Thursday, January 31, 2008

Comments Galore!

TheFashionInvestor has been blowing up with comments on our recent posts, so we pose this question to you, dear reader:

Are you joining the fray?

Be heard! TheFashionInvestor is not just a news site, an opinion site, and a retail investment site. We're a community! Go ahead and comment on any post that interests you--we dare you. If you're feeling extra friendly, email our editor, Patrick (kavanagh DOT patrick AT gmail DOT com) and share stories of your recent purchases, your thoughts, your number one most-favorite item, hell--you could even write him bad poetry for all we care.

Keep it considerate - but whatever you do, keep bringing it, FashionInvestors!

Tuesday, January 29, 2008

Designer Swim

This spring some of the main players in the fashion scene have also released swim lines. Some of the designers include, Marc by Marc Jacobs, Trina Turk, Diane von Furstenberg, Juicy Couture, Ralph Lauren Polo and Milly Cabana (see left). I particularly like the designs by Trina Turk (see right). She mixes fun colors and flattering designs, almost all of her pieces include gold links which would look good on tan skin!
A newcomer to the swim scene is Jessica Simpson, who is apparently dipping her toe in everything from shoes to jewelry. However her designs are bland and unoriginal. The fit however is very good, so I predict that it might sell well, because most women care more about fit than design when it comes to swim. The price range on the Jessica Simpson swimwear collection is also substantially lower than other designers ($40-$60).

Thursday, January 24, 2008

A Response to Louis Vuitton Makes the Right Move

I agree with Jeanna's comments, Louis Vuitton's new designs don't remotely resemble Gucci. It's just their signature Damier canvas in a new palette, like the Damier Azur collection. It doesn't represent real innovation as much as the artificial construction of something new for Louis Vuitton to sell without putting much thought into design and much investment into production, something at which they have become astoundingly good. Time will tell if it achieves the same level of success as the Azur line.

In any case, where will LVMH and rival Gucci Group stand in the face of the changing economy? LVMH has a completely diversified portfolio covering both the high- and low-end, and while many luxury houses across the board are indeed starting to feel the crunch, both the Gucci Group and LVMH have the resources to stick it out. It's true that LVMH does 25.6% of their business is the ailing US market, but Gucci Group itself finds 19.3% of their market here as well, and still Gucci Group is expected to ride high on the continued success of their Bottega Veneta revival. Gucci Group shows that it's possible to survive as a luxury player in the US market, but it requires the right brand with the right product.

What exactly is the right product for LVMH? It's not entirely clear yet. I don't think that this supposedly "freshening up" of the Damier canvas is as remotely important to LVMH as the Richard Prince collaboration for Louis Vuitton, which has received multiple times the publicity thanks to an expensive ad campaign and flashy fashion shows highlighting the collection. LVMH is hoping for a home run along the lines of the Takashi Murakami collaboration that is still making money for them (see the Louis Vuitton boutique that opened in MOCA's Murakami retrospective). In terms of actual innovation and possible financial success, LVMH is placing its bets on that artist collaboration more than the safe bet that the new Damier canvas is sure to be. Both Gucci Group and LVMH are rapidly expanding in India and China with very promising results, instilling brand recognition in countries with low luxury-brand recognition with their logo-laden products and splashy publicity machines like the Richard Prince line. It is a necessary part of their strategies to get the new consumer wanting their products. Even if the US market proves difficult for LVMH, there's no doubt that LVMH will find new markets for their high-margin canvas goods. It's mostly a matter of how rapidly they can replace the failing sectors of the US and Japanese markets with new emerging ones. Any future success in the US and Japanese markets relies on their higher-profile collections, but they certainly don't have as much to worry about as any of the independent fashion houses that don't have the portfolios to stay afloat when the going gets tough. LVMH's success in the short-term evidently relies more on the Prince collaboration and the brand awareness it can build more than anything else right now. I'm anxious to see if that is indeed the "right" product to keep the conglomerate going.

Wednesday, January 23, 2008

Is Rock & Republic In Hot Water?

The buzz about Sundance this past week has been about the state of some popular contemporary denim brands. I'm not even remotely a fan of True Religion, one of the sponsors of a swag suite at the festival, but the brand has generally been successfully in selling their core product - upscale denim with new, on-trend variations every six months or so. The gossip around Sundance has been focused on how Rock & Republic has been faring. While their core product is also upscale, on-trend denim, they have been trying to expand into areas with limited success that has allegedly cut dramatically into their cash flow. With handbag prices reaching $950 and shoes reaching $395, and sunglasses like those pictured above for $350, Rock & Republic is pricing the brand much higher than others in the same contemporary market, including L.A.M.B. and Botkier, among others. The problem is that the brand expanded into apparel and accessories far too quickly. Instead of capitalizing on a growing brand cachet, Rock & Republic instead found themselves with numerous overpriced products with very little consumer awareness. Just as they were experimenting with several new back pocket logos, they also launched their handbag and footwear line. The new logos varied from a popular, lightning-like, angular variation of their classic double-Rs, to a more confusing tri-colored, triple-stitched version of the logo they introduced on their accessories. Too many variations of the brand's logo can prove confusing for the customer, working against the rather unsubtle, nearly garish effect of their bestselling, original double-Rs. While this gossip may just have been propagated especially strongly because of True Religion's dominance at Sundance, Rock & Republic's clearly uncontrolled brand expansion is certainly something to watch out for.

Coach Posts Earnings: Up 6.2% At End Of Trading

Coach (NYSE: COH), who we've been critical of as of late (and whose stock has fallen precipitously, at one point more than 50% since its high last April) has just reported earnings of 69 cents/share for the most recent quarter, beating analysts by a penny and sending Coach shares up 6.18%. The recent selloff could've been an overreaction, and this positive performance might've just been a rebound back to sanity - long term, we're still not bullish on this stock. No matter how far a stock has fallen, it doesn't become a value stock until a sound, independent analysis of the firm's value determines that the firm is selling at a discount because the market overreacted. If you don't see any value in a brand's future, it's difficult to gauge a future value, and obviously we wouldn't advise anybody to own shares in a firm in which they don't see a future.

Consider yourself warned, Coach bulls. You may have won today, but only the future will tell if Coach can regain its cachet, net margin, and attractiveness as an investment candidate.

Louis Vuitton Makes The Right Move

As we've said before, we're not advocates of brands that base their design solely on one repetitive logo (*cough* Coach). It just gets old. Why then that have we not been critical of Louis Vuitton, who's been whoring-out its logo all over its handbag line?

Well first, Louis Vuitton has some history to fall back on. They invented soft luggage, which makes their bags a perennial object of desire no matter what may be en vogue at the moment. This history is kind of like fashion insurance - there will always be some LV faithful who buy their product. Still, Louis Vuitton could use some freshening up for their bag line. They've just answered our prayers and delivered the perfect punch: grey and black.

This is just the kind of innovation and differentiation that sets Louis Vuitton apart from the rest. Right when you think their bread and butter designs are getting dated, they swoop in with something fresh, stately, and unique. Actually, from a distance the design resembles some Gucci pieces, but the color is unmistakably non-Gucci, so that puts our gripe to rest.

Click on over to Fresh Mess for the rest of the photos.

Monday, January 21, 2008

Fall 2008 Men's Reviews - Lanvin

Lanvin's current menswear designer, Lucas Ossendrijver, has come up with a fall collection that is sure to please both current Lanvin fans and those who have yet to discover the classic/cool line that stores like Barneys New York and MAC in San Francisco have been buying up. The look was charmingly carefree and clearly young-skewing, but it was also certainly appropriate for work. Ossendrijver offered a much better take on the recaptured youth concept that Thom Browne has often butchered. Foulards en soie made a keen appearance in place of ties, especially in the slick steel grey that feels so modern right now. Rich chocolate velvet didn't seem outdated, but felt pleasingly unexpected as a piped, double-breasted blazer. The blazer was surprisingly fresh paired with loosely-tailored navy trousers, an over-sized, winter-white blossom at the lapel, and a bow-tie worn with a crooked insouciance. Glossy shoes (a Lanvin signature) featured much thicker soles than in years past, a trend that more conceptual designers like Raf Simons to Miuccia Prada have also embraced. Even the most traditional of gentlemen will pine for the sleek jackets and coats, cut in a flattering silhouette, a perfect cross between boyishly boxy and European trim. My favorites from the collection are here, and the whole show can be found here.

Fall 2008 Men's Reviews - Yves Saint Laurent

Stefano Pilati's latest collection for Yves Saint Laurent featured two kinds of sublime dandyism. The first half of the collection featured an updated version of the late 60s, early 70s silhouette, with loose, slightly flared trousers serving as the perfect base for more timeless coats and jackets, all in relatively muted tones. The second mode was strikingly more modern, featuring rich shades of pure green and true blue, along with gently beautiful maya blue and velvety aubergine. Mixed with anorak-inspired black trenches or cropped trousers, the effect was deliriously of-the-moment. Dapper gentlemen around the world will certainly appreciate Pilati's increasingly recognizable take on classic French luxe. More of my favorites from the show here, and the whole collection here.

In The Spotlight: Downturn of Retail Equity

With drops of virtually every retail sector due to post-black Friday woes and disappointing December sales, a buy and hold strategy would have been quite futile going into this New Year. Drops in equities like Saks (NYSE:SKS), J Crew (NYSE:JCG), Lululemon (NASDAQ:LULU), Nordstrom (NYSE:JWN), GAP (NYSE:GPS), Tiffany (NYSE:TIF), Coach (NYSE:COH), Abercrombie (NYSE:ANF), and a continuation of Ralph Lauren's (NYSE:RL) decline have been quite severe, however it is safe to assume that there are a few economic factors which could play into a further downturn. Yes, holiday sales ended up weaker than expected by many analysts, but the momentum seems to be continuing for the time being. A recent opinion in the Wall Street Journal has some good insight into retail's worst streak in 17 years:

"Chains are slamming the brakes on store openings, cutting back on inventory and girding for leaner times as consumer spending chills. The speed with which sales slowed during the holidays caught even cautious retailers off-guard, prompting a flurry of profit warnings.

And while data on December consumer spending won't be released until the end of the month, plummeting sales suggest consumers are snapping shut their pocketbooks." Full Text (Subscription)

In terms of cutting losses, there might be some value in hedging losses by shorting retailers who have no international exposure and also have fundamentally horrible collections and business strategies.

Be excited for the buying opportunities further in the future. There is a very good chance these equities will be priced at a significant discount once the momentum of this downturn begins to rebalance into the positive. For now, we suggest reweighing positions to the short side or looking for special event-driven momentum in earnings announcements.

Equities we like (longer-term):

Equities we like to short:

Monday, January 14, 2008

Coach Jewelry Falls Short

The once chic brand Coach is continuing to struggle, their spring collection jewelry is a perfect example of why they have been so unsuccessful and will continue to be so, unless they make major changes. When browsing the Coach website I found that Coach uses the same strategy with their jewelry line as they do with their bags and wallets, they simply stick their trade mark C's wherever they can, and as many times as possible. A perfect example of this is the Miranda Collection, see left. Coach describes the necklace as:

"The timeless design of this medallion necklace adds an air of elegance to any outfit. Its graphic pattern of repeating Signature C's can be worn both dressy and casual" (Coach).

In my opinion the design of the medallion can hardly be called a design, it is not attractive and it most certainly isn't timeless. Though the Signature C's are recognizable I don't understand how Coach expects to move product when that is all that their designs are. How does having a "graphic pattern" warrant the designer label, that Coach is so desperately trying to maintain.

However I would be lying if I said that the entire collection solely consisted of the Signature C's, the fragrance bracelet, see right, features the word Coach multiple times and also has little sketches of their mediocre fragrance. Why the constant repetition? Coach seems intent on throwing their name and C's in every direction they can, this is an unwise move for a struggling brand. A smarter move would be to limit the signature C pieces and instead establish a line with more style to reinvent their image.

See for more insight to Coach's expected downfall

Friday, January 11, 2008

Not a Very Happy Holiday for Department Stores...

We already knew that the Holiday 2007 did not go very well for most department stores and that majority of consumers opted out of buying clothes and instead purchased technology and gadgets for their choice gifts, Women's Wear Daily recently listed the numbers for December sales.

So just how bad was the damage?

  • Nordstrom was down 4%
  • Neiman Marcus down 2.9%
  • Macy's down 7.9% (ouch...)
  • And Saks squeaked by with a 0.8% gain
What is concerning is that not only did major department stores do universally poorly, but also that there is no remedy in sight. The product that has been carried recently has been sub par and not what you would expect from luxury department stores. If the department stores continue to carry brands that are of mediocre design and quality they will not get out of their slump. Also I believe that next holiday the marketing should be significantly improved if the department stores want to be able to compete with technology gifts.

via Luxist

Wednesday, January 9, 2008

Gilly Hicks - Abercrombie Guns For Victoria's Secret

Abercrombie & Fitch is launching a new lingerie concept ("Concept 5" in internal A&F jargon) called Gilly Hicks. The new brand isn't Montauk-flavored (A&F) or California-influenced (Hollister), but rather down-under-ified (is that a word?), straight-outta Sydney.

The brand uses the same old A&F tricks: youthful, fit models shot on black and white film who prefer gallivanting-about sans clothing to anything else. Their intro video (click) is playful and exotic, reminiscent of cliché 90's television perfume ads.

What Abercrombie is trying to sell here, indeed, as they always have, is a lifestyle. They got teens and twenty-somethings hooked on their rugged, old-school outdoorsy theme at their original branded stores, sold us a piece of California's surf and punk culture at Hollister, and now they're trying to sell us Australian swimwear like it's some sort of nouveau Brazil. Is Australia the best image to sell for lingerie?

Aside from having the distinction of the highest skin cancer rates on earth, Australia might be a tough sell.

Only the future will divine whether Australia is a marketing dream: the first 5 to 7 Gilly Hicks boutiques open up around the US during January and February.

Stores Opening Soon

NATICK, MA 01760


AURORA, IL 60504


SPACE #201-204A

Not much info is yet available on Gilly Hicks, just a little mention in an article over at the Columbus Dispatch:

Abercrombie and Fitch - Not Just All-American

Tuesday, January 8, 2008

Cobain's Daughter New Face of Chanel

The 15 year old daughter of the late Kurt Cobain, Frances Bean Cobain, has been reported by Styledash to be the next Chanel poster child. We guess having over 130 pairs of shoes and 200 pairs of jeans as well as being "relatively" famous gets you into a contract with a high end fashion house these days.

The rock world's most famous offspring is widely rumored to be the front runner for the face of Chanel's 2008 campaign -- and she's only 15!

I had no idea she was even a model, but apparently Frances Bean is "overwhelmed" by the opportunity and ready for "what the Chanel experience may offer."
-Via Styledash (full article)

Monday, January 7, 2008

Loeffler Randall for Target - Cheap and Moderately Chic

Loeffler Randall, the New York shoe and accessories line designed by Jessie Randall since 2004, has picked up a lot of editorial coverage lately, and buyers across the country have taken note. Ms. Randall's shoe collection can now be found everywhere from tiny shoe boutiques, like Lamb's Ear in Fremont, to extreme luxury landmarks, like Bergdorf Goodman in New York. The company recently expanded to include a clothing collection, now carried at Nordstrom, Les Amis, and Tulip in Seattle. With all the buzz, it was only natural that a collaboration with target was next.

Already in stores, the collection consists of two styles of flats, two styles of handbags, and three styles of clutches, all offered in a variety of fabrics or faux leathers. The shoes are all $29.99, while the clutches are all under $25 and the handbags under $50. For those prices, are they any good? A recent trip to my local Target revealed that the shoes were surprisingly chic for the money. The metallic rose cinched flats looked and felt on par with several shoes that cost twice as much. The rosette ballet flats avoided kitsch by using less conventional colors. All in all, these are all perfectly serviceable pieces of footwear for a very agreeable $30.

The bags, on the other, feel exactly as they should for their price. While their woven design is attractive enough, clearly a riff on Bottega Veneta's increasingly popular Intrecciato weaving, the material used is what one would expect at these under $50 price points. The satchel and large tote have handsome proportions, but the brown patent looks, feels, and, worst of all sounds cheap. The vinyl squeal elicited by the patent is painful to hear. The faux leather versions of these bags are much less offensive, but they still lack the feel of genuine leather. For the money, fabrics almost always looks better than faux leathers at the bottom end of the price spectrum. Instead, these bags come off as trying too hard to be something they're not, too hampered down by price constraints that result in excessively cheap materials. something that previous Target designer collections have also suffered from, most notably those from Rafe Totengco and Devi Kroell.

Hideous? We think so...

True ugliness, courtesy of Balenciaga and their new face, Jennifer Connelly.

Via Perez.

Coach: Bulls versus Bears

From time to time, internet stock banter can be pretty entertaining. Take this exchange we were involved in on Google Finance Discussions:

(Coach Bear): "Younger consumers have jumped off the coach bandwagon almost completely...Their purses are tacky...None of the college kids I talk to are even considering buying anything else from this brand. Sorry."

(Coach Bull): "I think its pretty drastic to assume that NO college kids are interested in this brand simply because it had one low season. At 24, i can say that a good percentage of my friends recieved coach this holiday season-myself included-and I would bet a bunch of them are looking to buy in the future. The retail market did terribly this holiday, I do not think that is an indication that Coach is done for."

(Coach Bear): "I'm really sorry to hear that you received Coach stuff (and liked it). My mother had the misfortune of receiving a Coach purse this Christmas, but she's old and doesn't understand. Coach emblazoned their logo all over every piece in their stores, and the fashion-conscious got tired of it. Repeating logos is not a long-term strategy. It works for a season. Look at what happened to Burberry in the late 90's: they focused on their signature check, and then forfeiters jumped on it, everyone had it, and, surprise, NOBODY WANTED IT! Coach has done the same, and for this failure I have no respect for them."

I'm guessing the CoachBull is the same fashion-victim suburban girl caught pairing hideous Uggs with a big branded AF hoodie, a loud Coach purse and a 2-year old Motorola RAZR while thinking she's a godess on par with Anna f***ing-Wintour.

The internet, grace be to god, is full of nutjobs. To another entertaining year.

The Pope: Enemy Of Luxury

First we had to worry about evil fashion designers like Mugatu, but now luxury fashion has another enemy in.....the pope.

At a speech marking Epiphany yesterday, the pope remarked that we are creating a world where the haves and the have-nots are far apart, and want of luxury goods is partly to blame.

Funny, considering this pope is well-known for sporting Gucci and Prada.

IHT via Luxist.

Saturday, January 5, 2008

Coach Heads To The Bargain Bin

Coach, the once lusted-after luxury marque, has officially hit the bargain bin. Long available at discounters like Costco (no, we're not kidding), we've seen a bunch of Coach loot show up at Nordstrom Rack locations. Usually, luxo-brands showing up on the cheap would be cause for celebration. For example, all Marc by Marc Jacobs shoes are 90% off at his boutiques. That's something to celebrate. But due to Coach's weakened cachet (and generally poor design [Is splattering your logo all over everything you make really a design direction?]), it's really a sign of caution to investors unlucky enough to be holding Coach shares.

Coach stock has already fallen more than 47% from its peak in August, it's slide only accelerating in October and December. Looks like a bloodbath.

Perhaps if Coach focused more on design and not over-emblazoning their logo on everything (not to mention maintaining exclusivity by limiting supply), they would've sold more goods at higher prices, maintaining their streak they've had going for the last few years and avoiding their newfound reliance on discounters. It could get worse, much, much worse. Personally, we hope the stock prices' precipitous fall will awaken management to the fact that heads need to roll at Coach HQ.