Many of the big names in the luxury industry posted their financial reports for the first half of 2012, and the picture was decidedly rosy.
A.) Hermes: “French luxury goods group Hermes reported first-half sales up 21.9% . . . Hermes said it was on track to post a 10% rise in sales for the full year … and added that ‘the underlying operating margin is expected to be between 2010 and the all-time high achieved in 2011′.”
Though there’s always the Debbie Downer in the group who wants to remind us all that yes, the economic sky really is still falling: Hermes sales growth slows as economies falter — “Recent signs that the Chinese market may be slowing down have thrown a note of caution into the analysis of the luxury companies and their 2012 prospects.”
Luxury brand sales growth has slowed from 50% down to about the teens
Hermes experienced its biggest growth in home ware & jewellery segment, with a sales increase of 53% over the same period last year.
B.) PPR (includes Gucci, Bottega Veneta, Alexander McQueen, Saint Laurent and more): “Sales in the luxury division, home to the company’s cornerstone Gucci brand as well as Bottega Veneta and Balenciaga, increased 18% on a like-for-like basis … with on-year sales growth maintaining a strong pace in both the first and second quarters, up 18% and 17%, respectively.”
*Speaking of Gucci: The Gucci Group won another trademark court case against a member of the Gucci family (see: Gucci Wins Trademark Case Against Guccio Gucci, Great-Grandson Of The Label’s Founder) — this happens with regularity as various Gucci descendants attempt to make their own fortunes using the famous last name that their grandfather sold off the rights to years ago.
Is it fair that Gucci family members can’t use their own last names when they want to go into business for themselves? Maybe not, but it would certainly help if the businesses they all decided to clamber into weren’t primarily about affixing their globally recognised monikers to handbags, skincare and luxury hotels.
Because then, obviously, there’s going to be consumer confusion (“Oh, look, Gucci now makes moisturising cream!” or “Hey, a new line of handbags from Gucci!”), and that’s a problem.
*And speaking of Saint Laurent: Newly appointed head designer Hedi Slimane unveiled the new Saint Laurent logo to the brand’s Facebook fans, and the response was less than enthusiastic. See: Facebook Commenters Horrified by the New ‘Saint Laurent Paris’ Logo — “Despite Hedi Slimane’s nod to the label’s past, Facebook commenters have responded to the new logo with vehement hostility. “Where’s the iconography? This is not iconic,” protested one, while another accused the new logo of looking a lot “like Zara”; a third very astutely observed that “YSL without the Y is not YSL.”
Which, really, isn’t a surprise. People are resistant to change, for the most part. It’s a sad fact of human nature. So all Slimane has to do is ride out the sense of manufactured outrage and it’ll all blow over in a year (or two).
Meanwhile, Tom Ford is likely indulging himself in a moment of private (and deserved) schadenfreude.
Hedi Slimane will unveil his first Saint Laurent collection during the upcoming Paris Spring shows (and has intimated that the Saint Laurent brand could return to producing haute couture, which it hasn’t done since 2002), but the work of recently fired designer Stefano Pilati is still selling briskly, contributing to the over 30% uptick in sales for PPR’s luxury groups.
Below is a video clip of Pilati speaking for the first time in March of 2012 about being fired from YSL:
“We can live very well without fashion”
C.) LVMH (includes Louis Vuitton, Dior, Fendi, Marc Jacobs and more): “LVMH said (that its first-half net profit rise of 28%) performance reflected double-digit revenue growth at Louis Vuitton, the success of the Christian Dior fashion house and the integration of the Bulgari jewelry maker, which was key to an 87% boost in profits for watches and jewelry.”
The high sales numbers for “hard luxury” (fine jewellery, watches and house wares) that Hermes and LVMH reported support the recent chatter about how hard luxury is the way to go for any self-respecting luxury group that wants to keep its big spenders coming back for more (see: Luxury brands like Hermes, Burberry and Louis Vuitton diversify product offering).
*Speaking of Louis Vuitton: Is there any brand more ripped-off than the already massively hyped and globally exposed LV? Hot on the heels of unsanctioned yet still logo-emblazoned condoms, trash bags, waffle irons, cars and even entire houses, comes the equally unsanctioned Louis Vuitton handgun . . . from Las Vegas, of course.
I smell a cease and desist letter in the very near future.
D.) Richemont (includes Cartier, Chloe, Dunhill, Van Cleef & Arpels and more): “Richemont Chairman and Chief Executive Johan Rupert said sales in April were up 29% from last year . . . with sales in Asia-Pacific up 46% at constant exchange rates to make up 42 percent of the group total after several years of strong growth.”
But Richemont nonetheless sounded a cautionary note for the rest of 2012, with the CEO of Cartier (a Richemont subsidiary) stating that “there’s been a bit of a slowdown in mainland China . . . Sales are still increasing, but not at the same rate as 2011.”
*Related: Rival watch giant Swatch reported a 25% jump in net income as they dramatically increased sales for watch components while also seeing a gain in sales of timepieces in China (see: Swatch Gains As Watch Components Drive Profit Growth).
*Even more related: Richemont Eclipses Gucci in Korean Sales
In fact, recent sales of luxury goods to Asian consumers have been so strong that Vanessa Friedman at the Financial Times wonders if Europe’s retail future is simply as a Disneyland-type shopping destination for Eastern tourists: “You know: a place where the entertainment value/point lies in shopping for expensive stuff. It certainly goes with the increasing emphasis on stores becoming ‘experiences’ complete with all sorts on interactive Game Boys (oops – I mean electronic information devices), shopping guides and celebrity appearances.”
As if to illustrate her “shopping as entertainment” point, Louis Vuitton unveiled a massive steam train set shipped over to China from Paris to celebrate the opening of their flagship Shanghai boutique: “‘Europe is finished,’ observed a Hong Kong-based Indonesian journalist at a cocktail party to celebrate Louis Vuitton’s latest store opening, that was held in one of the few remaining colonial buildings in Shanghai. ‘Shanghai’s the city of the 21st century.’”
“Definitely big fun”
*IN OTHER BIG BRAND NEWS: Burberry has walked away from the negotiating table and will sever its relationship with perfume and cosmetics manufacturer/distributor InterParfums at the end of 2012. Sales of Burberry perfumes and beauty products presently account for up to 75% of InterParfums’ earnings.
While Burberry is required to make a severance payment to InterParfums of $220 million in exchange for assets and product inventories, it’s unclear how and/or where InterParfums will be able to compensate in the long-term for the loss of such a high-profile and lucrative partnership.
Perfumes and cosmetics accounted for around 21% of the global luxury market in 2011, and analysts believe Burberry wants a bigger slice of that pie (right now, fragrances are only 2% of the brand’s overall revenue), signalling its intention to “intensify” non-clothing sales.
The talk is that Burberry will either seek out a different partner that can help it grow bigger and faster than InterParfums could, or they’ll develop their own in-house perfume and beauty teams — to be more like Chanel, for instance.
BONUS FRAGRANCE-RELATED READING: Dave Mosher chats with chemist Steve Pearce about NASA’s wish to reproduce the scent of space. It’s well worth checking out.
Best takeaway bits — the MIR Space Station smells like sweaty feet and stale body odour mixed with nail polish remover and gasoline, while space itself smells like a combination of hot metal, seared steak and arc welding on a motorbike.
Who knew? Well, except for the people who’ve been there, of course.