Agenda-setting intelligence, analysis and advice for the global fashion community.
THE CHEAT SHEET
The Talk of Paris Fashion Week: Prada and the Coronavirus
Miuccia Prada and Raf Simons, the co-creative directors of Prada | Source: Courtesy
- Paris Fashion Week runs Feb. 24 through March 3
- Sunday's announcement that Raf Simons will be joining Prada is sure to spark conversation on the front rows this week
- With dozens of coronavirus cases now reported in Italy, fashion businesses are no doubt monitoring the situation closely, though aside from six Chinese designers who had to cancel their shows, the outbreak hasn't impacted the Paris schedule as yet.
Paris Fashion Week usually commands the fashion world's attention for its nine-day run, but the outside world is threatening to overshadow the proceedings. Giorgio Armani's last-minute decision to stage his Milan show in an empty room, following reports of coronavirus outbreaks in the region, has not been repeated by other designers in Milan. However, the virus had already cast something of a pall over fashion month, given the absence of Chinese editors, buyers, influencers and designers who have played an increasingly important role in the proceedings. Many of the brands showing may also be uncertain about who will buy their clothes as Chinese retail sales have plunged and fewer tourists are visiting Europe's luxury boutiques.
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Then there's the news today that Simons is joining Prada, where he'll serve as co-creative director alongside Miuccia Prada. This unusual arrangement is guaranteed to shake up the luxury landscape.
The Bottom Line: As for the shows themselves, 2019 LVMH Prize winner Thebe Magugu stages his first runway in Paris, and Kenzo's 50th anniversary will be marked by the debut of Felipe Oliveira Baptista's debut collection for the label.
The Bid to Take Saks' Owner Private: Take Two
Signage outside the Saks women's store at Brookfield Place in New York, which closed in 2019 | Source: Allison Joyce/Bloomberg via Getty Images
- Saks owner Hudson's Bay Company's shareholders will vote on a C$2 billion ($1.5 billion) bid to take the company private on February 27
- A major shareholder that scuttled an earlier bid supports the new offer
- Saks comparable sales fell 2.3 percent in the most recently reported quarter, and HBC reported a loss
Department stores would greatly prefer to battle the retail apocalypse behind closed doors. Neiman Marcus told US regulators last year it would stop issuing quarterly updates on its operations, and the Nordstrom family has repeatedly tried and failed to take the company private. Richard Baker, chairman of Hudson's Bay Co., is likely to succeed where Nordstrom failed. One can spin the sudden mania for privacy as a necessary step to radically reinvent the ailing department store model without needing to fulfil investor demands for predictable quarterly growth. Of course, if there is a plan to reinvent the ailing department store model, the reigning incumbents, both public and private, are keeping it close to the vest.
The Bottom Line: For Saks, refurbished stores and a renewed push into the off-price market likely won't be enough. Barring a sudden turnaround in sales, expect more drastic measures, such as a merger with a rival, or finding more-profitable uses for HBC’s considerable real-estate holdings.
A Trio of Fashion Start-Ups Report Results
A graphic in The RealReal's Soho store illustrates how resale can encourage circularity. | Source: Courtesy
- Revolve and The RealReal report quarterly results on February 25; Farfetch reports February 27
- The three companies, along with Stitch Fix, are the biggest fashion start-ups to go public in the last few years.
- Shares of the three companies reporting this week are down sharply as investors worry about the long-term viability of the current retail playbook
Though Revolve, The RealReal and Farfetch are very different companies, investors have treated the trio roughly the same, which is to say, skeptically. Revolve has a strong brand and knows how to work the influencer economy like no other, helping it rise above the fray on Instagram. But it's also an apparel retailer, and suffers the same inventory issues and slim margins as its more-traditional peers. At least Revolve is profitable. The RealReal seems to have weathered questions about counterfeits on its resale platform and is making headway in convincing luxury brands to engage with the secondhand market. But it is still struggling to make the case that it can operate in the black. Similarly, Farfetch’s most recent quarter was once again marked by a flurry of deals and new features, welcoming Opening Ceremony into the fold and introducing a new series of exclusive drops. But the luxury marketplace’s streak of losses is expected to continue for at least another year.
The Bottom Line: As the recent troubles at Outdoor Voices show, fashion start-ups can wow investors for a time with innovative designs and business models. But ultimately, they must show they can turn a profit as well.
SUNDAY READING
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The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.
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