• Olivier Moingeon

W07 - Hermes, Alexander McQueen, Vacheron Constantin, Kering, Shiseido, Moncler, Farfetch

Luxury, Fashion, Beauty, Watches and Jewelry News Podcast.

1. Alexander McQueen partners with Vestiaire Collective

2. Vacheron Constantin let’s clients trade-in their watches

3. VF Corps sustainability investment and Livestream channel

4. Finance news: The Honest Company files for IPO. LVMH and Fast Retailing valuations

5. Farfetch adds new services

6. Kering 2020 results

7. Valentino 2020 results

8. Hermes 2020 results

9. Moncler 2020 results

10. Shiseido 2020 results

1. Alexander McQueen partners with Vestiaire Collective, in an effort to encourage the circular economy. The British label becomes the first brand to join Vestiaire’s program called “Brand Approved”, which gives brands some control over what is bought and sold on the platform. How does it work: McQueen’s sales team will contact some of their clients, offering to buy back some products against a coupon to be used in McQueen’s stores, after careful review and authentication. These 2nd hand pieces will then be listed for sale on Vestiaire, under the “brand approved” section, and will be given an authentication tag.

This is another example of the push towards sustainability and prolonging fashion products lifetime. From Alexander Mc Queen, to Dior or Louis Vuitton, more and more designers are actually implementing circular practices in their studio, by reusing unused or unsold garments and fabrics from older collections.

2. Vacheron Constantin is the latest Richemont brand to accept trade-ins at their boutiques, after Panerai initiated this new service a few weeks ago. How does it work. Vacheron partners with the second hand market place Watchfinders, which is also owned by Richemont. Clients can bring in their watches for an estimate. If they agree on the price, Watchfinders will conduct an inspection and buy back the watch. The client will receive a coupon for that amount, to be redeemed against the purchase of a brand new Vacheron watch. What’s really interesting is that watchfunders will buy back pre-owned watches of other brands than Vacheron. So far, clients can bring in their Rolex, Cartier, Audemars, IWC or Jaeger. I love seeing such creativity, which would have been unfathomable a few years ago.

3. A couple of news stories coming from VF Corps.

First of all, they announced a 493 million euros commitment to 13 sustainability projects. Why such a specific amount? It is the money they raised from issuing a green bond last year.

All the projects will revolve around three key targets: sustainable products and materials; sustainable operations and supply chain; and natural carbon sinks.

Then, there was another news coming from one of VF’s portfolio companies. Vans launched a new livestream channel, which will broadcast weekdays from New York, Chicago, Los Angeles and Mexico City. Don’t think of video shopping, but rather a digital TV channel with various programs.

Audiences around the world are able to connect and watch. Channel 66 offers live audio and video broadcasting featuring DJ sets, talk shows with pro skateboarders, workshops, live musical performances, sports coverage, fashion news, and community relations. Channel 66 gives airtime opportunities to local skate shops, restaurants, music venues, shops, and independent record labels to build stronger community relations.

4. Farfetch made a couple of announcements this week. First of all, it is launching a new aftercare service called Farfetch Fix, which aims at extending products lives by restoring them. To do so, Farfetch partnered with the British company The Restory, which will handle all aftercare services for Farfetch clients, through their UK based artisans.

Then, Farfetch announced a partnership with wishii, a start up offering personalized styling recommendations powered by both AI and human professional stylists. Wishi was launched in 2018 by super star stylist Karla Welsh, who vets and trains the stylists. In their own words, it’s another example of “Technology being at the service of customer experience,”

5. Let’s talk about finance a little bit. First of all, The Honest Company, which was co-founded by actress Jessica Alba, has filed confidentially for an IPO. The company is seeking a $2 billion dollars valuation.

Then you probably read the news that LVMH became the largest company in the European stock market. With a valuation of 271 billion euro, it surpasses Nestle, which used to hold the number 1 spot.

Finally, for the first time, Fast Retailing m, the owner of Uniqlo, became the largest company in the clothing industry, overtaking Inditex, which owns Zara. Fast Retailing reached a valuation of the equivalent of 85 billion euros, even though sales wise it ranks third, at 15.6 billion euros, behind Inditex (28.2 billions) and H&M (18.5 billion euros).

6. Valentino reported a 28% decline for the year 2020. Sales dropped below the symbolic level of the billion euro, to reach 882 million euros, significantly down compared to the 1.2 billion euro it reached in 2019.

Positive results came from China, which grew 44% year on year, and guess what, online sales, which grew by 62% in all digital channels, including direct-to-consumer and multi brand platforms.

The brand’s virtual boutique saw its sales rise 77%

In a statement, the brand said that initiatives started during the pandemic helped limit the effects of store closures and travel restrictions. Such initiatives include reaching out to its community using diverse content, including advice, games, performances, and digital projects, to improved omnichannel integration and the introduction of clienteling and remote sales strategies. Moving forward, the strategy will continue to focus on omni channel activity, with a particular emphasis on innovation and advanced digital technologies.

7. Hermes reported solid results for the full year 2020, with 6.4 billion euros in sales, which is only a 6% decline vs 2019. The luxury Maison returned to growth in the second half of 2020 and accelerated in the 4th quarter with a 16% increase vs 2019.

In terms of channels, retail stores sales were down only 2% in 2020, whereas wholesale declined by 32% mainly due to the impact of Covid -19 on travel retail. Despite store closures throughout the year, Hermes still carried out their plans for new store openings or renovations and expansion projects.

In terms of regions, Asia led the way with a 14% increase for the full year, and a 47% increase in that last quarter. China obviously over performed, but other countries like Korea and Australia also posted strong results.

Japan declined by only 4% for the full year, with business being driven by online sales and the strong demand from loyal local clientele.

The Americas declined by 21% but posted a small positive growth in the 4th quarter, showing its on the path to recovery.

France declined by 29% and Europe, without France, by 20%. Plagued by store closures and restrictions throughout the year, and still during the 4th quarter, the zone suffered and the strong performance of online sales wasn’t enough to compensate.

One amazing fact: Hermes’ workforce grew in 2020, as the group added 1,183 people. They employ 16,600 people around the world and almost 10,400 in France. Hermes maintained the jobs and salaries of their employees throughout the pandemic and didn’t resort to government help. Each employee will receive a bonus of 1,250 euros in 2021 to thank them for their resilience during the pandemic. This is amazing and the sign of a strong company culture! Of course they have the financial reins to do that, but how many companies sitting on tons of cash cut through their workforce to preserve their financials.

8. Kering published their 2020 results and sales declined by close to 18% to reach almost 12.7 billion euros.

If we slice the year, sales during the first half dropped by 30% but then declined by only 3% in the 2nd half.

Looking at channels, retail comp sales declined by 16% but were down only by 1.5% in the 2nd half.

E Commerce sales increased by 67%.

The wholesale network was down by 17%.

Looking at individual brands, Gucci posted 7.4 billion euros in revenues which is a decline by almost 23%. ECom sales increased by 70% while retail declined by 19% and wholesale by 30%.

At YSL, revenue was 1.4 billion euros and declined by 15%.

At Bottega, revenue reached 1.2 billion euros and was up by almost 4%!

9. Moncler published their 4th quarter results and beat estimates, by reaching 675 million euros in sales, or an 8% increase whereas analysts expected only a 1% growth.

Sales rose by 26% in Asia and 5% in the Americas, compensating for a 13% decline in Europe excluding Italy, where revenues fell by 34%. Online sales also boomed, and in 2020 accounted for 15% of total revenues.

For the full year 2020, revenue reached 1.45 billion euros and net profits reached 300 million euros, which largely surpassed analysts consensus.

10. Japanese beauty group Shiseido posted a net loss for 2020, for the first time since 2013. Losses amounted to 110 million dollars. Sales declined by almost 19% to reach 8.8 billion dollars.

The group was severely impacted by the pandemic, with a loss of foreign visitors to Japan, as well as poor results in Europe and the US.

This follows a major decision made by the group a few weeks ago, to sell the low-cost personal care side of their business to CVC Capital Partners for $1.5 billion dollars. This will allow Shiseido to focus on their cosmetics division and prestige skincare. Shiseido expects to come back to profitability in 2021, and will put a stronger emphasis on skincare, as well as online advertising.

. Finally, a few rapid news to conclude the week.

French macaron maker Laduree is for sale. After posting a loss of 10 million euros in 2020, the historical baker owned by the Holder family is looking for a financial partner. It is unclear if it is to sell the entire business or stakes in it.

Still along the line of historical family business, the Weston family, which owns Selfridges and Holt Renfrew, will need to do a cash injection

Finally, Burberry is paying back earlier than due a 300 million pound loans it received from the british government during the pandemic. It will also repay 7 million pounds it had received in business rates relief.

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