on the rise rather than the decline. Local designers, manufacturers, retail moguls and other leaders seem remarkably optimistic considering that Egypt is still effectively on the brink of bankruptcy as it clambers to secure international loans. Not to mention the fact that so many of its social, religious and political problems remain both unresolved and highly combustible.

“You know why? The revolution showed the real people from the false. It was a filtering process that created, well, less contamination,” says Ahmed Farid, a pioneering figure of Egyptian fashion and luxury. “The great thing now is that, for the most part, it was the clean money that survived the revolution. You see, before that, some local fashion brand partners made their deals through dubious relationships and money laundering. But now, nobody who’s not really professional will be able to continue.”

Farid began his career in the 1970s when he co-founded the Baraka Group to import sunglasses such as those made under Luxottica’s YSL and Armani licenses. At the time, optics were the only designer-branded category allowed under Egypt’s protectionist regime. Restrictions on imported apparel and textiles were only lifted about a decade ago. But in the meantime, Farid expanded into accessories by becoming the Egyptian franchisee of Bvlgari through his subsidiary Bustan when the jewellery category was liberalised in the late 90s.

Another reason that Farid and some of his peers seem so optimistic at the moment is that there is faith – or at least hope – in the new government’s ability to turn around the economy. Although it has only been a couple of months since former military general Abdel Fattah el-Sisi was elected president, Farid believes that two of Egypt’s business blights, corruption and bureaucracy, will become more manageable under his tenure.

And he’s not alone in his confidence in the new regime. Laila Neamatalla is an Egyptian designer who founded her business, Siwa Creations, 13 years ago in order to connect international labels like Ermanno Scervino with specialist seamstresses and embroiderers in the remote Siwa Oasis region of the Egyptian desert.

“President el-Sisi and his government are working very hard on overcoming the crisis and I believe we’ll succeed soon. Business was very difficult for us during the revolution [and] we had to cancel export orders,” she concedes. “But although the market has been hit hard, only a few businesses are actually closing down. Business is recovering for us now, thanks to the optimistic mood in the air.”

Perhaps not surprisingly, the revolution has also compelled some local players to improve and streamline their operations. Azza Fahmy is an internationally renowned fine jeweller who was the first woman to enter the male bastion of Cairo’s ancient Khan el-Khalili jewellery quarter as an apprentice in the 1960s. According to Fahmy, designers such as herself, Amina Khalil and Marie Bishara have become more flexible and nimble with their business operations and more agile with digital marketing.

“Not only that, a surge of new business entrepreneurs were born out of the revolution [although] it is too early to see any tangible ‘green shoots’ of economic recovery quite yet. The country needed stability and, with this, economic growth will definitely come. Egypt is a young fashion market with tremendous potential,” Fahmy says.

Another thing the revolution highlighted was just how resilient certain sectors and tiers of the Egyptian market are to the kind of instability that would probably wreak havoc in other countries.

“We closed our Cairo and Alexandria stores at the beginning of the revolution but re-opened shortly after the revolution began based on demand from our clients,” Fahmy reveals. “Surprisingly, we achieved reasonable retail sales at first and, even more surprisingly, the following months proved to be one of our best sales performing periods. I believe that this was partly due to the huge surge in support for local brands, coupled with the emotional need to maintain normality amid the unrest. Nonetheless, for us, the revolution was business as usual albeit operating within curfew hours.”

In other words, because Egyptian business culture has had so much practice absorbing and enduring instability over the past half-century, many of its leaders have grown accustomed to finding ways around major obstacles and sometimes even turning them into assets. This is a quality that many international fashion investors will no doubt find reassuring.

The Lay of the Land

No matter how persuasive Egypt’s business community may be in their portrayal of the market as a glass half-full, there is no getting around the fact that the current regime faces some exceptionally daunting challenges before it can claim real, lasting stability.

In addition to the need for urgent political reconciliation, there is the still smouldering social divide between Salafists and secularists as well as mistrust between the rich and the poor and several high-profile international human rights controversies. All this before there is any mention of the precarious state of the economy. Nevertheless, an increasing number of analysts are upbeat, indicating that the basket-case economy of last year is now at least on the long, hard road to recovery through reform and austerity, while investors point out that Egyptian stocks have returned to pre-revolution levels.

In other areas, too, the numbers look attractive. According to New World Wealth, a wealth intelligence provider, Egypt has the second highest number of millionaires in Africa. Today’s 22,800 Egyptian millionaires represent a 2 percent increase from five years earlier – in spite of the revolution – and it is estimated that millionaires will increase by 52 percent in the next 15 years.

In terms of sheer size, the country can count between 20 and 30 million members of the ‘middle class,’ depending on which definition you apply. But no matter how you define it, Egypt’s middle class is growing, and growing fast. As for the side of Egypt’s apparel and footwear market, Euromonitor International anticipate growth of 40.1 percent between this year and 2018 when the sector is expected to be worth $3.8 billion.

Egypt’s ban on apparel imports was lifted just a few years before the 2011 revolution and the fashion market was growing at breakneck pace before the uprising in Tahrir Square. Large-scale retail developments in Egypt’s major cities of Cairo, Alexandria, Port Said and Sharm El Sheikh were being planned to replace or upgrade some of the more traditional souks. At the same time, international high-street brands opened up in new or revamped shopping malls like Citystars, Mall of Arabia and Cairo Festival City.

“Even during the import ban, luxury brands had been sold discreetly at multi-brand boutiques ‘behind closed doors’. But after import legalisation, we saw several new brands enter the market including standalone stores for Bvlgari, Zegna, Burberry and Ferragamo in The First Mall Cairo while others were sold at Beymen’s department store in Garden City. Louis Vuitton was gearing up to open in 2012 but then, boom, the revolution happened so that was cut short,” says Sabet.

“Still, Galleria 40 is the latest upmarket mall to open its doors, located in 6th of October City which is one of the suburbs of Cairo filled with luxury residential compounds. High-end indie retailers have also mushroomed in Cairo’s affluent districts of Zamalek, Heliopolis, Maadi and in Mohandeseen on the other side of the Nile,” she adds.

But according to Farid, herein lies one of the major hurdles the market needs to overcome before the next big wave of high-end brands expands in Cairo. “We’re waiting for the birth of a unified fashion district and this is something that relies upon urban development activity from the government. I know that all the CEOs of Kering, LVMH, Richemont – everyone – they all have their eyes on Egypt. They’re just waiting,” he reveals. “It’s so urgent in fact that I’ve written a white paper on it myself and handed it over to the new government.”

Sabet has, in her own way, tried to address this issue too by creating and consolidating the city’s first designer shopping festival called Cairo’s Fashion Nights, which she bravely launched right after the revolution and has organised annually since.

The Regional Dimension

Just as Egypt’s macroeconomic development is now dependent on loans and investment from its wealthy neighbours in the Gulf, so too is Egypt’s fashion market dependent on similar investment. Apart from a few native firms like Ahmed Farid’s Baraka Group and Ossama El-Naggar’sNile Projects most of the Egyptian franchise rights for global brands were bought up by major players from the Gulf before Egypt’s own market even opened up.

Retail operators like Alshaya from Kuwait, Alhokair from Saudi Arabia and MAC, a local subsidiary of the UAE’s Chalhoub Group, still dominate the Egyptian high-street and contemporary sector alongside Lebanese firms like Azadea Group. The Qataris and the Saudis have long been tussling with locals over the acquisition of Egypt’s once splendid 150-year-old heritage department store, Omar Effendi, which had grand outposts across the cities of the Middle East before it began to tarnish as a downmarket chain. Meanwhile, Gulf shopping mall developers like Dubai’s Majid Al Futtaim are penetrating deeper into bricks and mortar with multi-billion dollar projects like the Mall of Egypt which is slated to open next year.

But putting strategic, geographic and profit incentives aside, there is one other compelling reason for fashion firms from the Gulf to push forward in Egypt now. To many Khaleeji Arabs, Cairo’s style legacy is something that simply can’t be quantified because it is partly about emotion. True, Kuwait may indeed be unrivalled for its fashion-forward street style; Beirut for its effortless vavavoom; and Dubai for being the glitziest shopping mecca of the Middle East. But for many fashion leaders, Cairo remains the spiritual and historical home of modern Arab style.

“Growing up in Bahrain in the 1980s, I could still feel the reverberations of Cairo’s golden age even then, especially when I spent time with my grandparents. The music of Umm Kulthumand Abdel Halim Hafez was always in the background and we couldn’t escape the expression ‘Egypt: Mother of the World’,” says Hind Matar, the London-based designer of the up-and-coming fashion brand MATAR. “I recall with great fondness watching so many spectacular old films from that era with my father like Cairo Station and The Nightingale Prayer. And I specifically remember how modern and elegant the Egyptian actresses were.”

During much of the 20th century, Egypt was a regional leader in art, culture and education around the Arab world. Kings, presidents, sultans, ministers, prominent businessmen and royals from most Arab countries were educated and entertained in Egypt, leaving an indelible impression on generations to come.

Dana Al-Khalifa is a blue-blooded Bahraini entrepreneur who has used the popularity of her fashion blog TheOverdressed.com to partner with jewellery trade shows and global e-commerce sites interested in expanding in the Middle East. According to Al-Khalifa, it is not simply about nostalgia for Egyptian style icons of yesteryear like Faten Hamama, Soad Hosny and Hind Rostom, but also the timeless elegance that Egyptian style still conjures from that era today.

“There’s a black and white picture of my grandmother in a striped sleeveless taffeta dress cut in the classic 50s silhouette and, although she never told me, I get the feeling she got it in Egypt – because at that time Egypt is where all those beautiful clothes came from,” she says. “There are underlying elements of those [classic Egyptian] characteristics in the way many women dress today. In fact, it’s what I draw inspiration from too.”

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Under Armour 2nd-Quarter Profit Edges Up

BALTIMORE, United States — Athletic clothing gear maker Under Armour said Thursday its second-quarter net income edged up less than 1 percent, hurt by marketing and new product expenses.

But the company raised its revenue guidance for the year and shares jumped 15 percent in midday trading.

The Baltimore-based company reported profit of $17.7 million, or 8 cents per share, compared with $17.6 million, or 8 cents per share, in the same quarter a year ago. Analysts expected 7 cents per share, according to FactSet. Planned timing of marketing and new product expenses ate into profit.

Still, revenue jumped 34 percent to $609.7 million from $454.5 million in the same quarter a year ago, much higher than analyst expectations of $573.8 million. The strongest categories were golf, outdoor, running, training, and women’s studio products.

Looking forward, Under Armour now expects 2014 revenue of $2.98 billion to $3 billion, from prior guidance of $2.88 billion to $2.91 billion. Analysts expect revenue of $2.93 billion.

Shares rose $9.55, or 15.8 percent, to $70.18 in midday trading. The stock is up about 60 percent in the year to date.

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Pop Quiz | Christopher Bailey, Geoffrey Beene, Floriane de Saint Pierre

You can find the correct answer and detailed explanation for each question immediately following the question (simply highlight to read), along with all the answers at the end of the quiz. Good luck!

Question 1: Who said, “A brand has an audience even before it has consumers”?

a. Natalie Massenet

b. Floraine de Saint Pierre

c. Christopher Bailey

d. Will Forrester

Answer 1: Choice (b) is correct. Floraine de Saint Pierre recently shared: “It used to be much more difficult for brands to reach their audiences. Now there are billions of messages every second. A brand has an audience even before it has consumers. Now they can go direct to the audience.”

Question 2: Who “outed” the designer behind Maison Martin Margiela?

a. Grace Coddington

b. Renzo Rosso

c. Suzy Menkes

d. Kanye West

Answer 2: Choice (c) is correct. On 7th July, when Maison Martin Margiela invited its Twitter fanbase to “follow the unmasking of our Artisanal show”, it couldn’t have predicted that Matthieu Blazy, the collection’s previously anonymous designer, would also be unmasked. The unmasker was Suzy Menkes. In a review for Vogue, she decided to “out” the designer and followed up with backstage photo proof on Instagram.

Question 3: According to Tom Ford and Marc Jacobs, who was the greatest designer produced by the United States in the 20th century?

a. Perry Ellis

b. Geoffrey Beene

c. Halston

d. Charles James

Answer 3: Choice (b) is correct. A few years back, Colin McDowell happened to be with Tom Ford and Marc Jacobs — separately, but within a few days of each other — and asked them both who they felt was the greatest designer produced by the United States in the 20th century, a figure who could be placed alongside couturiers of the calibre of Chanel and Balenciaga. There was not a flicker of doubt in either man’s mind. “Geoffrey Beene,” they both said.

Question 4: EBay’s special language includes ______.

a. NWOT and RRP

b. NIB and RIP

c. RRP and IBN

d. NWOT and RIP

Answer 4: Choice (a) is correct. On eBay, NWOT means ‘new without tags’, RRP is ‘recommended retail price’, NIB means ‘new in box’, and BIN means ‘buy it now’.

Question 5: Anjhe Mules of Lucas High believes that the recent rise of activewear signals fashion’s evolution towards _____.

a. comfort

b. performance

c. technology and innovation

d. cross-functionality

Answer 5: Choice (d) is correct. Anjhe Mules of Lucas High believes that the recent rise of activewear is a harbinger of fashion’s evolution towards cross-functionality. “All of a sudden people were realising that women were wearing activewear throughout the day and not just at the gym but, in my eyes, I think that is the future of ready-to-wear, not necessarily activewear, but technical products that women can do multiple things in.”

Question 6: Who said, “He left me everything I have; everything I knew, everything I learned. He taught me his world.”

a. Alber Elbaz about Geoffrey Beene

b. Nicolas Ghesquière about Cristóbal Balenciaga

c. Karl Lagerfeld about Pierre Balmain

d. Matthieu Blazy of Martin Margiela

Answer 6: Choice (a) is correct. Alber Elbaz worked for Geoffrey Beene. When asked if Geoffrey had left him anything when he died, Elbaz replied, “He left me everything I have; everything I knew, everything I learned. He taught me his world.”

Question 7: Which designer partnered with Fitbit to offer a unique collection of accessories that transform the fitness tracker into a stylish piece of jewellery?

a. Mary Katrantzou

b. Stella McCartney

c. Diane von Furstenberg

d. Tory Burch

Answer 7: Choice (d) is correct. Tory Burch is partnering with Fitbit to offer a unique collection of accessories that transform the fitness tracker into a stylish piece of jewellery that is versatile enough to go from day to evening.

Question 8: According to Floraine de Saint Pierre, the luxury industry is based on ______.

a. craftsmanship

b. exclusivity

c. observation

d. the finest raw materials

Answer 8: Choice (c) is correct. Floraine de Saint Pierre recently shared: “The luxury industry is based on observation. Many people imitate because they do not observe.”

Question 9: In 2008, Sarah Mower wrote in Vogue, “Because he’s so impersonal, his clothes become personal to you.” She was referring to ___.

a. Haider Ackermann

b. Martin Margiela

c. Alexander Wang

d. Christopher Lemaire

Answer 9: Choice (b) is correct. Anonymity at Maison Margiela meant that clothes spoke for themselves, and not on the personalities of whoever made them. As Sarah Mower wrote in Vogue in 2008, “Because he’s so impersonal, his clothes become personal to you.”

Question 10: Will Forrester is the chief merchandising officer of Temperley London. He considers his role to be all of the following EXCEPT:

a. market analyst

b. process engineer

c. product assortment architect

d. inventory economist

Answer 10: Choice (a) is correct. Will Forrester of Temperley London recently shared: “I consider myself first and foremost a product merchandiser. This includes being a business strategist, process engineer, product assortment architect, and inventory economist.”

Answer Key: 1. (b) 2. (c) 3. (b) 4. (a) 5. (d) 6. (a) 7. (d) 8. (c) 9. (b) 10. (a)

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The Creative Class | Alasdair McLellan, Photographer

LONDON, United Kingdom — Alasdair McLellan is sitting in the corner of Bar Bruno in London’s Soho with a cup of strong but milky tea. It’s an old-fashioned sanctuary from the neighbourhood’s self-aware cafés and the stage-managed charms of nearby members’ clubs. “It’s a locals’ place,” says McLellan, who prefers the casual setting to the table originally booked by his assistant at nearby Charlotte Street Hotel.

The attention McLellan pays to the mise-en-scène of the interview offers an insight into his photographic style, which refers to early years spent growing up in the mining villages of South Yorkshire, where he took pictures of friends messing about and DJ’d in the local youth club, but nonetheless reflects a consciously created world. As does his outfit. “It probably looks like something you could pick up at the market in Doncaster,” he says of his zip-up, cropped houndstooth jacket, which is Prada Autumn-Winter 2013-14.

“I took my folio round and I remember thinking, ‘God everyone is absolutely vile.’ I remember thinking, ‘This is a hard industry to crack.’ It was quite intimidating.”

But McLellan is not some hokum pretender and both his artistic voice and heart are still closely bound to his northern adolescence. “I remember getting a camera, I think it was a Halina, for my thirteenth birthday and thinking, ‘Oh this is quite good.’ I took it everywhere. I took it to school. And I remember my mate and his girlfriend and my girlfriend all came to my house and I started taking pictures of everyone and I realised it was quite good fun. The girls liked Bros [a British band popular in the late 1980s and early 1990s] and they did my hair like Matt Goss and Jason Donovan and took pictures of it. We were listening to everything in the Top 40 at the time.”

His initial enthusiasm became more serious when he decided to pursue photography at school. “For my GCSE art, again, I took pictures of my friends but it was more of a sitting. I think we were trying to recreate posters she had on her wall of Madonna — it was a Herb Ritts image. I shot it on black and white film, which I think is pretty cool for a 16-year-old. I remember watching the Ritts’s video with Madonna and the Pet Shop Boys videos and thinking, ‘That looks really appealing. What is that? What kind of job is that?’”

Edie Campbell by Alasdair McLellan – Stylist: Suzanne Koller – Self Service 40th Anniversary Issue 2014

In a similar way, what fascinated McLellan most about the DJ club nights he ran — first in his village, then in his mate’s Dad’s pub and then in Doncaster town centre — was the look of the people who came and the imagery around the music. “It was very weird and obviously we couldn’t drink, but we were DJing at this bar and we had a bit of cash. I remember that I was into the image as much as the music; magazines like Smash Hits, the NME and Melody Maker. And then I started looking at The Face in maybe about 1990.” Both The Face and a fascination with club culture stayed with him as a source of inspiration throughout his years of schooling.

Bawtry, South Yorkshire 2001 | Photo: Alasdair McLellan

“I had a brilliant time doing an art foundation at Doncaster; it was one of the best years of my life. And then I went to Nottingham for Art College. It was the time of Handbag House music and everyone was going to nights like Venus in Manchester and Miss Moneypenny’s in Birmingham and clubs up and down the country. Everyone was trying to be cool,” he recalled. At the time, McLellan, mostly taking pictures of his mates, started to wonder about how he could get his images into magazines. “I always used to take pictures of my friends in their clothing, just in what they were wearing, but I remember thinking, how am I going to get my pictures in the magazines, ‘cos they’re just my mates. They were good looking, but it wasn’t until I started to understand the work of Corinne Day and David Sims and i-D and The Face, in general, that I realised that you could put people who looked like your mates in a magazine.” Earlier, McLellan had been a fan of Ray Petri’s ‘Buffalo’-style, exemplified by the music video for Neneh Cherry’s 1989 ‘Buffalo Stance.’ However, McLellan realised that the look he wanted to communicate — while inspired by Day, Sims, Bruce Weber and Buffalo-style — was different. “[My subjects] were very ‘football casual’ in what they were wearing. And I remember thinking if I could put people like them in a shoot, then that could be what I’m into, that could be my thing — English, kind of homoerotic, but a more normal look than Ray Petri’s styling.”

Lara Stone – Stylist: Jane How, i-D magazine 2008 | Photo: Alasdair McLellan

Today, McLellan is one of the world’s most in-demand photographers, with countless Vogue covers and fashion campaigns to his name. But, when he came down to London after college, his break didn’t come easily. “I took my folio round and I remember thinking, ‘God everyone is absolutely vile.’ I remember thinking, ‘This is a hard industry to crack.’ It was quite intimidating.” At first, he was discouraged, but it was his friend, fashion editor Jo-Ann Furniss, who pepped him up and told him to keep going: “She was the only one who said ‘You’ve really got something.’ I remember for around four years I was thinking: ‘Don’t wanna do it, don’t wanna do it.’ I would work in a shop and I was still taking pictures but it felt like to get into fashion photography you had to assist someone for ages to get to know everyone and I didn’t want to do that. I thought it was too much of a boys’ club.”

Joey – Stylist: Panos Yiapanis, Arena Homme Plus 2009 | Photo: Alasdair McLellan

Eventually, he was picked up by the agent Julie Brown. “She took me on and it all took off really. I think she just liked me. I had been doing lookbooks and things to earn money. I don’t really know how it happened, though you just sort of find your feet over time… I started working with some great people like Joe McKenna and Jane How.” Soon after he started shooting editorial for the likes of i-D, McLellan began getting commercial work. “The balance between my editorial and commercial is about half and half. You have to be aware of the brand, though it’s not that dissimilar from shooting for different magazines. Shooting an i-D photograph is very different to shooting a Vogue photograph, which is very different to a Fantastic Man shoot. In terms of advertising you have to think about the brand and your own photography and how you can create your world within that.”

McLellan is persistently and romantically old-fashioned when it comes to his medium and insists on shooting film rather than digital. “I have a massive problem with the fact that everything is going digital because my favourite part is going to look at those contact sheets the next day to see how it has come out. I love sitting down and editing the film. It’s such a joy.” Shooting digital also changes the dynamic on set, he says. “Everyone is gathered round the screen with digital. But when I shoot on film everyone is gathered round the girl and they see if the collar needs to be changed, done up or undone, and with digital you lose that moment. It’s the same with the hair.”

Arizona Muse – Stylist: Suzanne Koller, Self Service 2011 | Photo: Alasdair McLellan

Some of McLellan’s best work is rooted in his personal biography. “You have to put yourself in a picture. Whenever I do a photoshoot, I often think about memories. When I go home, I photograph places that meant something to me growing up in South Yorkshire. I would be photographing it because it meant something to me. It would be associated with the first person I fell in love with or the street where I had my first kiss. There’s always meaning in it.”

For McLellan, a clearly identifiable personal fascination is what make great work stand out: “You know what great photographers are turned on by. You know that David Sims is obsessed with David Bowie and that he’s interested in questioning sexuality. Bruce Weber has created this amazing world and he almost art directed America in some respects; it almost looks like it’s art directed by him. And that’s what you can’t be afraid to put in.”

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Apple Poaches Another Luxury Executive as iWatch Nears

PARIS, France — Apple has poached a senior executive from Swiss luxury watch brand Tag Heuer, which could be to help it with the launch of its iWatch expected this autumn.

Tag Heuer, part of luxury goods group LVMH, said on Friday its vice president for sales, Patrick Pruniaux, who had been with the brand for seven years, was leaving on Monday to join Apple. It did not say what his new job would be.

Apple declined to comment.

The iWatch will be the closest the U.S. company has come to selling a fashion accessory and marks its first foray into the personal luxury goods market.

It is in a race against Samsung Electronics and Google to turn computers into wearable fashion and must-have items as smartphones, increasingly becoming commoditized items, start loosing their appeal.

Apple has plucked several executives from the luxury sector in recent months. Burberry ex-Chief Executive Angela Ahrendts started as its new head of retail and online sales in May, and former head of French fashion brand Yves Saint Laurent Paul Deneve was hired last year to work on special projects.

“I think he was probably head-hunted,” a Tag Heuer spokeswoman said of Pruniaux, adding a replacement had already been found.

Analysts and industry executives say the jury is still out on whether smart watches will disrupt the luxury Swiss watch industry.

“I don’t believe that an iWatch will be a threat to luxury Swiss watches,” said Jon Cox, analyst at Kepler Cheuvreux in Zurich.

“But where I do see some potential impact is at lower, for example below $1,000, price points where there could be a temporary dislocation if there is super high demand for iWatches.”

Jean-Claude Biver, head of watch brands at LVMH and chairman of watch brand Hublot, said he believed the threat of smart watches had to be taken seriously by the Swiss watch industry.

“The iWatch will have the same status symbol power as many other Apple products, especially at the beginning,” he said. “I personally believe it has the potential to be a threat for the industry, and it should not stay with its arms crossed.”

Apple applied for a trademark for the “iWatch” in Japan, a patent official said earlier this week, signaling the iPhone maker could be moving ahead with plans to launch a watch-like device soon.

Speculation has been mounting that Apple was preparing to launch an iWatch which would include multiple health and fitness sensors and access to features such as messages and notifications through integration with the iPhone and iPad.

Edited by Mark Potter

Copyright (2014) Thomson Reuters. Click for restrictions

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Kris Van Assche Says Do What You Are Good At

PARIS, France — “Every season is more exciting, because I feel the expression is becoming more and more clear. And as I grow older, I keep learning, so at 20 collections, there have been a lot of small learning processes that add up and allow me to fine-tune things more each time.” So says Kris van Assche, explaining the iterative advancement of his creative vision, a precise and determined personal quest that has kept the Belgian-born designer in the highest ranks of Paris menswear since he arrived in the French capital 16 years ago.

“Leaving a rather comfortable situation being an assistant in a big house to launch my own company was the scariest, biggest thing I’ve done so far.”

Two days ago, Van Assche presented a mix-and-match, denim-themed collection that included colour-blocked tops, superimposed jackets in various lengths and covetable backpacks with white piping — another study in the blend of sportswear and suiting that has become the calling card of Van Assche’s label. Regarding the landmark show, his twentieth, Van Assche said: “It’s another step forward within my vision of the Kris Van Assche man, which continues to evolve. And it’s fun visually, because at this point in my career, I need a little lightness and fun.” Indeed, the colour palette of Friday’s show evinced a desire to defy the norm.

KRISVANASSCHE men’s S/S 2015 | Source: Nowfashion.com

One can’t blame the 38-year-old for feeling the need to let loose a little. The show was, in more than one way, a milestone for Van Assche, and the culmination of a decade-and-a-half of hard work. This year marks the tenth anniversary of his namesake label, which pioneered the finely calibrated mix of tailoring and casual elements that is so common now on both runways and in real life. Yet, if the idea of pairing a dinner jacket with sneakers seems commonplace today, Van Assche’s designs stand out for their single-minded stringency and, in recent seasons, for the designer’s increasing willingness to experiment.

The show also capped off a busy year that signals a new phase of confidence and growth for Van Assche’s brand. In June 2013, the designer’s first standalone boutique opened on Paris’ Rue Saint-Roch, just around the corner from Rue du Faubourg Saint-Honoré, one of the city’s most exclusive shopping strips. The store opening was followed by a global e-commerce launch. And, most recently, Van Assche’s company moved into a large and airy space on a bustling street near Place de la République — in many ways the heart of Paris’ gentrified, but much less bourgeois east end — physically anchoring the brand and lending it a distinct off-centre character.

Van Assche grew up an only child in one of Belgium’s Flemish provinces, in a small municipality best known for its brewery and third-division football team. He says that while his family wasn’t artistic, he knew at a very early age that he would have to find a line of work that afforded him a “degree of self-expression,” specifically through clothes. “Even as a child, I would question the clothes my mother picked for me, why it was in my closet and where it came from. When I learnt someone had made that jumper or those trousers, I said ‘That’s what I want to do.’”

Van Assche was only eighteen when he enrolled at Antwerp’s prestigious Royal Academy of Fine Arts. “It all started with that,” he reflects. While he speaks highly of his famous alma mater, it was two unplanned moves after his graduation, in 1998, that paved the way for Van Assche’s rise: “I came to Paris — which I hated — and I started working in menswear, which I had never touched.” (At the Academy, Van Assche had studied womenswear). The driver of these unforeseen choices? An opportunity that would have been hard for anyone to turn down: a four-month internship at Yves Saint Laurent. “I thought it would give me the time to look for a real job.”

Of course, the story unfolded differently, as this was no ordinary internship. At Saint Laurent, Van Assche assisted Hedi Slimane, who, although not quite the star he is today, was already beginning to attract attention and praise for his work channelling the codes of the house into commercially viable, sharply cut clothes for men. Four months turned into six years, as Van Assche followed his famous mentor when Slimane left Saint Laurent to head menswear at Dior in 2000. Albeit behind the scenes, Van Assche helped shape the remarkable four years that followed, when Slimane’s collections for Dior Homme became the unofficial bellwether of men’s fashion, their super-slim silhouette defining how young men around the world would dressed for the next decade.

Yet, Van Assche’s aesthetic sensibility is markedly different from that of his former boss, and the designer says his main learnings from his early stints at Yves Saint Laurent and Dior Homme were more practical that creative. “I got to see how a collection is constructed from day one and all the departments around it, like publicity, marketing, et cetera, things I hadn’t really been confronted with at the Academy, even though it’s a very good school. Assisting Hedi with the launch of Dior Homme was definitely something important for me, because that is when I realised things such as buttons don’t just fall from the sky onto a jacket. You have to make them, and if you want a logo on them, then you have to make buttons with a logo on them.”

The designer says his years assisting Slimane were “a six-year reality check.” He also discovered that “it’s not enough to be good designer; you need to be surrounded by a really good team. Because there’s only so much you can do yourself and everybody needs to do what they are good at. That was the biggest lesson for me.” It was priceless preparation for the big step that Van Assche would take next.

As the designer tells it, none of his early achievements compare to the giant leap he took in 2004. “Leaving a rather comfortable situation being an assistant in a big house to launch my own company was the scariest, biggest thing I’ve done so far. At 28, I was paying rent, and I had a comfortable salary, so it was definitely a gamble to drop all that and start my own company.”

Van Assche is candid about the personal dissatisfaction that lead him to start his own brand. “I had been frustrated and looking for a way out for a long time, at least a couple of years before I left Dior. It’s not that it wasn’t a great position, but I was assisting someone else’s dream and I felt I had reached a point where I had to tell my own story. I hadn’t completed the Academy — which was incredibly tough — to be an assistant all my life. The whole time I was assisting, I could not forget how rewarding it had felt when I put on my final degree show [at the Academy] and I was desperate to go back to that feeling. It was really about me putting a fashion statement, a silhouette out there.”

KRISVANASSCHE men’s S/S 2015 | Source: Nowfashion.com

The support he needed to establish his own company came through friends and persistence. “I had been driving all my friends crazy complaining and one of them knew someone who knew someone else, which eventually brought me in contact with these people who financed young companies, even though they had never invested in a luxury or fashion business. They are still my partners today,” he said, declining to reveal their identities. “I presented them with this concept which was very rich in terms of fashion statements, but had little in terms of figures.”

Van Assche needed a business plan, something he resisted at first. “It’s not that I didn’t care about the business side, but at Yves Saint Laurent and Dior, I had learnt that everyone should be doing what they’re best at. And I knew that coming up with a business plan wasn’t my forte.”

Rescue, again, came through friends and Van Assche’s willingness to ask for help. “I ended up working on a business plan with people I had never met before, but who I was introduced to through friends that were tired of hearing me talk about my struggles. One of them was a banker. I would explain to them how I saw things and they helped me put it into realistic terms.” German-born designer Dirk Schonberger was also among Van Assche’s syndicate of consiglieri. “‘You need to have this type of a budget for fabrics, this for models, et cetera,’ Dirk told me — he gave me a few invaluable clues.”

“My first reaction was, ‘I don’t know how to do a business plan, I am not going to do it. You’re the business people, you take care of it, I’ll make the clothes.’ But they said ‘No, you want your company, you come up with a business plan.’ It was one of the best things that ever happened to me, because it made me take responsibility and learn.”

“I had an office on the first of November [2004] and I remember plugging in the fax machine, because back then we sent faxes to order fabric. I was so desperate to have a fax number. My show was at the end of January,” recalled Van Assche. “It was a nightmare, there were just three of us doing everything.” Nonetheless, Van Assche’s label got the attention of the industry right from its inception — Suzy Menkes attended the designer’s first show.

Ten years later, Van Assche says the challenges of running an independent label remain the same. “Doing good shows and good collections isn’t enough. It’s the whole package around it: You also have to have the right commercial person, the right press person, the right strategic vision, a good accountant, and so on. It’s as essential as what you show on the runway, and in some ways, the trickiest part.”

Then, there’s what Van Assche calls fashion’s number one rule: “The more you sell, the more you are in trouble.” Van Assche thought after his first show he would have around 15 clients. Instead, 45 retailers placed orders. “That sounds great but it also means you have to make the stuff, buy the fabrics and finance the production. Then you send the clothes in June but people don’t start paying until July and we just didn’t have enough cash for all that. The bigger you become, the more money you need.”

When, in 2007, following Slimane’s departure from Dior Homme, Van Assche was offered and accepted the top creative post at the house where he had previously worked, he admits it affected his own brand. “My appointment [at Dior] definitely took things to the next level. I was only in my fifth show with my own label but, all at once, it got a lot more attention.”

While Van Assche says sales have been growing consistently for the last few years — he declined to reveal exact revenue or growth figures — he confesses that his brand has faced some challenges along the way, most noticeably during the financial crisis of 2008. “I am not sure that being a young label is supposed to be smooth and struggle-free. If it’s easy, it probably means you are not being ambitious enough,” he said, adding: “You need to constantly adapt yourself, like when the financial crisis hit the world. Stores bought less and safer, more well-known brands. We felt that. If you are a small label, you feel the tiniest breeze.” On the flipside, “the advantage of being an independent young label is that you can actually make decisions quite fast and you can change your mind without too many consequences,” said Van Assche.

Today, Van Assche’s label is available in 150 stores in 31 countries. “Historically, from day one, Japan was our biggest market, followed by Europe. Now the Chinese market is becoming more important, as is the American market, though the United States is tough for an independent label because you need a lot of communication and resources there that we don’t have as a still relatively small, young company.”

The menswear boom of recent years means the market “has become as diverse and important as womenswear, with the big difference than it some ways it’s tougher, because you can’t have an ‘it bag’ or ‘it shoes,’ which is where a lot of brands make their money,” said the designer. That’s not to say Van Assche doesn’t have some ‘it’ items of his own. The business performs well with shirts and knits. Shoes are also strong, in particular the ‘multi-lace’ high-top sneaker that comes in black and white every season, along with one-off variations (like crocodile-embossed for Spring-Summer 2014). The shoe, which retails for around €500, is known to be a favourite of members of the French football team. Bags have also become a lucrative category for Van Assche, not least thanks to a two-year collaboration with Eastpak which he calls a “tremendous success.” “After four successful seasons we decided to halt the collaboration, but in the meantime we had learnt how to make bags and we had grown a customer for our bags.” (Van Assche has refused a number of other collaborations. “I think it should bring me something that I don’t know how to do myself and vice versa. You don’t make a lot of money with these collaborations, so you have to do it for other reasons,” he said.)

Van Assche doesn’t like to look back. Yet he gets excited when talking about the collection currently in stores (Spring-Summer 2014), calling it a turning point. “It marks a moment when I decided to go full on fashion. I think it’s good thing for the brand. It became more fashion, more visual and more fun for me to work on.” But the designer admits that the move has alienated some of his early stockists. “We use to hang with established big labels; we were the cool brand next to them. We were considered ‘classic with a twist,’ as much as I hate that phrase. Now the stores that buy us are much more fashion-oriented. We have become too loud for certain stores.”

KRISVANASSCHE S/S 2014 campaign | Source: KRISVANASSCHE

How does Van Assche balance his responsibilities at Dior Homme with his role at his own label, and how does he maintain a separate aesthetic approach for each brand?

“I have been doing this for seven years (working between Dior and his own label). Creatively, I have grown an intuition to know which idea goes best with each label. Logistically, it’s very helpful that both brands are in Paris.” He normally spends around two days a week at Kris Van Assche and three days a week at Dior. “Obviously there’s times when I don’t know where I am, but overall it works really well. Only when I am choosing fabrics and colour cards, that’s always a nightmare.”

What makes it work, he added, is that he is surrounded by the right people. Today, the designer has 12 full-time employees working at his own brand. “The best people I have are interns that grew into their job. Maybe they started doing something totally different, but turned out to have a real talent for something else. You could be working in the commercial department one day and end up working in the studio the next day, and my first assistant never went to fashion school — that’s not a problem for me. If you have passion and do what you do well, that’s all that matters to me. They also move between the two brands. The few times I’ve had the ambition to go outside of the brand and hired someone with more experience, it didn’t yield the happiest choices.”

Van Assche says it’s a common misconception for people to think that his own label allows him a lot more freedom than working for a big house. He disagrees, saying that with the same freedom comes a lot of responsibility. “Yes, it’s a lot of fun, but a lot of struggling as well. At Kris Van Assche, we cannot afford to have a bad season,” adding: “The amount of visibility that I’ve had through Dior is huge, it’s impossible to deny that. But there has been no financial, strategic or professional support directly from the house. But as a designer I’ve learnt so much [working for Dior] and whatever I learn is passed on to my label, so it’s definitely benefitted my brand.”

Where does Van Assche see his business at this major milestone?

“A decade is a decade. I am working on getting to the next level. But it’s too early to talk about it. It’s about growing for the next five to ten years, finally breaking into the United States and gaining ground in China, which is a huge challenge. But for that I need to adapt my resources to face today’s economic realities. If you see how much big brands — which are already well-known — are spending on communication worldwide, how much effort and money they invest, just imagine me being an independent, fairly unknown name. I need to make at least a little noise in order to survive.”

“So I am trying to find the tools to make noise.”

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Your Days are Numbered, Top Online Entrepreneur Tells Retailers

PARIS, France — The founder of Rocket Internet, the German venture capital company behind dozens of online start-ups, warned the retail industry on Thursday that e-commerce and smartphones would mean there will be little future for stores in emerging markets.

Oliver Samwer, 40, told the annual summit of the Consumer Goods Forum (CGF), an industry network of some 400 retailers and big brands from 70 countries, that many of them risked being left behind as the growth of e-commerce accelerates.

“You only have stores because there was no Internet, but that does not mean there is a right to have a store,” Samwer said, adding that traditional retailers focused too much on older shoppers and not enough on smartphone-savvy youngsters.

“What you fear will come much faster,” he warned.

Rocket Internet is bidding to create the largest internet empire outside the United States and China, seeking to replicate the success of Amazon and Alibaba in markets the U.S. and Chinese e-commerce groups have yet to dominate, such as Africa, Latin America and Russia.

After his speech, Samwer traded blows about whether stores will survive, in a panel discussion with Mark Price, managing director of British grocer Waitrose, who introduced himself to Samwer saying: “Hi — I’m Mark, I’m a dinosaur.”

Samwer founded Rocket Internet in 2007 with his brothers Marc and Alexander and it is already active in 102 countries, making revenue of $1 billion in 2013 via online fashion stores including Dafiti in Latin America and Lamoda in Russia, as well as Jumia for general merchandise in Africa.

Sources have told Reuters the company is considering a stock market listing in Frankfurt later this year which could value it at up to 5 billion euros ($6.8 billion), as buoyant capital markets have encouraged a flurry of e-commerce flotations this year, with most focus on Alibaba.

Samwer said the stock market value of Amazon and Alibaba would soon dwarf the world’s biggest retailer Wal-Mart.

“What would you buy for your children? I would buy Amazon and Rocket (shares),” he said, adding he believed French retailer Carrefour would have been better off buying a stake in Alibaba than trying to open stores in China.

ONLY 10 PERCENT LEFT OFFLINE?

Noting that 75 percent of the world’s population lives in the markets Rocket is targeting, Samwer said e-commerce had even better prospects in emerging markets than in developed economies, as online sites do not have to compete with such established stores.

“If you don’t have to share with offline, your percentage will be much higher,” he said. “It will all move online, you will have 10 percent left that will not move online.”

Samwer said Rocket Internet ventures around the world already had 44 million fans on Facebook, more than Nike and Apple combined, noting that the cities with the most active users of Facebook are Bangkok, Jakarta and Istanbul, with none of the top 10 cities in the United States.

Deutsche Post, the world’s largest postal and logistics company which is profiting from booming deliveries for online retailers, predicts e-commerce could account for up to 40 percent of total trade by 2025 in developed countries, from under 10 percent in most markets now, and up to 30 percent in emerging markets, up from a tiny fraction today.

The Samwers have raised hundreds of millions of dollars of funding for Rocket Internet and its ventures, including from Swedish investor AB Kinnevik, billionaire American industrialist Leonard Blavatnik, JP Morgan Asset Management and retailers like Tesco and Germany’s Tengelmann and Rewe.

Before founding Rocket, the Samwers had success with German online auction site Alando, which they sold to eBay and mobile phone content provider Jamba which they sold to VeriSign.

Rocket Internet also helped launch Zalando, Europe’s biggest online fashion retailer, which is considering its own stock market listing. Rocket is no longer invested in Zalando, but the Samwer brothers’ European Founders Fund still owns 18 percent. ($1 = 0.7368 Euros)

Editor: David Holmes

Copyright (2014) Thomson Reuters. Click for restrictions

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L’Oreal Agrees to Acquire U.S. Makeup-Artist Brand NYX Cosmetics

PARIS, France — L’Oreal SA, the world’s largest cosmetics maker, agreed to acquire NYX Cosmetics for an undisclosed price, bolstering its makeup offer in North America where its consumer-products unit has faltered.

NYX Cosmetics will continue to operate from its Los Angeles headquarters under the brand’s current leadership team, Paris- based L’Oreal said today in a statement.

NYX, founded in 1999, sells $6 blush and $10 eyeliner in more than 70 countries, according to its website. The competitor to Estee Lauder Cos.’s MAC Cosmetics says it’s one of the fastest-growing cosmetics company in the U.S. Sales in the 12 months through May rose 57 percent to $93 million, L’Oreal said.

The personal-care market is consolidating as companies from Germany’s Henkel AG to Japan’s Kose Corp. buy niche brands to widen their offers. Since January, L’Oreal has acquired facial- mask maker Magic Holdings International Ltd. and spa brands Decleor and Carita. Including the buyback of 8 percent of its stock held by Nestle SA, slated to close this month, L’Oreal will have spent more than $5 billion on deals this year.

Sales at L’Oreal’s consumer-products division fell in North America in the first quarter, contributing to the company’s slowest quarterly growth since the recession. Regional sales at the unit, which includes Garnier shampoo, will return to growth this quarter and accelerate through 2014, L’Oreal has said.

The company’s other specialist makeup brands include Urban Decay, acquired in 2012, and Maybelline New York.

By Andrew Roberts; Editors: Celeste Perri, Paul Jarvis

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Lululemon Gives Adidas to VF $1 Billion Reason for Bid

NEW YORK, United States — Lululemon Athletica Inc. just got marked down by $1 billion.

The yoga-pant maker plunged 16 percent after the company cut its full-year earnings forecast last week. That decline added to the $5.5 billion already wiped out in the last year amid a product recall and management shakeup, leaving Lululemon trading near its lowest earnings multiple since 2009. While the $5.6 billion retailer may not want to sell at this level, the drop could encourage an opportunistic buyer to make an approach, said Scott Rostan of Training The Street.

Suitors willing to court Lululemon’s founder and largest shareholder Chip Wilson would get a company that’s projected to boost sales 46 percent over the next three years. VF Corp., the $27 billion owner of the Vans and The North Face brands, is one of the most likely candidates to consider acquiring Lululemon, said Canaccord Genuity Group Inc. Adidas AG also would make sense as a buyer because the $22 billion sporting-goods maker could use its international expertise to help guide Lululemon’s overseas expansion, Wedbush Inc. said.

“If you believe the long-term growth prospects and fundamental value of the company, then maybe now is the time to talk to them,” Rostan, whose New York-based firm teaches new hires at investment banks how to structure mergers and acquisitions, said by phone. “Given where their valuation is now, there’s probably some sniffing going on.”

A representative for Vancouver-based Lululemon didn’t immediately respond to phone or e-mail requests for comment.

Disappointing Report

Lululemon plunged last week, erasing more than $1 billion in market value in a single day, after saying sales have been slower than expected and full-year earnings will be lower than earlier forecast. While the stock has gained 3.9 percent since, the company’s market value is still down about $800 million.

The shares had been slipping since last June, when Chief Executive Officer Christine Day announced she was stepping down. Sales growth has stalled in the last year as increased quality checks slowed deliveries of new apparel. It’s also been forced to re-woo shoppers after recalling a popular yoga pant line because they were too sheer.

With the stock drop, Lululemon hasn’t been this cheap for potential buyers since July 2009, one month after the end of the worst U.S. recession since the Great Depression. The retailer’s price-earnings ratio of 21 yesterday is about half its five-year average, according to data compiled by Bloomberg.

“It becomes a little bit more realistic,” even though Lululemon is still relatively expensive compared to peers, Howard Tubin, a New York-based analyst at RBC Capital Markets, a unit of Royal Bank of Canada, said in a phone interview. “They’re a large player in a very attractive segment of apparel, the women’s athletic apparel market. They have a lot of growth prospects.”

Sales Forecasts

Analysts estimate Lululemon will boost sales to $2.3 billion in the year ended January 2017 as it expands into men’s wear and international markets. That compares with $1.6 billion last year and represents a fivefold increase from the year ended January 2010.

“It could be enticing to some,” Tubin said.

Lululemon could be a good fit for VF because the larger company already has a presence in athletic apparel, said Camilo Lyon, a New York-based analyst at Canaccord. VF, which traces its retailing roots back to 1899, could also use its expertise to remedy Lululemon’s supply-chain challenges and cut costs, Lyon said.

Shining Light

Omar Saad of International Strategy & Investment Group LLC highlighted Lululemon as a potential takeover target for VF last month. A takeover at $50 a share, a 29 percent premium to yesterday’s close, could be accretive for the maker of Wrangler denim and Ella Moss dresses, he wrote.

Lululemon’s “value proposition of superior product quality and an engaging store experience has been a beacon of light in the dark ocean of specialty retail mediocrity, leading to tremendous profitability and growth until this point,” Saad wrote in the May report. VF “has in spades what Lulu lacks,” such as a scaled supply chain.

Adidas, which is based in Herzogenaurach, Germany, and gets more than 75 percent of its sales from outside North America, also could be a logical buyer should a deal occur, said Corinna Freedman an analyst at Wedbush.

“That could make a lot of sense, especially given Adidas’ international expertise,” Freedman said by phone from New York.

Laurent Potdevin, who took over as Lululemon’s CEO in January, said in March that he wants to accelerate the retailer’s international expansion plans. The company got 95 percent of its revenue last year from the U.S. and Canada.

Nike Gear

Nike Inc. may also be interested in adding Lululemon’s tank tops and yoga pants to its athletic lineup, according to Jennifer Black, chief executive officer at Lake Oswego, Oregon- based Jennifer Black & Associates LLC, who said the company’s takeover prospects will increase if it continues to struggle this year.

“Shareholders will become frustrated,” Black said in a phone interview. “Shareholders are going to give them the benefit of the doubt for a long period of time. But if they don’t execute, they are an open target.”

Representatives for Greensboro, North Carolina-based VF and Adidas declined to comment, as did a representative for Beaverton, Ohio-based Nike.

Stabilize First

Any suitor may want wait for an improvement in Lulu’s earnings before considering a deal, said Freedman of Wedbush and Jaime Katz of Morningstar Inc.

“You want to see things stabilize before you jump into the crossfire,” Katz, a Chicago-based analyst, said in a phone interview. “It’s going to be a little bit of time before any other large retailer would feel comfortable folding this business in. It just seems like there’s a lot of internal turmoil that’s trying to settle itself down right now.”

Part of that turmoil is related to Wilson, who last week voted against the re-election of his successor as chairman, saying the board has been too concerned with short-term results. With an almost 30 percent stake, Wilson can influence or control strategic changes, including approving a merger, Lululemon said in its most recent annual filing.

“You have a very big shareholder who has a mind of his own,” Katz said. “In order to get everybody on board, Chip Wilson needs to be on board.”

Activist Interest

While Wilson and the rest of Lululemon’s management team probably isn’t interested in selling when the company’s stock is so low, its plunging shares could encourage an activist to approach and push for changes, including a sale, said Pamela Quintiliano, a New York-based analyst at SunTrust Banks Inc.

“This space is filled with activists right now,” she said in a phone interview. “I don’t know that they’d be successful in pressuring, but I think there’s clearly an opportunity for someone to come in.”

The drop may also be dramatic enough to entice buyers to approach on their own, said Frank Beck, president of Austin, Texas-based Beck Capital Management LLC. Beck said his firm, which oversees about $250 million, had sold its Lululemon shares before the earnings report last week.

“The drop has at least gotten the valuation down low enough that, heck, if it went down a little lower, I’d probably consider buying shares myself,” Beck said in a phone interview. “It would be really attractive to a lot of companies.”

By Brooke Sutherland, Lindsey Rupp, Scott Deveau; Editors: Beth Williams, Whitney Kisling

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Lululemon Trims Full Year Forecast, Shares Tumble

TORONTO, Canada — Lululemon Athletica Inc trimmed its revenue and earnings forecast for the fiscal year on Thursday, a fresh sign that the once-flying yogawear maker was still struggling to return to strong growth in an increasingly crowded field.

Shares of the company fell more than 10 percent to $40.10 in trading before the morning bell on Thursday in New York, even as the company announced a $450 million share buyback program and posted quarterly results that topped expectations.

“As we move into 2014, we are reflecting on our learnings with humility, and are entirely focused on our future,” Chief Executive Laurent Potdevin said in a statement.

Potdevin admitted to investors earlier this year that the company – which essentially created the lucrative yogawear market – was “not the only game in town anymore.”

Rivals such as Gap Inc, Under Armour, VF Corp and even department stores are all jumping into the fray with their own, more affordable, versions.

Lululemon’s results come a day after its founder and largest shareholder, Dennis “Chip” Wilson, announced he had voted against the reelection of its new chairman and another director. He publicly criticized the board for being too focused on short-term growth.

The company now expects revenue for the year to be in the range of $1.77 billion to $1.80 billion, with adjusted earnings of between $1.71 per share and $1.76 per share. It had earlier forecast earnings of $1.80 to $1.90 per share on revenue of $1.77 billion to $1.82 billion.

Analysts on average had expected earnings of $1.89 a share on revenue of $1.8 billion, according to Thomson Reuters I/B/E/S.

SUPPLY CHAIN WOES

The reputation of Vancouver-based Lululemon, which once inspired a cult like following among its customers, was badly tarnished by an embarrassing recall in March 2013 of yoga pants that were deemed overly transparent.

For more than a year, it has worked to smooth out quality and supply-chain issues, battle lawsuits, deal with departing executives and face backlash after Wilson touched a nerve with loyal customers, saying that “some women’s bodies just actually don’t work” for Lulu’s pant.”

Despite efforts to regain its stride, some traders and analysts are still skeptical about Lululemon’s prospects. The stock was one of the most heavily shorted companies in North America among those reporting earnings this week as some traders bet there was more bad news to come.

The retailer had previously said it would not fully resolve its supply chain issues until 2015.

QUARTERLY RESULTS

Excluding a one-time adjustment for planned repatriation of foreign earnings, the company said its profit in the quarter was 34 cents a share. Analysts on average were expecting earnings of 32 cents a share according to Thomson Reuters I/B/E/S.

On a net basis, profit in the fiscal first quarter ended May 4, fell to $19 million, or 13 cents per share, down from $47.3 million, or 32 cents per share, a year earlier.

Revenue rose 11 percent to $384.6 million, the Vancouver-based company said.

Sales at established stores and online sales edged up 1 percent from a year earlier. The company had forecast little change. The small gain came thanks to online sales, which rose 25 percent while comparable sales at corporate stores fell 4 percent.

The company also said its veteran chief financial officer, John Currie, would retire by the end of the fiscal year, ending February 2015.

By Euan Rocha, Allison Martell, Shubhankar Chakravorty; Editors: Kirti Pandey, Sofina Mirza-Reid

Copyright (2014) Thomson Reuters. Click for restrictions

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E-tailers Growth Ensnared in India’s Logistics Jungle

MUMBAI, India — Online retailers jostling for a chunk of India’s $13 billion e-commerce trade are so desperate to avoid snarled roads and inefficient railways that they fly their packages in the passenger cabin of costly commercial flights. The cargo, however, often gets bumped off.

India’s largest domestic e-tailer Flipkart as well as bigger global rivals like Amazon and eBay Inc are widening their supplier networks or racing to build multi-million dollar logistics networks to circumvent crumbling infrastructure, keen to attract customers by shrinking delivery times to same-day or even as short as nine hours.

In the meantime, they remain at the mercy of commercial airlines, which frequently remove their parcels to make room for passengers, highlighting one of the challenges to expanding in an e-commerce market that consultants say is growing at a compound rate of 34 percent a year, and which saw online retail sales of $1.6 billion last year.

“It is unfortunate, but offloading does happen and we have to make sure our delivery promises take that into consideration,” Rahul Chari, vice-president, supply chain technologies at Flipkart, told Reuters.

Up to 90 percent of goods ordered online in India are moved by air, which pushes up delivery costs by around half, according to several online retailers and logistics companies. Road and rail transport networks remain woefully underdeveloped and entangled in graft and bureaucracy.

With a population exceeding 1.1 billion, a burgeoning middle class and better Internet access, India’s e-commerce potential is huge. Online retail sales are expected to surge to $76 billion by 2021, according to consultants Forrester, and the segment is growing at a much slower pace than other emerging markets, including China.

E-commerce is poised to get a boost as early as next month, when the government is expected to allow online retailers to sell directly to consumers.

Logistics, however, remains the biggest barrier to growth and transport troubles are just the tip of the iceberg.

Most e-tailers use sometime unreliable third-party delivery firms, more than half of sales are paid for with cash-on-delivery, return rates are high and orders made to fake addresses are all too common.

“The biggest advantage of e-commerce is the instant nationwide reach it enables sellers of all sizes, however, it is the delivery of that opportunity that requires significant focus and investment from the industry,” Amit Agarwal, Amazon’s vice president and country manager, told Reuters in an e-mail.

MOVING IN-HOUSE

With India’s perennial infrastructure failings far from being resolved, most e-tailers are focusing their investment on setting up their own capital-intensive logistics businesses.

Flipkart, founded by two former Amazon executives in 2007 is aggressively growing its logistics arm E-Kart. Amazon, the world’s biggest online retailer, is pumping up the capacities at Amazon Logistics. That’s in addition to existing partnerships with third-party logistics firms including GATI, Blue Dart and FedEx Corp.

“Having a control over what customers want is a big driver because now we are able to have a channel through which we can gather a lot of feedback and tailor our services accordingly,” said Flipkart’s Chari. The company counts South Africa’s Naspers Ltd as an investor.

To reduce air shipments, Flipkart is setting up regional warehouses and signing up more suppliers across the country to ensure customers get orders delivered by the nearest supplier, he said.

Having its own network now means Flipkart can handle delivery rescheduling requests better, manage product returns faster and help customers exchange products, services that are time-consuming when handled by a third-party operator.

Amazon is using a similar strategy. In addition to building its own warehouses, it is trialing using neighborhood grocery stores and petrol stations as delivery points.

It also struck agreements with the Indian Postal Service to reach far-flung places in the country, Agrawal said.

eBay, by contrast, is working with external logistics firms to cut back on multiple state taxes for products shipped by road and the excessive documentation required to move every parcel.

It is also intensively training its 45,000-strong supplier base, which hold all the inventory eBay sells on its platforms, to improve efficiency.

“In this business, it is important we do what we are good at and let our logistics partners do what they are good at,” said Latif Nathani, eBay India’s managing director.

FROM LAPTOPS TO REFRIGERATORS

The anticipated boom in online retail is encouraging logistics firms to better their services, but it will take several years before India gets an efficient network, said Bablu Tewari, chief operating officer for e-commerce and international business with Gati. The company is one of India’s largest logistics firms, delivering for Amazon and eBay.

“Nobody shipped products which weighed more than two kilos like say laptops and now suddenly people are moving refrigerators,” Tewari said.

For the many Indian e-tailers that lack the deep pockets of Amazon and Flipkart, air freight and couriers are not an option. Instead, they are altering their packaging and product lines to ensure they can reach customers via road and rail.

Pepperfry, one of India’s largest online furniture and home products retailer, is training suppliers to make knock-down, foldable products, similar to IKEA furnishings.

Flat-packaged goods reduce shipping costs, said founder and Chief Executive Officer Ambareesh Murty. The company also provides carpenters to assemble the items once delivered.

Industry consultants say companies like Pepperfry that are able to adapt their business to the ailing infrastructure are better placed to take advantage of the expected e-commerce boom. India’s roads and railways are not going to get better any time soon, and commercial airlines can only carry so much cargo.

“The roads are where the action is going to move to as volumes start surging,” said Ashish Jhalani of consultants e-tailing India. “Anyone innovating and building capacities to deal with that challenge will benefit in the long term.”

Editor: Miral Fahmy

Copyright (2014) Thomson Reuters. Click for restrictions

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