Nordstrom Sells Façonnable to.....Lebanon?

Seattle-based Nordstom (NYSE:JWN) has decided to sell its Façonnable brand to the Lebanese investment firm M1 Group for $210 million. As part of the deal, Nordstrom agrees to sell Façonnable clothing for a further 3 years, and will use the proceeds to focus on its main business, retailing, as opposed to brand-building. Façonnable, a conservative luxury clothier that competes against the likes of Brooks Brothers, was long known to be on the auction block; the acquirer, however, is the surprise here. M1 Group (formerly Investcom) was the first company to IPO on the recently-opened Dubai International Finance Exchange and primarily owns wireless networks in third world countries like Guinea Bissau, Liberia, Afghanistan, Guinea Republic, and Sudan. Wait a minute....REWIND. Sudan? As in Darfur's federal overlord? A third-world cellular operator buying falling-star luxury marque? Something smells fishy here. Upon further inspection, the real owner is Mauritius-based MTN Group, which bought Investcom (and hence M1 Group) last year. MTN Group operates mostly in South Africa, and is also in the cellular business. It's all a tangled mess of ownership from there, involving shady tax shelters in the Virgin Islands. Could this get any weirder?

Anyone have any idea why a cellular business in the third world would want to buy a slightly-lagging shirtmaker? Is this deal really even going to go through?

Article at PSBJ

V.F. Corporation: Net Income Down

In an earnings report Friday, V.F. Corporation (NYSE: VFC) reported a decline in net income in comparison with last year's quarter. Blamed on the discontinuation of the Intimate Apparel branch of the company, CEO Mackey J. McDonald reaffirmed strong growth in the other sectors of the company.

One interesting note is that while V.F. brands The North Face and Reef had a successful run in the last few years with Reef's "bottle opener" sandal and North Face's cult/trend fleece lines, investors may be misguided by the strength of these underlying brands. Even with the recent acquisition of outdoor-wear manufacturer Eagle Creek, V.F.'s momentum may be stunted by the lack of continuing growth in some of its more well known brands.

Traditionally, brands like North Face have been a more visible brand for V.F. Corporation as they have integrated into the ranks of younger consumers in the form of North Face fleece jackets. However, it is questionable whether this trend will continue to sustain momentum after almost 3 winter seasons of popularity, and very little product differentiation between them.

Specialized outdoor brands may also rival the likes of V.F.'s brand Nautica, as they close in on the casual-yachting/sailing centric brand. Although still carried by large department stores, it may take a hit from popularity in competing brands such as Polo Ralph Lauren and J. Crew.

Shareholder's Meeting Preview: Abercrombie and Fitch

With summer casual fashion behemoths like J Crew (NYSE:JCG) and Ralph Lauren (NYSE:RL) stealing all the thunder lately, investors may have overlooked the inherent strength in the historically well branded Abercrombie and Fitch (NYSE:ANF). Between Hollister, Abercrombie & Fitch, and newcomer RUEHL No.925, these stores cover almost every casual summer fashion niche in the United States.

The expansion overseas of Abercrombie & Fitch in London will most likely provide for potent viral marketing in the European and Wealthy Middle Eastern scenes. The Savile Row plays a critical role in courting the high-end constituency of European consumers, while seeding possible expansion offers from growing Middle Eastern consumer capitals such as the U.A.E., Qatar, and Saudi Arabia.

Although seemingly squeezed lately by the rise of competing brands, Abercrombie's brands are known for staple summer fashion at accessible price points for young adults. I must concede that the inherent risk associated with Abercrombie may be in the slow developments of new products throughout their stores, however this may also be the stability that investors have come to take for granted.

For example, while J Crew's popularity has risen in the last few years, their net profit margin is about half that of Abercrombie's at 6.75% compared with 12.72% , with the Return on Assets being similar.

I would suggest that during the Shareholders Meeting, Abercrombie's historical strengths are reiterated by CEO Michael S. Jeffries, along with an emphasis on potential growth in overseas markets.

Men's Spring 2008 - Alexander McQueen

Alexander McQueen has apparently fallen in love with 1950s surf culture and Americana. That's a far cry from his past collections, which have been inspired by everything from World War II to Lord of the Flies. It's safe to say that this collection is a whole measure brighter and enlivened than many have come to expect from McQueen. On the whole, his concept came off beautifully. Without any ideological theme riding too heavily on the clothes, every look was lighter and more approachable than ever before, without losing that signature McQueen edginess. He continued the season's trend of shorter shorts and cropped pants, paired with lengthier coats and parkas in more assertive colors. Fabrics spanned the range from cotton suiting in shades of white polka-dot, to slicked and soaked black wool Men in Black looks, with hippie cotton "love" shirts, extra-long sock-hop cardigans, and Technicolor neoprene diving pants all in between. While that sounds like a maddening mix, McQueen deft hand and sharp editing kept it all under control. With pieces like shark-print and flower-embroidered t-shirts, down-to-earth plaid shorts, and a few easy trousers and trenches, this collection was also built to sell. It was a bright, wet delight that was filled with easy statement pieces that I'm quite sure men will want to start wearing now. But, alas, we have until 2008 to wait!

Barneys New York bought out by Dubai private equity

Jones Apparel Group (NYSE: JNY) announced Friday of its $825 million dollar sell off of its subsidiary Barneys New York to Dubai-based private equity group Istithmar. Focused more on the wholesaling, Jones Apparel said that although Barneys New York provided significant growth, the growth margins with regard to investment was not on par with the rest of its wholesaling business.

We see in Barneys a very nice growth asset. From our perspective...the asset required more capital investment to grow, [with the] operating margin not likely to approach [that of] our wholesale business as we go forward - Peter Boneparth, CEO Jones Apparel

Returning to its beginnings in wholesaling and mid-level luxury, Boneparth noted that Jones Apparel's short stint in Luxury-end fashion was too far outside of the company's spectrum, however he noted the opportunity for producing a great shareholder return to investors.

We didn't buy [Barneys] with the intent to sell it, but this is a great opportunity for shareholder return. - Boneparth

Due to tax benefits, Jones Apparel will make approximately $290 million from the sale, with net proceeds after taxes and transaction fees being close to $770 million.
[source]

Finally: First Fashion Free-For-All Fund Found!

Ever wanted to own a portfolio of luxury brands but didn't have to time to research them all? The Chic Fund might just be for you. The brains over at Dominion Funds created Chic to capture the growth in the luxury segment, which has exploded over the last half-decade. The fund owns iconic brands such as Hermès, Louis Vuitton, Ferragamo, Tod's, Van Cleef & Arpels, Bottega Veneta, Bulgari; even a little stake in Rolls-Royce to keep those fashion houses company.

The minimum investment is $10,000, and there's an annual management fee of 2.27 percent. Wonder if they'll give me a Louis Vuitton briefcase just for signing up?

Doubtful.

Chic Fund

Luxottica Group purchases Oakley for 2.1 Billion

Luxottica Group S.p.A. (NYSE: LUX) announced their 2.1 billion dollar buyout of sunglasses maker Oakley (NYSE: OO) for $29.30 per share today sending both shares skyrocketing up. Owner of fashion eye-wear brand Ray-Ban and distributor of luxury brands such as Dolce & Gabbana, Prada, and Chanel, Luxottica plans to dive into the upscale sports eyewear market with its latest acquisition.

Based on the latest releases of Oakley shades, both for men and women, there was a clear directional shift in the look from sporty to fashionable. The summer 2007 line of Oakley women's sunglasses not only featured big-lensed glasses, but also touted an arsenal of fashionable frames and styles very far from the traditional sporty look.

Due to the extreme market saturation in high end fashionable eye-wear, a strategic diversification into athletics-based background may yield higher growth in the future.