This edition of TextileFuture’s Newsletter will offer you the necessary knowhow to the latest aspects of fashion.
The first feature is entitled “Farfetch plans beauty launch with Violet Grey acquisition”. It is written by guest author Kati Chitrakorn from Vogue Business. It tells the story of the Violet Grey acquisition.
The second item bears the title “LVMH annual fashion sales surge 47 % on US, China” giving you an insight on the business in luxury fashilon. It is written by guest author Laure Guilbault from Vogue Business.
The third feature is the most spectacular one with the newest photographs – all courtesy by the Wall Street Journal Magazine – of the couture shows. It is written by guest authors Jenny Hartman & Alexander Fisher from the Wall Street Journal Magazine.
The team of TextileFuture decided to dedicate this Newsletter on fashion to bring you up to the latest trends. Of course it features also excellent short readings, but bringing the different subjects to the important point.
Have a terrific week and lots of success in your business.
LVMH annual fashion sales surge 47 % on US, China
The luxury conglomerate’s fashion and leather goods division spiked last year despite ongoing pandemic disruptions. CEO Bernard Arnault discussed the metaverse opportunity, acquisitions and what’s next at Louis Vuitton.
By guest author Laure Guilbault from Vogue Business
LVMH finished 2021 with a bang as the pandemic rebound continued, buoyed by strong sales in the US and Asia.
The company’s fashion and leather goods category smashed expectations in the fourth quarter, with sales up 51 % versus pre-pandemic levels in 2019. (Expectations, according to Visible Alpha, were an increase of 38 %.) For the full year, the division was up 42 % versus 2019 and 47 % over 2020, with LVMH total annual sales reaching a record-level EUR 64.2 billion.
“This performance is all the more remarkable that the year 2021 was heavily affected by the global pandemic,” LVMH chairman and CEO Bernard Arnault told analysts and reporters on Thursday night. He also noted operating cash flow exceeded EUR 13 billion one year following LVMH’s USD 15.8 billion Tiffany acquisition. Arnault was in good spirits during the company’s annual earnings presentation, riffing on his pride at the work of the new Tiffany management team (including his son Alexandre Arnault, who is leading the revival at the brand), the potential of the metaverse and his respect for late designer Virgil Abloh.
The US and Asia were the key growth drivers, up 30 % and up 40 % in the fourth quarter 2021 versus the fourth quarter of 2019 respectively. LVMH chief financial officer Jean-Jacques Guiony noted the “steady improvement” in Europe, where sales rose 1 per cent in the fourth quarter versus the same period in 2019.
The US and Asia were the key growth drivers, up 30 per cent and up 40 per cent in the fourth quarter 2021 versus the fourth quarter of 2019 respectively. LVMH chief financial officer Jean-Jacques Guiony noted the “steady improvement” in Europe, where sales rose 1 per cent in the fourth quarter versus the same period in 2019.
LVMH is leading luxury’s pandemic bounce back. Its 2021 performance underscores an ongoing pattern over the past two years in luxury fashion: the biggest players have fared best thanks to house cachet and marketing budgets. Sales at Richemont’s jewellery maisons, including Cartier and Van Cleef & Arpels, rose 57 % in its third fiscal quarter from October to December, versus the same period in 2019.
“The earnings season has so far demonstrated that category leaders are smashing it: Richemont in jewellery and LVMH in leather goods,” wrote Exane BNP Paribas luxury goods analyst Antoine Belge. Consensus expectations for Kering in the fourth quarter of 2021 are an 11 % increase in constant currency relative to the fourth quarter of 2019 with Gucci at a 4.2 % increase, per Visible Alpha.
Speaking to the fashion unit’s performance, Arnault said that “the credit is first and foremost to Louis Vuitton, which is far more than just a fashion company. In fact, it’s not a fashion company. It’s a culturally creative company,” he said. The dynamic teams and designers have “taken this brand from success to success whilst attracting the youngest as well as the most mature of our customer segments in the world.”
On the drivers of the performance in Western countries and China, Arnault reiterated that, “Louis Vuitton sells culture to Americans and Europeans,” and noted that the Morozov exhibition currently on view at Fondation Louis Vuitton has attracted 800000 visitors so far. “The reasons why our products, our brands are extremely appealing: we sell a lot more than just fashion. I think that’s the most important thing.” He added: “Indeed, I keep saying this, Louis Vuitton is not a fashion company. And all this is very attractive to our Chinese customers.”
Asked how far along the house is in the process of replacing Virgil Abloh, the artistic director of menswear for Louis Vuitton who died in November, Arnault said: “Virgil was an extraordinary creator, more than a fashion designer. He was a man of culture. His last show that he had actually designed prior to his death was a cultural event. It was not just a fashion show. We are still mourning him. Once that [mourning period] is behind us, we will consider the next move.”
Dior also delivered “remarkable growth” and the reopening of the Montaigne flagship early March will be an “unforgettable event”, according to Arnault. He also called out Fendi, Celine and Loewe. “Fendi has been a big success from day one, but accentuated since the arrival of Kim [Jones]”, Arnault said. He called Celine “an exceptional brand with a very talented designer” with “one of the fastest growth rates of all fashion brands in the world”, while Loewe is “a great brand, growing strong with JW Anderson.”
With Tiffany & Co now consolidated, LVMH’s watches and jewellery division grew 167 per cent in 2021 versus 2020. LVMH doesn’t break out brand sales, but Exane BNP Paribas says the company reached sales of EUR 4.32 billion. Arnault called it a “major turnaround”. “People said, ‘You are paying a lot for that company.’ But I think it was not expensive at all. I still think in terms of value, this was a great acquisition.” More acquisitions will be approached carefully: “We are not in a hurry. We have made a big one with Tiffany. For a good acquisition, you must not be looking for it but be opportunistic,” Arnault said.
With other luxury brands minting NFTs and creating digital worlds, will LVMH embrace the metaverse? “I’m sure this will probably have a positive effect if things are done properly,” Arnault said when asked about it. “We are not interested in selling a pair of virtual sneakers for EUR 10. But there may be more relevant applications. We have to see what these applications might be. But again, we are not in the business of selling virtual shoes, and we also have to be wary of bubbles.”
Looking ahead, Arnault is confident, based on January figures. “Nevertheless, we need to remain vigilant. Everyone is talking about inflation […] I don’t expect such an economic crisis. We have just gone through two very challenging years. I’d rather think that things will continue to improve, but we have an advantage on quite a few other groups which is that we have a degree of flexibility on our prices. So in the face of inflation, we have the ways and means to react. And I believe that demand will remain strong for our products.”
Eyes will be on LVMH competitor Kering when the Gucci parent reports results on February 17, 2022. Exane BNP Paribas’s Belge wrote: “These strong beats from leaders and some impressive recoveries at Prada and even Tod’s created a high bar for Kering: if Gucci ‘only’ produces the sequential acceleration anticipated by consensus, the market will probably take the view that Gucci did not narrow its performance gap.”
Farfetch plans beauty launch with Violet Grey acquisition
The luxury e-commerce platform is set to add beauty to its offering with the acquisition of upscale Los An-based beauty retailer Violet Grey.
By guest author Kati Chitrakorn from Vogue Business.
Farfetch has acquired upscale, cult beauty retailer Violet Grey as a precursor to launching beauty this year.
LA-based Violet Grey – viewed as the beauty industry’s answer to legendary Paris fashion boutique Colette – sells luxury, independent brands including Augustinus Bader and Westman Atelier, alongside megabrands Chanel, Giorgio Armani, Estée Lauder-backed La Mer and Tom Ford, using a mix of curation and editorial-rich content, akin to the Goop model. The acquisition, announced today, for an undisclosed amount, is an “important step ahead of the launch of beauty on Farfetch later this year and will form part of our overall beauty strategy ‘palette’,” says Stephanie Phair, chief customer officer at Farfetch. Violet Grey also occupies a storefront on Melrose Place in Los Angeles, and has raised USD 29.2 million to date in financing. The company declined to share annual sales.
Farfetch is betting on Violet Grey’s curated selection of products, content and community-driven strategy to make a mark in the highly competitive global luxury beauty industry, which will reach USD 69 billion by 2025, according to the Bain Altagamma 2021 luxury study. The acquisition means Farfetch could earn access to the kinds of prestigious brands that aren’t sold at Sephora or Cult, and founder Cassandra Grey believes that brands could benefit from the new route to market and the potential to enlarge their customer base.
“This partnership is about taking our seal of approval and community endorsement and helping brands scale and reach some of the most discerning consumers around the world,” Grey says. She will remain on as chair and join Farfetch as global advisor for beauty and co-founder of New Guards Group Beauty, where she will work to incubate and accelerate new brands. Niten Kapadia, previously vice president of operations at Farfetch, will become managing director for Violet Grey. Farfetch declined to comment on the terms of the deal with Violet Grey.
Still, not all Violet Grey brands will be sold on Farfetch. Among those that currently sell on Violet Grey, Susanne Kaufmann, Tata Harper, Kosas and Indie Lee told Vogue Business they had no plans to sell on the platform but declined to specify why. Farfetch declined to reveal which beauty brands it will stock. “It’s about choice so it will be important for us to stock both established brands and cult favourites,” says Phair. “We’ll offer a variety but there will also be an element of curation because we are a luxury destination.”
Violet Grey and Farfetch have been in discussions around how they could work together in 2014. “The conversation started in terms of getting on each other’s radar and recognising the synergies of how much we wanted to innovate and provide the best service to customers,” says Grey, the wife of late entertainment industry executive Brad Grey, who launched Violet Grey in 2014 and turned it into a go-to source for the kind of products found in the medicine cabinets of Hollywood’s most sought-after makeup artists and aestheticians.
Farfetch, founded in 2007, carries fashion, shoes, accessories and home goods from a vast selection of global brands and boutiques. Adding beauty to the mix, would align with other retailers like Net-a-Porter hoping to grab a slice of the “large and attractive,” market, says Hamza Khan, a partner at McKinsey & Company’s marketing and sales practice, who focuses on the beauty industry. Still Farfetch faces new competition from dedicated-beauty marketplaces, rivals like department stores like Selfridges and Neiman Marcus and specialty retailers like Sephora and Cult Beauty (acquired by The Hut Group last August.) Growth hasn’t been steady either. Beauty retail sales dipped globally by roughly 15 per cent in 2020, according to McKinsey’s Khan, but quickly returned to strong growth.
The model for beauty at Farfetch will be via e-concessions model, the same it uses for fashion, where brands have a presence on the site in return for a commission on sales (usually about 30 per cent) but manage their own inventory and logistics.
With the exception of some European department stores, which run a concession model in a physical retail space, e-concessions are highly unusual in beauty, says Sucharita Kodali, VP and principal analyst for retail at Forrester. “In beauty there are very strict distribution agreements, particularly for categories such as haircare. You don’t see a lot of premium hair products widely available on the Internet because they’re restricted to whoever is allowed to distribute the goods.”
Still, e-concessions are a direction that beauty brands will accelerate the move towards in the coming years, McKinsey’s Khan predicts. “In the long run, it should end up working better for brands, who achieve higher control over brand, price and assortment, get access to more data, and develop more direct relationships with consumers.”
Surveys by Farfetch found consumers – particularly Millennial and Gen Z shoppers – prefer shopping in one place when it comes to beauty. “It was never a matter of ‘if’ but a matter of ‘when’,” says Phair. “Farfetch is a community driven business: we have a community of boutiques, of customers, of influencers. We want to take these multiple points of view to beauty, where the customer is already all about individuality and self empowerment,” she explains.
Phair compares the acquisition of Violet Grey to Farfetch’s 2015 purchase of Browns, the London-based fashion boutique founded by influential buyer Joan Burstein. “We have precedent in taking a strong boutique and building up its authority, proposition and point of view, while offering the best of Farfetch’s technology.” Farfetch has used Browns as a laboratory and incubator of ideas, and plans to do the same with Violet Grey, says Phair. Violet Grey added Former Vogue beauty director Sarah Brown in May 2021 to oversee collaborations, scout brands and enlist other experts as the head of the newly launched product development and content hub, Violet Lab.
Finding footing in beauty
Beauty could unlock a new customer for Farfetch. Beauty’s lower price points make it more accessible to a wider audience than fashion and accessories, demonstrating a real opportunity for new customer acquisition, says Phair.
“The acquisition gives Farfetch a solid presence in the beauty market, which is complementary to its existing offer. This should allow it to generate more spend from existing customers and potentially attract new ones too. It also rounds out Farfetch’s fashion credentials by moving them beyond apparel,” says Neil Saunders, managing director of Globaldata’s retail division.
Farfetch first experimented with beauty in 2016 via a partnership with Space NK, a UK-based retailer with a respectable edit of products but limited reach. As part of the tie-up, Space NK had its own area on the Farfetch site where shoppers from across 190 countries could browse and buy brands including By Terry, Chantecaille, Eve Lom and Kevyn Aucoin. But the venture quietly ended as Farfetch prefers a e-concession route to wholesale.
McKinsey’s Khan is curious to see the route brands will take: “Farfetch has a lot of scale online, but some of these beauty retailers have a lot of scale offline.” Another challenge for Farfetch will be navigating exclusivity relationships brands may already have with existing retail partners. “It’s going to come down to operational conversations with brands about reach versus margins. What I would expect they’ve been spending time on is putting together an integrated strategy for the beauty market, including how to engage the major brands; for Farfetch it’s not just a category but a model with a couple of different dimensions to it.”
Farfetch will continue to vet its brands carefully, says Phair. Ultimately, many brands can benefit from Farfetch’s model, she believes. “Beauty is a vibrant category and there are lots of players. We also believe there’s a role for Farfetch to play. The uniqueness of our proposition is complementary to brands’ DTC strategies,” Phair says. “Beauty brands are moving away from wholesale and are focusing on direct distribution and how they can really speak to their customers directly.”
From Schiaparelli to Chanel: The 12 Best Looks of Couture Season
Just in time for a much-needed moral boost, the spring couture collections have arrived.
By guest authors Jenny Hartman & Alexander Fisher from the Wall Street Journal Magazine.
On Thursday January 27, 2022, the spring 2022 couture season came to an end. The shows are typically defined by their ability to stretch the limits of our imagination, and this season, they were also a reassurance that reality can be just as compelling. Looks felt closer to actual clothes than the wearable art of seasons past—although there was still plenty of marabou trim and silver sequins to go around. On the eve of the couture shows, Paco Rabanne and Alaïa showed couture-worthy ready-to-wear collections. Designer Maria Grazia Chiuri’s collection for Dior featured understated silhouettes in a calming palette of creams, grays and blacks. The precision of a tailored Chanel jacket—the brand’s presentation featured Monaco’s Princess Charlotte Casiraghi wearing one as she rode a horse—or the rigorous drapery of a dress at Valentino were further reminders that there’s nothing more glamorous than sartorial restraint. Even at Schiaparelli, as transfixing and escapist as it was, the fantastical elements were tied back to austere pieces that were incontestably real clothes. Below, our 12 favourite looks from the season.
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