• Olivier Moingeon

Week 18 - LVMH, Sephora, E.L.F. Beauty, Selfridges, Rimowa, L Brands, Zenith, Burberry, Coty, Simon

Here are the transcripts of your weekly podcast summarizing the most important luxury news for the week of May 10, 2021!

1. LVMH releases its first social and environmental report

2. Sephora launches online shopping parties

3. E.l.f. Beauty launches their Twitch channel, with some controversy

4. Innovation: Selfridges launches rental service. Estee Lauder on Uber Eats.

5. Finance: Gap sells Intermix. L Brands spins off Victoria’s Secret.

6. Technology: Rimowa launches NFTs. Sotheby’s accepts Crypto payments.

7. Zenith launches a 2nd wave of rare vintage pieces for their Icons collection

8. Burberry Q4 and full year results disappoint

9. Coty’s quarterly results: Prestige Segment drives the growth

10. Simon’s Properties show promising results and raises guidance.

1. LVMH released their first social and environmental report, in which they highlight their initiatives to support sustainable growth. Through an independent audit, the group measures its carbon footprint as well as the environmental impact of their hazardous waste, packaging, transportation, gas emissions, water and electrical consumption. It also tracks ongoing initiatives around social responsibility to improve gender equality and diversity. This is another angle to the 10-year initiative called LIFE 360 which was launched a few months ago, and which aims at preserving natural resources and reducing waste. While LVMH announced they would not invest yet in the second-hand market, the group reinstated their belief that luxury products should last forever and that they were investing heavily in creating a circular economy. By 2030, LVMH wants every product to come from eco-design, meaning their environmental footprint should be minimal. When it comes to the one of the biggest problems in Fashion, which is overproduction, LVMH is working on sustainable inventory management strategies to avoid waste. It is important to note that a French law will take effect in 2022, which forces companies to show concrete efforts to reduce their waste across a wide variety of industries, including strong restrictions around destroying unused materials or unsold merchandise.

Amazon raised $1.0 billion sustainable bon for climate and social causes

2. Sephora launched a new shopping concept called “Sephora Shopping Party”. The concept is simple, while shopping online, users can request advice from the rest of the community or invite their friends via a search bar or a dedicated URL. Favorite products are tagged and shared in a chat with the rest of the people in the party to encourage discussions. Besides facilitating online a traditional physical behavior, there is also a strategic objective to capture data about these conversations between friends while shopping. It is a way to prevent what is called dark social, which are conversations about a brand happening outside of the brand’s control.

3. E.l.f. Beauty launched their Twitch channel, a platform mostly known for gamers but which boasts 30 million daily visitors, and growing. Over 79% of people aged 13 and up in the US identify as gamers, and the average consumer in 2020 spent 1 hour and 44 minutes per day gaming. Twitch users spend more than double the amount of time per session than YouTube, more than six times per session than Facebook, and four times per session than TikTok, according to Comscore. E.l.f.’s new channel, called — E.l.f. You, is centered around the concept of “Game-Up,” where contestants can post videos of their best make-up look for their video game streaming sessions.. Seven winners were selected and each won a collection of high-tech streaming equipment and e.l.f. Products, as well as the opportunity to stream with a prominent gamer on E.l.f.’s Twitch channel. The first live stream actually drew a wide range of criticism, for the lack of diversity black or Bipoc streamers, the lack of acknowledgement of various skin tones, the lack of moderation in the chat, the use of the word “female” instead of women to refer to the gamers, and the fact that make up was associated only to women as opposed to all the people who want to wear make up. Other smaller brands also complained about the press release which stated that elf was the first major beauty brand to open a twitch channel, whereas they opened theirs long before. A lot to think about and elf has declined to comment on the situation so far.

4. A few news about brands or retailers adopting new models.

First of all, In the UK, Selfridges launched a rental service in partnership with Hurr, the womenswear rental platform. Customers will be able to rent items curated by Selfridges teams across womenswear, menswear and accessories. Brands include Balmain, Jacquemus, Cult Gaia, Off-White, Burberry and Rick Owens, with pieces available to rent for 4, 8, 10 and 20-day periods. Prices start from 20 pounds. The rentals will be available via the Selfridges website and powered by Hurr Enterprise, operating using the same technology that powers the Hurr rental platform

Then, Estee Lauder partnered with Uber East to allow the delivery of products on Uber Eats and Postmates. So far, Jo Malone and Origins are the first beauty brands being available on the delivery platform. This is another example of brands adapting to changing consumer habits and adapting their sales and distribution strategies to provide more convenience and discovery.

5. On the finance side, Gap sold Intermix to a private equity firm Altamont Capital Partners, in order to focus on its own brand. Gap’s recent partnership with Kanye West, plus the signing of Simone Biles to Athleta and the sale of Janie and Jack, its children’s fashion brand, show how They are focusing on lifestyle rather than growing a luxury retailer. As a reminder their lifestyle portfolio includes Old Navy, Gap, Banana Republic and Athleta.

Then, L Brands announced that Victoria's Secret and Bath & Body Works brands will become two separate publicly traded companies in a tax-free spinoff, slated to close in August

Finally, Vinted, the popular second hand app founded in Lithuania, raised $303 million dollars.

6. On the technology front, luxury luggage maker Rimowa launched their first NFT’s collection. The brand commissioned the design studio Nuova to develop artwork celebrating Rimowa’s know-how, materials and heritage. Each digital asset is unique and will be auctioned on May 18th on the NFT auction platform Rarible. Benefits from the auction will go to the artists who created these artwork as well as to a charity. Rimowa also off-set the carbon footprint from the initiative by making a donation to an environmental charity in Belize.

Then, Sotheby’s announced a partnership with Coinbase to start accepting payments in Bitcoin and Ethereum. The auction house started accepting crypto payments in the Banksy’s auction on May 12th.

7. In the watch industry, Zenith unveiled their latest Icons collection, which comprises one of a kind vintage pre-owned models which have been restored by the brand. These 4 time-pieces are extremely rare, and will be sold in the Shanghai boutique. Each watch comes with a unique passport which has been signed and filled-in by hand by the watchmaker who restored the watch. This is a great way to bridge the past and future, as well as tapping into the second hand market in a very meaningful and curated way.

Still in the watch industry, Piaget announced they were increasing their watch warranty from 2-years to 8 years.

8. Burberry released their 4th quarter results and reported a 9% decline, which was below analysts forecasts. Even though the group posted a stronger than expected operating profit, the stock fell 10% following the earning call, as reported sales remained below 2019 level, showing a slower recovery than some of its peers in the industry. Burberry announced that it plans on spending 190 million pounds on capital projects, from store refurbishments, to digital offerings and information technology.

9. Coty released their fiscal third quarter results. The positive momentum continues and recovery is underway. Revenues declined by 3% vs a year ago due to continued Covid restrictions in most of Europe, but Asia Pacific and eCommerce drove the performance with strong double-digit growth, while the Americas remained stable. These positive results came from the Prestige segment, which over performed and delivered a 2% growth, especially due to a strong performance in the US. The mass channels on the other end, suffered with revenues declining by double digits. However, sell-out returned to growth in March which the group sees as an encouraging signal. Coty also continued to improve its profitability for the 3rd quarter in a row, thanks to continued efforts in reducing its cost base, which resulted in an improvement of more than $300 million vs a year ago. In YTD, the adjusted EBITDA is up by 50% vs last year.

10. Simon Properties, the largest mall operator in the US, reported a better than expected first quarter and raised guidance for 2021, as shoppers are going back to the malls. Simon’s CEO is observing some level of euphoria, but expressed that it was hard to predict what traffic trends would look like one year from now. Negotiations with some tenants for rent reductions continue but Simon says they are not afraid to sit on empty spaces.

Simon Properties made the news also because of their acquisition of Eddie Bauer, through the joint venture they formed with Authentic Brands Group. Eddie Bauer is the latest in a long string of acquisitions by ABG, after they acquired Barney’s, Brooks Brothers, JCPenney, Forever 21 and Lucky Brand.

2 views0 comments