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Puerto Rico Ready for Luxury Shopping Amid Recession

SAN JUAN, Puerto Rico — A pair of nearly 5-inch black satin heels with a large gold alligator that serves as the front strap retails for almost $1,600 at the first Saks Fifth Avenue store to open in Puerto Rico, more than what the average person here earns in a month and where nearly half the population lives in poverty.

While a nearly decade-long recession has forced many Puerto Ricans to seek a more affordable life on the U.S. mainland, some of the world’s priciest retailers have stores at The Mall of San Juan, a $475 million shopping center opening Thursday alongside one of the island’s most crime-ridden public housing projects.

“We know that Puerto Rico has its challenges, but we’re not basing our decision on the economy’s ups and downs,” said Manuel Vazquez, the mall’s general manager. “The sales of shoes, clothes and accessories in Puerto Rico have always been strong.”

Puerto Ricans do seem to have been busy shopping while the government struggles with $73 billion in public debt and U.S. investors worry some of island’s public agencies could go bankrupt. Retail sales grew 0.5 percent over the past year to $37.6 billion, with a 17 percent increase in sales at women’s clothing stores, according to government statistics.

Shopping on credit is popular on this island, where the population of 3.65 million holds more than $22 billion in consumer debt, compared with the $3.3 trillion held by consumers on the U.S. mainland. Laura Ortiz, a sociology professor at the University of Puerto Rico, said consumers she interviewed for her book “Shopping in Puerto Rico” told her they didn’t worry about debt. The view was, “I’ll handle it,” she said.

That shop-until-you-drop mindset is on full display at the Plaza Las Americas, the largest shopping center in the Caribbean. It generates roughly twice the sales-per-square-foot of the average U.S. mall and draws up to 70,000 visitors daily.

Angel Diaz, who was shopping there with his girlfriend one recent afternoon, said they can’t wait to explore the new Mall of San Juan. “They say the economy is bad, but the stores are always full,” the teenager said.

Developers are betting the trend will continue at the new two-story, 650,000-square-foot mall. It has more than 70 stores, many new here, including Lululemon and Jimmy Choo. Two high-end department stores anchor the shopping center: Puerto Rico’s first Nordstrom, where shoppers can choose from 7,000 different lipstick colors (“We heard that people in Puerto Rico love their cosmetics,” spokeswoman Amy Jones said), and Saks Fifth Avenue, which has mother-of-pearl walls and polished white Italian marble floors.

Developers expect to attract strong sales from a mix of tourists and locals because of its proximity to the main international airport and Old San Juan, where cruise ships dock.

But some Puerto Ricans wonder why the mall was built next to the Ernesto Ramos Antonini housing complex, among the island’s most violent. It also borders on a working class area.

“You would think a mall of this kind would be located in a high-end neighborhood,” said David Caleb Acevedo, a translator. “I don’t know how good this will be for an island whose economy is in such a bad state.”

Other malls that tried to attract a high-end clientele have failed, and stores including Macy’s have had to lower prices and modify products for consumers, said economist Jose Villamil, CEO of the Puerto Rican consulting firm Estudios Tecnicos.

He said it’s remarkable that retail sales remain robust amid a shrinking economy, but maintained there’s not a huge demand for luxury items. “People erroneously assume that Puerto Rico’s high-end market is bigger than it is,” he said.

Still, some who live nearby hope to benefit from the new mall. In October, police officer Angel Aviles bought a small sports bar within walking distance, hoping to attract workers who cannot afford to eat there.

“If that mall weren’t there, I would have never done this,” he said.

By Danica Coto.

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BoF Cover Star Stella McCartney on Building a Sustainable Luxury Brand

LONDON, United Kingdom — In a nondescript building tucked away on a quiet street in West London, Stella McCartney and her team are comparing the properties of a real leather shoe to the various non-leather swatches being considered for her brand’s winter 2015 shoe collection. McCartney is wearing a cream blouse, open at the neck, with faded blue jeans and non-leather boots. Pinned up against the wall are boards labeled: “Heels,” “Mules,” and “Cutouts.” A large white table is scattered with moulds, lasts and uppers — as well as scissors, ID cards, empty glasses and a partially-eaten package of organic dark chocolate.

Women of differing ages, ethnicities and body types come in and out of the room with a constant flow of new ideas and creative references while McCartney acts as a kind of real-time editor, deciding what colours, materials and shapes feel right for the upcoming season. An assistant is frantically taking notes to capture McCartney’s feedback while snapping digital photos of the things that catch her eye.

“That non-leather thing was doing a bit of a leather thing,” McCartney declares obscurely, at one point, caressing one of the samples and then draping it on top of her foot. “With our pull-ons, there’s always been a bit of a fit issue. So I what I found really exciting about Autumn was that they fitted.”

She is speaking in Stella McCartney code, but her team seems to understand exactly what she means. They go on to debate the shape of the toe, the size of the heel and whether this particular shoe shape would work best for day or evening. But soon, talk returns to the materials. According to the brand’s stated values, Stella McCartney does not use any animal products — no leather, no fur, no skins, no feathers.

At this point, McCartney turns to me, a fly on the wall. “We always have this conversation about our non-leathers. We are, of course, the most ethical and loving company in the fashion industry,” she says half-joking, almost mocking herself, “but at this stage I always have to apologise to my designers and creative team for the limitations [this creates].”

“It has the texture of a real leather,” says one team member, examining a new fabric sample brought in by one of the junior designers. Even now, almost 15 years after the Stella McCartney brand was born, there are still limited non-leather materials suitable for making high-fashion accessories.

“Material is hard,” says McCartney, in her office, after the design meetings have concluded. “Clearly leather is a great material. It wears well. It moves. You can wash it. It’s real. One of the hardest things is to design something that is desirable and then to take that design and make it in a way that is not conventional. We’re sourcing our own material, developing our own material — we’re not using PVC.”

McCartney’s business was launched in 2001 in a 50/50 joint-venture with Kering, the French luxury conglomerate formerly known as PPR and, before that, Gucci Group. Kering does not break out Stella McCartney’s revenues and profits, but recent growth in the brand’s UK business is an interesting proxy for the company’s overall momentum. Between 2010 and 2013, top line revenues at Stella McCartney Ltd, which includes two directly-operated stores, grew by more than 60 percent to £28.4 million (about $44 million), with profits of £3.4 million (about $5 million), according filings at Companies House in London.

But this represents only a fraction of the total Stella McCartney business, operated through several other companies incorporating 30 directly-operated stores, 20 franchised stores and 600 wholesale accounts in more than 70 countries around the world. Market sources estimate annual global revenues at around $150 million to $200 million, though the annual retail value of Stella McCartney products is likely significantly more, through branded collaborations with Procter & Gamble for beauty, Adidas for sportswear and Bendon for lingerie.

In January of this year, the Stella McCartney business was the subject of a Harvard Business School case study, a prestigious honour reserved for companies employing innovative business models that the world’s top business students can learn from.

In short, McCartney has built the world’s first sizable global fashion brand rooted in sustainability. But how did she do it?

To read the full story, pre-order your issue of the fourth special print edition of The Business of Fashion, available March 30th.

7 ISSUES FACING FASHION NOW will be available at select retailers, including Antonia (Milan), Browns (London), Colette (Paris), Corso Como (Milan), Dover Street Market (London), McNally Jackson Books (New York), Mulberry Iconic Magazines (New York), NK Store (Sao Paulo), The Goodhood Store (London) and Wardour News (London).

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Massimo Giorgetti Appointed Creative Director of Emilio Pucci

LONDON, United Kingdom — Florence-based fashion house Emilio Pucci has named Italian designer Massimo Giorgetti its new creative director, effective in April. Giorgetti will show his first collection for the house during Milan Fashion Week in September.

Giorgetti will continue to design for his own Milan-based brand, MSGM, dividing his time between the two Italian cities. MSGM, a visually bold, contemporary label which Giorgetti launched in 2009, posted revenues of $45 million last year and the brand’s aesthetic shares with Pucci a focus on colourful prints.

The appointment is part of a move to inject a more youthful spirit into Pucci and orient the house away from red carpet dressing towards daywear offering. The house was founded in 1947 and is owned by LVMH.

LVMH acquired Emilio Pucci in 2002 for €38 million euros ($35.9 million) and the last two years have seen the luxury conglomerate push through with plans to increase Pucci’s global store count (currently approximately 50 boutiques), as well as expand into product categories such as shoes, bags and eyewear, inking a licencing deal with luxury eyewear company Marcolin Group in June 2014.

Today’s news follows the departure of Peter Dundas, who showed his last collection for Pucci earlier this month, having served as creative director at the brand for seven years. Yesterday, it was announced that Dundas has joined Roberto Cavalli, another Italian fashion house, as its creative director.

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Peter Dundas Named Creative Director of Roberto Cavalli

LONDON, United Kingdom — Peter Dundas has been appointed the new creative director of Italian fashion brand Roberto Cavalli, effective immediately.

The Norwegian designer will present his first collection for the house at Milan Fashion Week in September. Earlier this month, Dundas presented his final collection for Emilio Pucci, where he served as creative director since 2008.

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Patek Philippe $2.5 Million Watch Sells Out

GENEVA, Switzerland — Patek Philippe’s $2.5 million Grandmaster Chime watches sold out just months after they debuted, a sign of the buoyancy at the top of the luxury-goods market as buyers paid as much for a timepiece as they could have spent on a yacht.

Six of the pieces commemorating Patek Philippe’s 175th anniversary have been ordered, and the seventh will be showcased at the Geneva-based watchmaker’s museum. The line is still in production, and the third will be delivered to its new owner next month, Chairman Thierry Stern said Wednesday in an interview at the watch fair in Basel, Switzerland. It will take two years to make all of them.

“It’s just a matter of having the cases, which is very difficult because it’s hand-engraved,” Stern said at the Baselworld trade show, where the largest watch and jewelry brands are showcasing their latest creations to more than 150,000 expected attendees.

The Grandmaster Chime, which rings out the time, displays two time zones and adjusts for leap years, costs about as much as a 64-foot Italian-made Azimut yacht with oak and leather interiors and a walk-in closet. While the Swiss watch industry has been suffering a slowdown in demand, Patek Philippe has been expanding and earlier this year unveiled a 450 million-franc ($452 million) investment plan.

“Patek is often seen by collectors as a sort of holy grail,” said Bassel Choughari, an analyst at Berenberg in London.

Limited Production

Patek Philippe plans to make 58,000 watches in total in 2015, an increase of 5 percent from last year and more than 30 percent higher than its capacity five years ago. The family- owned watchmaker doesn’t plan to boost annual production beyond 100,000, Stern said.

“Quality would be hit,” he said. “We’re not made for that.”

The Swiss watch industry is reeling from a slowdown in export growth to 1.9 percent last year, down from as much as 22 percent in 2010.

In January, Patek Philippe announced plans to add a 50,000 square-meter building to its production site in Plan-les-Ouates near Geneva. The facility will give the watchmaker sufficient space for the next 20 to 30 years, and will also be used for service and training. The company fixes 70,000 to 80,000 timepieces a year, its chairman said.

“We’ve been here since 1839, so there’s a lot of watches around the world,” Stern said. “It’s important to me to say, yes, we’re still able to fix all of them.”

‘Currency Problem’

The day after Patek Philippe announced the 450 million- franc investment, the Swiss National Bank made its shock decision to lift the cap on the euro, which led to a surge in the franc.

To adjust to the currency fluctuations, the brand, whose least expensive watches sell for about 11,000 francs, last month cut prices in the Americas, Switzerland and Asia, while raising them in Japan and Europe.

“It’s 100 percent a currency problem,” Stern said. “Demand is quite high, but we had to adapt our prices, sadly. You’ve got to see it as a long-term investment.”

Patek Philippe is the maker of the most expensive timepiece ever sold in auction. The Supercomplication pocket watch, finished in 1933 on custom order for New York banker Henry Graves Jr., fetched 23.2 million francs at a Sotheby’s auction in Geneva in November.

By: Corinne Gretler and Tara Patel; editors: Matthew Boyle and Thomas Mulier.

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Lines Form at Chanel’s China Stores After Price Cuts

HONG KONG, China — As Lily Li waits in line outside the Chanel SA store in Hong Kong’s central financial district, the nearby Chloe, Berluti and Ralph Lauren stores stand almost empty.

Li is among about 40 shoppers seeking to grab a bargain after Chanel started cutting prices in the region to account for a yearlong weakening of the euro that has driven Asian shoppers to cities such as Paris for their luxury purchases. Some didn’t make it inside, being turned away by a store employee because their chosen item had already sold out.

“It would have cost me more than HK$37,000 ($4,700), but now it’s HK$10,000 less,” said Li, 30 minutes into her wait behind 10 other shoppers for a black Boy Chanel bag. “I was planning to go to Europe to buy handbags, but there’s no need to travel there to shop now.”

Chanel and luxury Swiss watchmaker TAG Heuer said this week they will adjust prices globally because of currency fluctuations. A weakening euro has widened the gap between the price of items sold in China and Europe to an all-time high, with soft luxury-goods costing as much as 70 percent more in the Asian country, according to Exane BNP Paribas analyst Luca Solca.

“As the price cut between Europe and China gets more extreme, this prompts the Chinese consumers to buy abroad, either when they travel or through professional daigou agencies,” London-based Solca said, referring to the bulk buying groups. “Brands are not particularly keen to see a massive transfer from one region to the other.”

Struggling Economy

The euro has plunged 24 percent against the dollar over the past 12 months. European Central Bank President Mario Draghi is debasing the region’s currency by flooding its struggling economy with 1.1 trillion euros ($1.2 trillion).

The Federal Reserve is also moving closer to raising interest rates, making the dollar more attractive. Goldman Sachs Group Inc. predicts the divergence in monetary policy will send the shared currency lower, extending this year’s 12 percent slide.

Chanel’s price adjustments will extend worldwide on April 8, the company said. The price of its iconic 11.12 and 2.55 bags, as well as Boy Chanel bags, will increase by 20 percent where they are sold in euros, the company said. Prices of the same bags in China will fall by more than 20 percent. Korea, Vietnam, Thailand and Russia will also see prices drop, while prices will remain stable in Japan, the U.K., U.S. and Canada.

TAG Heuer

At a Chanel store in Shanghai’s Lujiazui financial district, where the price revisions have already been made, a black leather Chanel 2.55 bag cost 29,800 yuan ($4,783), while a Boy Chanel bag cost 26,000 yuan.

TAG Heuer, owned by LVMH Moet Hennessy Vuitton SA, said it will cut prices internationally due to the strong Swiss franc.

The price revisions will help keep locals shopping at stores in their home countries and also help brands manage inventory, said Deborah Aitken, London-based analyst for Bloomberg Intelligence.

“If a currency swings hugely and you don’t adapt price when travelers travel, a high-tag luxury purchase which is 10 to 20 percent lower elsewhere often pays for the trip abroad,” Aitken said. “But then you have inventory and empty stores in the original location.”

Chanel and TAG Heuer had raised prices significantly in China in recent years, so the revisions represent a normalization of pricing, said Exane BNP Paribas’ Solca. Even so, the move will put some pressure on other luxury brands to follow suit, particularly with handbags and watches, according to Rahul Sharma, managing director of investment firm Neev Capital in London.

“It’s quite likely that you’ll see some of them addressing this gap, slightly increasing the price in Europe and lowering it elsewhere,” Sharma said.

By: Liza Lin, Jill Mao in Hong Kong and Jillian Ward; editors: Stephanie Wong and Paul Jarvis.

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Hugo Boss $2.7 Billion Return is the Biggest for Permira

METZINGEN, Germany — Fashion retailer Hugo Boss, an investment emblematic of the difficulties facing its private-equity owner Permira Advisers during the financial crisis, proved to be one of the company’s biggest winners of recent years.

Permira sold its remaining 12 percent stake in the Metzigen, Germany-based fashion chain this week, netting its backers 2.5 billion euros ($2.7 billion). Including the proceeds from the 2012 sale of Valentino Fashion Group, Permira’s clients will receive more than 2.3 times their total 1.1 billion-euro ($1.2 billion) investment, said Martin Weckwerth, a partner at the London-based firm.

Hugo Boss is the biggest return, in absolute terms, from any investment in Permira’s fourth fund, a 9.6 billion-euro pool raised in 2008, so far, a spokeswoman for the company said. The transaction has helped the fund, which saw its valuation crumble to 39 percent of the backers’ original commitments in 2008, return to profit.

The sale marks a turnaround for an investment that Permira had written down by as much as two-thirds as consumer spending dried up during the financial crisis. Permira even had to step in to buy some of the firms’ debt as it plunged to 38 percent of face value.

Permira, which inherited Hugo Boss in 2007 as part of a 5.3 billion-euro purchase of Valentino Group, made the returns by opening more stores, expanding in the U.S. and China, and shortening lead times between design and point of sale. Private equity firms traditionally profit by selling companies’ real estate or using debt to pay themselves dividends.

“The business was originally 70 percent wholesale, 30 percent retail and the company had around 200 stores,” Weckwerth said. “Now its 55 percent retail and the company operates more than 1,000 stores. It reflects the strategic story of shifting what was originally a branded manufacturer towards today a customer focused branded retailer.”

Store Growth

The geographic spread of the company also changed with Chief Executive Claus-Dietrich Lahrs, who replaced Bruno Saelzer in 2008, doubling the number of U.S. stores and tripling the proportion of the company’s sales coming from China to 9 percent.

The shift, which included opening a flagship store in the Taipei 101 skyscraper in 2012, saw sales rise by 60 percent from 2007 to 2.6 billion euros last year. Earnings before interest, taxes, depreciation, and amortization more than doubled to 591 million euros from 275 million euros in the period.

Debt Deal

The drop in the company’s value prompted Permira to negotiate with its lenders over the size and structure of a 2.5 billion-euro debt load. Rather than accept a dilution of its stake through a debt-for-equity swap, Permira spent a further 300 million euros buying loans at the 38 percent of face value from lender Citigroup in 2009.

“We took the opportunity as our view at the time was this was a great company,” Weckworth said. “Other people had less confidence and we could buy the debt back at a very good price.”

By 2013, Permira felt that the company’s transformation was complete, having sold Valentino to a Qatari investment group for 710 million euros a year earlier, and began examining sale options, said Jorg Rockenhäuser, a partner at Permira.

Shares Surge

Given that Hugo Boss had a minority public shareholding throughout Permira’s ownership, which was a legacy of takeover rules in Germany that made it difficult to force minority investors to sell their holdings, a gradual sale of shares by Permira was always the most likely, Rockenhäuser said.

The firm sold a 6.4 percent stake made up of preferred shares in 2011, disposed of about 10 percent in May 2013 and sold an 11 percent stake to institutional investors in September last year. Hugo Boss’s shares surged 121 percent since Permira purchased the company in May 2007, compared with a 91 percent increase for the German DAX Mid-Cap Index.

“Permira added significant operational and strategic value to Hugo Boss,” said Lynn Fordham, chief executive of SVG Capital and historically Permira’s largest backer. The firm “significantly increased gross margins and laid the foundation for its continued success.”

By: Kiel Porter; editors: Mark Bentley and Edward Evans.

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Alibaba Leaning Away from Investing in Snapdeal

BENGALURU, India — Alibaba Group Holdings Ltd may scrap plans to invest in Indian online marketplace Snapdeal, technology website Recode reported, citing a person who was familiar with the matter.

Last week, a person informed about the deal had told Reuters that Alibaba was in talks with Snapdeal over a potential cash investment in what could have been the Chinese e-commerce giant’s first direct investment in India.

Alibaba has held discussions with Snapdeal about a possible investment, but the Chinese company is leaning away from investing in Snapdeal right now, Recode said.

Snapdeal competes in India with bigger rivals Flipkart.com and Amazon.com, and media reports had said it was seeking $1 billion in its latest funding round to fuel growth.

Alibaba and Snapdeal’s talks, however, did not involve a deal close to the $1 billion number reported, Recode cited the source as saying.

By: Anet Josline Pinto.

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American Apparel Delays Annual Report to Rework Lending Agreement

NEW YORK, Unites States — American Apparel Inc. delayed the filing of its annual financial report as it reworks a lending agreement to allow it to take on more debt provided by a hedge fund.

Discussions are continuing with Capital One Financial Corp. to change the terms of a credit facility and allow a $15 million loan from Standard General, the Los Angeles-based retailer said today in a filing. Standard General agreed to a $25 million capital commitment last year in exchange for board seats, and used the first $10 million to buy an American Apparel loan.

The retailer, which is in a battle with ousted founder Dov Charney, reported some estimated annual results in the filing. Sales fell about 3.9 percent to $609 million. That would imply revenue fell 9.2 percent to $153.6 million during the fourth quarter, the steepest quarterly drop in four years.

American Apparel rose 1.2 percent to 77 cents today in New York. The shares have declined 25 percent this year.

The retailer estimated that its annual net loss shrank to $69 million, or 43 cents a share, from $106 million, or 96 cents, a year earlier.

The chain, which has raised money multiple times in the past few years, said it had $8 million in cash at the end of last year and $13 million of borrowing capacity under the facility with Capital One. By March 13, the available capacity declined to $6 million.

The $15 million from Standard General will be used to make a debt payment. On April 15, the company owes about $14 million of interest on its bonds.

By: Matt Townsend; editors: Nick Turner, Kevin Orland and James Callan.

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Quiksilver Reports First Quarter Loss

HUNTINGTON BEACH, United States — Quiksilver Inc. on Tuesday reported a fiscal first-quarter loss of $10.8 million, after reporting a profit in the same period a year earlier.

On a per-share basis, the Huntington Beach, California-based company said it had a loss of 7 cents. Losses, adjusted to account for discontinued operations, were 11 cents per share.

The results beat Wall Street expectations. The average estimate of six analysts surveyed by Zacks Investment Research was for a loss of 14 cents per share.

The skateboard and surfing-themed clothing maker posted revenue of $340.9 million in the period, also topping Street forecasts. Six analysts surveyed by Zacks expected $336.8 million.

For the current quarter ending in April, Quiksilver said it expects revenue in the range of $340 million.

The company expects full-year revenue in the range of $1.38 billion to $1.45 billion.

In the final minutes of trading on Tuesday, the company’s shares hit $1.70. A year ago, they were trading at $8.16.

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LVMH Announces Eight Finalists for 2015 Prize

LONDON, United Kingdom — Today, BoF can reveal the eight finalists for the 2015 LVMH Prize, an award set up in 2014 that grants a young fashion designer €300,000 and a year of mentorship from executives at the luxury conglomerate.

The finalists are: Arthur Arbesser, Coperni, Craig Green, Faustine Steinmetz, Jacquemus, Marques’ Almeida, Off-White c/o Virgil Abloh and Vetements.

The selection was made by a panel of forty-five international fashion experts, including renowned fashion critic Cathy Horyn, Vogue China editor Angelica Cheung and Linda Fargo, senior vice president of Bergdorf Goodman, who met the 26 shortlisted designers in Paris earlier this month.

Of the eight finalists, two are menswear brands: Craig Green and Virgil Abloh. Meanwhile, French label Jacquemus, designed by Simon Porte Jacquemus, is back for a second time, having been selected as a finalist in 2014.

Three of the designers are based in Paris. Craig Green, Faustine Steinmetz; and Marques’ Almeida are based in London. Arthur Arbesser and Off-White c/o Virgil Abloh, both based in Milan, complete the list.

“The designers who have entered the LVMH Prize 2015 have truly surprised and impressed us with their diversity, their ideas and enthusiasm. Although very young, they’re all extremely talented,” said Delphine Arnault, executive vice president of Louis Vuitton and daughter of LVMH chairman Bernard Arnault, in a statement. “The level of the competition is so high, I have no doubt we will see some of the semi-finalists again in the years to come.”

The winner of the 2015 Prize will be announced on May 22nd at the Louis Vuitton Foundation after deliberation by a jury comprised of nine creative directors from LVMH-owned fashion houses, as well as Delphine Arnault, Jean-Paul Claverie, advisor to Bernard Arnault and head of corporate philanthropy for LVMH, and Pierre-Yves Roussel, chairman and CEO of the LVMH Fashion Group.

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Target’s Shares Lift to All-Time High

MINNEAPOLIS, United States — Target’s stock hit an all-time high on Monday as the discount retailer moves forward with shuttering its unprofitable operation in Canada and the fallout recedes from its damaging 2013 data breach.

Shares of Target Corp. rose $1.19, or 1.5 percent, to $80.37 in afternoon trading after climbing as high as $80.81 earlier in the day.

The upbeat momentum reveals optimism for a company after years of organizational missteps in what has become a much more competitive market.

Earlier this month, the company announced that it will lay off about 1,700 workers, eliminate another 1,400 unfilled positions and cut up to $2 billion in costs. It will also focus more on technology to boost its online sales growth. The latter move will involve about $1 billion aimed at beefing up business from shoppers who are more likely to go online for products.

Problems with the company’s ill-fated Canadian venture began in in early 2013 and eventually involved 17,000 jobs and 133 stores. Costly retail regulations and a failure to win over Canadian consumers turned the move into a bust. The company will shut down the first 16 of its stores there starting next week.

At the end of 2013, hackers stole millions of customers’ credit-and debit-card records from the company in what became a costly and image-damaging incident.

Brian Cornell, a former PepsiCo executive, took the reins as CEO in August of 2014 and was tasked with reclaiming the retailer’s image. His plan to make the company more nimble and agile also involves sprucing up key departments including fashion and children’s products. The plan also involves reimagining the grocery area, with more of a focus on organic and locally produced products.

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Inside ‘Enhanced’ Savage Beauty Show

LONDON, United Kingdom — “Alexander McQueen: Savage Beauty,” which attracted a record-breaking number of visitors to New York’s Metropolitan Museum of Art in 2011, making it the most popular fashion exhibition in history, touched down at the Victoria & Albert Museum in London last week, in what was nothing less than a spiritual homecoming of epic proportions. “London is where I was brought up. It’s where my heart is and where I get my inspiration,” said the late ‘Lee’ McQueen in January of 2000.

But was McQueen’s work of sufficient significance to merit not one, but two major exhibitions at cultural institutions of this calibre?

Dress from Widows of Culloden Collection, Autumn/Winter 2006 | Source: firstVIEW

Claire Wilcox, curator of the V&A exhibition (who worked alongside Andrew Bolton, the exhibition’s original curator) said the museum viewed McQueen’s work as art. “[Savage Beauty] has three big galleries. We have never given three galleries to a fashion exhibition before. And the exhibition certainly merits it,” she said. “The show Andrew Bolton created for the Met was totally brilliant. It had freshness and an emotional frisson, but what we are doing is exceptional on many levels. We have enhanced the original show by giving it space,” she continued. “We have also made subtle modifications to the Met show to include the perspective of time passing since McQueen’s death. It is the Met, but enhanced for another city, another time, another mood.”

Wilcox gives me an insider’s look at how much work goes into an exhibition of this scale. “We have been repairing garments and dressing figures since autumn,” she confided. “We have treated his work with respect and understanding in every way. We need up to seven people to move just one piece. After all, we view this exhibition as a historical survey of a career.”

Duck feather dress from The Horn of Plenty collection, Autumn/Winter 2009-10 | Source: firstVIEW

The career of Lee McQueen is beyond compare. Literally, no one approached dress as he did. Almost like tracking the animals and birds that meant so much to him, he would stalk an idea instinctively. But upon entering the exhibition, the first thing that strikes you is not just the beauty of the clothes, but the way in which they are displayed.

Each room of the show has its own carefully crafted synergy between clothes and setting, providing a three-dimensional walk through the many complex elements of the designer’s imagination. And as I progressed through the exhibition, my admiration for its curatorial tour de force grew and grew, until I came to the show’s central room, called the “Cabinet of Curiosities.” It is absolutely the jewel in the crown of the entire enterprise. It says in brief everything about McQueen’s creativity we need to know and should really be made a permanent feature of the V&A for the way it successfully delivers on McQueen’s famous comment: “I’m going to take you on journeys you’ve never dreamed were possible.”

Portrait of Alexander McQueen in 1997 | Photo: Marc Hom

“The public are fascinated by McQueen and eager to find out more. We are giving them the full experience of seeing the clothes up close. We are also recreating the atmosphere of the actual shows,” said Jonathan Ackroyd, chief executive of the Alexander McQueen brand, which collaborated closely with the V&A on the exhibition.

I hope that the fecundity of the designer’s imagination will make visitors to the V&A think about the link between beauty and horror, as the designer himself did. Indeed, this exhibition is about so much more than beautiful clothes. And, in my opinion, it shows a line of thinking that should really be picked up and developed.

My answer to the question I posed at the beginning of this piece is, I hope, clear: Alexander McQueen deserves a major exhibition such as this — and so do we.

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France Plans to Ban Advertising with Anorexic Models

PARIS, France — France’s health minister says she supports plans to criminalize the use of advertising with anorexic models in France.

The measure would put France, a world capital of fashion, among countries like Israel and Spain to crack down on the glorification of dangerously thin models.

Socialist lawmaker Olivier Veran wants to add language to an upcoming health reform bill to make it illegal to employ models deemed to have an eating disorder.

A second would make it a crime to glorify “excessive thinness,” which would target pro-anorexia websites. It would be punishable by up to one year in prison and 10,000 euros ($10,575) in fines.

Veran was expected to propose the amendments on Monday, part of an overall health reform bill to be presented in parliament’s lower house on March 31.

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Top 10 Shows Autumn/Winter 2015

Chinese Makers Roll Out Wave of Apple Watch Lookalikes

BEIJING, China — A month before Apple Inc.’s smartwatch hits the market, China’s thriving copycat manufacturers are selling lookalikes, some openly advertised as Apple copies.

“Apple Smart Watch with Bluetooth Bracelet,” says one vendor on Alibaba Group’s popular Taobao e-commerce website.

Photos on the vendor’s page appear to be the real Apple Watch. It says features on the Chinese version include text messaging and a music player. It starts at 288 yuan ($45), or one-eighth the $349 price of the cheapest Apple Watch.

Alibaba, which listed on the New York Stock Exchange last year after a record initial public offering, has faced criticism in the past for hosting the sale of counterfeit goods. It says it has been taking steps to reduce the problem.

The flood of “me too” smartwatches reflects China’s mix of skilled electronics manufacturers and a growing consumer market for bargain-price style.

Most of the world’s personal computers and mobile phones are assembled in China. But this country’s own companies are only starting to develop design skills and the ability to create breakthrough products.

That has led to the rise of an industry known as “shanzhai,” or “mountain forts” — hundreds of small, anonymous manufacturers that quickly copy the design or features of popular foreign mobile phones or other products at a fraction of the price.

At least eight vendors on Taobao advertised watches as “Apple Watch” or “Apple Watch lookalike.” Most said they were compatible with Apple’s iOS or Google Inc.’s rival Android operating system.

One vendor jokingly used Chinese slang for a vulgar rich person, offering an “All-New Apple Tyrant Gold Mobile Phone-Supporting Watch” for 288 yuan ($45).

Eight vendors failed to respond to questions from The Associated Press sent through their Taobao accounts.

Asked whether it had taken action against any sellers, Alibaba said in a statement, “Alibaba Group is dedicated to the fight against counterfeits. We work closely with our government partners, brands and industry associations to tackle this issue at its source. We also utilize technology like data mining and big data to scrub our platforms of counterfeits.”

Alibaba faced controversy in January after a Chinese government agency accused the company of lax oversight and allowing vendors to sell counterfeit goods on Taobao. The two sides settled their dispute a few days later. The agency said its report had no legal force and Alibaba promised to tighten its oversight of vendors.

Apple, based in Cupertino, California, says buyers in China and Hong Kong can pre-order its watch beginning April 10, the same day it takes orders in the United States, Japan, Britain, France and Germany.

Most previous Apple products were released in China weeks or months after other markets. That fueled a trade in iPhones that were smuggled in for sale to gadget fans who were willing to pay a premium.

Apple lookalikes also are on sale in markets in the southern city of Shenzhen, “the mainland’s best place to shop for … hi-tech knockoffs,” according to the Hong Kong newspaper The South China Morning Post.

“Shanzhai Apple Watches in Shenzhen Less Than 1 Day After Launch,” said a headline on Internet portal Sohu.com.

By: Joe Mcdonald and Zhao Liang.

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Cambodia Garment Workers Face Routine Rights Abuse

PHNOM PENH, Cambodia — Cambodia’s government and global clothing brands need to do more to protect garment workers from abuses such as forced overtime and discrimination, a rights group said.

Many factories unlawfully use short-term contracts to avoid paying benefits and indiscriminately fire workers, and verbal abuse and sexual harassment is common in the female-dominated industry, Human Rights Watch said Thursday in a report titled “Work Faster or Get Out.” Both the government and global producers need to commit to enforcing the law and ending abuse, the group said.

“Cambodian women working in the garment industry face a daily onslaught of harassment and abuse, and when they try to defend their rights by forming a union, they often get fired,” Phil Robertson, the group’s deputy Asia director said by e-mail.

“The problem is factory owners know they can get away with it because the government’s enforcement of the labor law is abysmal and far too many international brands are primarily interested in avoiding responsibility for the lousy conditions faced by workers making their clothes.”

Surging wages and inflation in China in recent decades has led to a diaspora of low-cost garment production to countries such as Cambodia, Vietnam and Bangladesh, where labor regulations and safety standards are often poorly enforced. Pressure on local manufacturers to accelerate production has also grown as global brands such as Inditex SA’s Zara and Hennes & Mauritz AB’s H&M introduce styles as often as every two weeks to keep customers coming to their stores.

Economic Driver

Cambodia’s garment industry, which employs an estimated 700,000 people and exported $5.3 billion of apparel and shoes in 2013, was thrust into the spotlight in January 2014 when police and soldiers cracked down on workers protesting for a higher minimum wage, killing at least five people. The year before, a shoe factory collapsed, killing at least two workers.

The garment industry has been one of the key drivers of the Cambodian economy, which the World Bank forecasts will expand 7.5 percent this year, the fastest pace in all of East Asia.

The Human Rights Watch report, released in Phnom Penh, was based on more than 340 interviews with garment workers from 73 factories, union leaders, labor rights activists, government officials and representatives of the local clothing industry and international brands.

Anti-Union Practices

Workers at 48 factories supplying international brands told researchers that overtime was forced instead of voluntary as mandated by law. Workers at 35 factories reported anti-union practices, including the intimidation or dismissal of labor leaders. Workers at 30 factories reported abuses specific to pregnant women, such as refusal to renew contracts.

“I used to be exhausted but we just had to work very hard,” said Ku Kam Rein, 32, a former worker quoted in the report who quit when she was five-months pregnant. “I couldn’t go for any health checks. I didn’t have any time to go. We had targets to meet. And I was too scared to ask for permission. I asked the group leader and he asked another leader and that leader refused.”

Despite the legal minimum age for garment workers being set at 15, Human Rights Watch said it documented younger workers in 11 factories. All the workers who reported children at their factories described how managers would order them to hide when visitors came, the group said.

“They told me to hide under the table and put a pile of clothes on us,” Lun Lea, 15, told researchers, noting she had started working when she was 14. “I sat there for so long. We were giggling with the pile of clothes on us. We were also scared that we would be fired. So we tried to keep very quiet when the visitors were there.”

Supply Chain

Researchers found that conditions were worse in factories that take on subcontracting work from other factories, including those that supply to well-known international brands.

“Brands have a critical role in promoting respect for workers’ rights throughout the supply chain,” the report said. “But a combination of poor supply chain transparency, absence of whistle-blower protection, and no information on available support mechanisms — together with a lack of support for remedial measures to protect worker interests in unauthorized subcontractor factories — hamper brand accountability.”

Human Rights Watch called on the government to hold factories accountable for abuse and to change its policies on inspection. It called on brands to publicly disclose their suppliers and to factor in the cost of safety, health and labor compliance into their contracts.

By: Chris Blake; editors: Andrew Davis and Andy Sharp.

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Alibaba Reportedly in Funding Talks with India’s Snapdeal

SHANGHAI, China — Alibaba is in talks with Indian online marketplace Snapdeal over a potential cash investment, a source familiar with the negotiations said, in what would be the Chinese e-commerce giant’s first direct investment in India.

Snapdeal competes in India with bigger rivals Flipkart.com and Amazon.com, and media reports have said it is seeking $1 billion in its latest funding round to fuel growth.

In October last year, Snapdeal secured a $627 million investment from Japan’s Softbank, itself an early backer of Alibaba.

The source, who declined to be named as talks are not public, said on Wednesday that negotiations were “ongoing”, confirming Indian media reports. The source said Alibaba was “looking, but there’s still no deal”.

A second source familiar with the matter confirmed the two sides had spoken in the past and said investor interest was “high”, but gave no detail on any current negotiations.

Snapdeal declined to comment.

Alibaba has been eyeing India for months, but has yet to invest directly in the e-commerce space. Ant Financial, an affiliate of Alibaba controlled by senior Alibaba executives, bought a 25 percent stake in the Indian payment services provider behind Paytm last month.

By: John Ruwitch and Nivedita Bhattacharjee; editor: Muralikumar Anantharaman.

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Quiksilver Delays Earnings Due to ‘Possible Error’

NEW YORK , United States — Quiksilver postponed its first-quarter earnings report due to a possible error, sending shares of the surfing retailer down 8 percent Wednesday.

The company’s audit committee is investigating a “revenue cut-off issue” first noticed by management.

Quiksilver did not immediately respond to a request for comment.

The company was scheduled to post earnings Thursday. It expects to announce a new date for the release later this month. The audit committee will provide an update on the investigation at a March 16 board meeting.

Quiksilver does not anticipate any impact on previously released financial statements, its first-quarter results, or on its guidance.

Quiksilver Inc., based in Huntington Beach, California, also sells clothing and accessories under the Roxy, and DC brands. It has reported a drop in revenue every year since 2012, and revenue is expected to fall again this year, according to industry analysts surveyed by FactSet. In the last 12 months, Quiksilver shares have fallen nearly 80 percent.

Shares fell 16 cents to $1.83.

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