BUSINESS OF FASHION
    FIRST HALF FINANCIAL REPORT 2020 — BY INDIA ESPY

    COUTURE 50
    BALENCIAGA 50TH COUTURE — BY INDIA ESPY

    SPRING 2022
    BALENCIAGA ‘CLONES’ S22 — BY INDIA ESPY

    SEPTEMBER 1, 2021
    THE FACE OF LLEWELLYN — BY INDIA ESPY

    AD CAMPAIGN
    GUCCI ARIA COLLECTION 2021-22 — BY INDIA ESPY

    SUMMER 2022
    BALENCIAGA ‘RED CARPET’ — BY INDIA ESPY

    SPRING SUMMER 2022
    MIU MIU SS22 — BY INDIA ESPY


 



BUSINESS OF FASHION

FIRST HALF FINANCIAL REPORT 2020 — BY INDIA ESPY

FASHION’S BIGGEST FIGURES RELEASED THEIR FIRST-HALF FINANCIAL REPORTS FOR 2020 IN JUNE. LVMH AND KERING GROUP REPORTED RECORD LOW NUMBERS.

STORE CLOSURES DUE TO THE COVID-19 HEALTH CRISIS IN QUARTER ONE CLOSED 65% OF KERING-OWNED LUXURY STORES WORLDWIDE IN APRIL. KERING GROUP’S NET PROFIT WAS DOWN 63.4% WITH LVMH AT A BIGGER LOSS—DOWN 84%.

LVMH-OWNED LOUIS VUITTON AND DIOR KEPT THEIR GROUP AFLOAT. PROFIT FROM RECURRING OPERATIONS WERE LIMITED TO A 46% DECLINE DUE TO NEW PRODUCTS AND DIGITAL STRATEGIES FROM LOUIS VUITTON, AND A NEW DIOR BOUTIQUE IN PARIS. 

“LVMH SHOWED EXCEPTIONAL RESILIENCE TO THE SERIOUS HEALTH CRISIS THE WORLD EXPERIENCED IN THE FIRST HALF OF 2020,” CHAIRMAN AND CEO OF LVMH, BERNARD ARNAULT STATED IN A PRESS RELEASE. “WHILE WE HAVE OBSERVED SIGNS OF AN UPTURN IN ACTIVITY SINCE JUNE, WE REMAIN VERY VIGILANT FOR THE REST OF THE YEAR.”

THE INDUSTRY SLOWED IN Q1 WITH A CRITICAL DECLINE IN Q2 AS PRODUCTION AND LOGISTICS HIT THE BRAKES. EXCESS INVENTORY DUE TO LOW DEMAND AND SUPPLY CHAIN CLOSURES HAD A NEGATIVE IMPACT ON DISTRIBUTION WITH LOCKDOWN MEASURES REDUCING THE CAPACITY FOR LUXURY BRANDS TO DESIGN AND PRODUCE. KERING GROUP AND SUPPLIERS CLOSED PRODUCT DEVELOPMENT AND PRODUCTION SITES IN ITALY, THE LOCATION OF MOST THEIR FACILITIES, AND CLOSED WAREHOUSE AND LOGISTICS SITES IN SWITZERLAND, ITALY, AND THE UNITED STATES IN MARCH. WITH THE SUPPLY CHAIN BLOCKED, NEW COLLECTIONS WERE UNAVAILABLE WHEN STORES REOPENED AND ONLINE. YOOX NET-A-PORTER, KERING’S E-COMMERCE PARTNER, REPLANNED MANAGEMENT SCHEDULES FOR OPERATIONS TO RESUME IN LATE APRIL AFTER TEMPORARY CLOSURE.

KERING GROUP’S SALES FROM DIRECTLY OPERATED STORES FELL 30.9% IN THE FIRST HALF OF 2020. BUT ONLINE SALES ACCELERATED. BAIN & COMPANY/ ALTAGAMMA ESTIMATED 12% OF LUXURY HOUSES’ REVENUE IN 2019 WERE GENERATED IN ONLINE SALES, WITH AN EXPECTED RISE TO 28%-30% IN 2025. KERING’S E-COMMERCE REVENUE WENT UP FROM 21% IN Q1 TO 72% IN Q2, HIGHLY ACCREDITED TO A FASTER RECOVERY IN CHINA THAN ANY OTHER REGION, DESPITE DISRUPTION IN RETAIL LOGISTICS. NOW, LVMH, KERING GROUP, AND OTHER BRANDS EXPAND THEIR BUSINESS IN CHINA: LOUIS VUITTON RELEASED THEIR MENS 2021 COLLECTION IN SHANGHAI, SAINT LAURENT LAUNCHED YSL.CN, AND ACNE STUDIOS RENOVATED THEIR SHANGHAI STORE. THE HIGHEST IMPACTED LVMH-OWNED GROUP WATCHES AND JEWELRY BRANDS CHAUMET, HUBLOT, AND FRED WILL EXPAND THEIR NETWORK IN CHINA TO RECOVER FROM THE FIRST SIX MONTHS OF 2020.

WITH 1,901 STORES IN ASIA, MORE THAN ANY OTHER REGION WORLDWIDE, LVMH GENERATED NEAR HALF (41%) OF THEIR H1 REVENUE IN THE ASIA PACIFIC REGION WITH HIGHEST RESULTS IN MAINLAND CHINA. KERING REPORTS A “SHARP RISE IN CHINESE AND ASIAN DEMAND OF PERSONAL LUXURY GOODS” DUE TO AN INCREASE IN TOURISM WORLDWIDE PRE-CRISIS. NOW, A CRITICAL DECLINE IN CHINESE TOURISM PREDICTS POSITIVE GROWTH IN CHINA’S DOMESTIC MARKET, BUT NOT WITHOUT A NEGATIVE IMPACT ON EUROPEAN MARKETS. CHINA IS EXPECTED TO REBOUND IN ECONOMIC ACTIVITY WITH NEAR 11% GROWTH IN 2021, KERING GROUP SAYS. “WHILE THE CONSUMER CONFIDENCE INDEX REMAINS RELATIVELY HIGH IN CHINA, IT HAS DECREASED IN THE UNITED STATES, AND IS RELATIVELY LOW IN THE EUROZONE AND UNITED KINGDOM.” CHINA IS EXPECTED TO HAVE LONG-TERM EFFECTS ON THE LUXURY MARKET GROWTH AS LVMH AND KERING GROUP’S MAIN CUSTOMER PROFILE. NEW STRATEGIES TO MAINTAIN THE VALUE CHAIN IN CHINA IS IMPERATIVE, KERING GROUP SAYS.

FASHION FORECASTS PREDICT MORE EXCLUSIVE DISTRIBUTION FROM LUXURY BRANDS. FUNG BUSINESS INTELLIGENCE GROUP (FBIC) AND THE CHINA COMMERCE ASSOCIATION FOR GENERAL MERCHANDISE (CCAGM) JOINT REPORTED CORPORATE GROSS AND NET PROFIT MARGINS, AND CUSTOMER UNIT PRICE INCREASE IN CHINA’S DOMESTIC DEPARTMENT STORES. BUT THE UNITED STATES HAD OPPOSITE RESULTS. WHOLESALE MARKET FAILURE IN RECENT YEARS DEVELOP WORSE CONDITIONS AFTER U.S. DEPARTMENT STORES, INCLUDING BARNEYS NEW YORK, FILED FOR BANKRUPTCY IN 2019—THEN THE CRISIS HIT. MARKET CONDITIONS FELL TO AN EXTREME LOW IN 2020 AS DEPARTMENT STORES CONTINUED TO FILE FOR BANKRUPTCY, INCLUDING NORDSTROM, MACY’S, AND JCPENNEY, CAUSING LUXURY BRANDS TO REEVALUATE THEIR STORES’ GEOGRAPHIC NETWORK. FOR KERING-OWNED GUCCI, SALES DECREASED 36.1% IN WHOLESALE DUE TO LOW DEMAND AND REALLOCATION OF PRODUCTS FROM FAILED DEPARTMENT STORES TO 489 DIRECTLY OPERATED STORES IN WHICH 86.3% OF GUCCI SALES ARE GENERATED. WITH KERING GROUP AND LVMH-OWNED BUSINESSES SELLING EXCLUSIVELY IN-HOUSE AND ONLINE, LONG-TERM DISTRIBUTION AND INVESTMENT IS EXPECTED TO INCREASE THE VALUE CHAIN.

”THE IN-STORE PRESENTATION OF SPRING/SUMMER COLLECTIONS HAS BEEN EXTENDED AND THE DELIVERY OF FALL/WINTER COLLECTIONS HAS BEEN POSTPONED,” SAID KERING GROUP IN THE 2020 FIRST HALF REPORT. “IN ORDER TO IMPROVE INVENTORY TURNOVER, PRIVATE AND PUBLIC SALES WERE HELD AT THE END OF THE SPRING/SUMMER SEASON.”

KEY HOUSES LOOK FOR MORE CONTROL OVER THE INDUSTRY. FASHION WEEK IN THE TRADITIONAL FORMAT DID NOT OCCUR THIS YEAR, BUT THE DIGITALIZATION OF OPERATIONS ACCELERATED. FEDERATION DE LA HAUTE COUTURE DE LA MODE’S DIGITAL FASHION WEEK REPLACED CANCELLED MENS AND WOMENS SHOWS IN Q2, INCLUDING COUTURE WEEK, AS THE CALENDAR FOR COLLECTIONS AND FASHION SHOWS WERE OFFICIALLY POSTPONED. BUT WITH FASHION’S TRADITIONAL SEASONS—FALL/WINTER COLLECTIONS HIT STORES IN SUMMER, AND SPRING/SUMMER COLLECTIONS HIT STORES IN FALL—LVMH AND KERING GROUP ARE HEAVILY POLARIZED.

GUCCI, SAINT LAURENT, AND OTHER KERING-OWNED BRANDS AGREED TO SCHEDULE LESS FASHION SHOWS WITH COLLECTIONS EXPECTED TO BE MORE SEASON SYNCHRONOUS. THE GROUP’S BRANDS ARE EXPECTED TO SHOW FALL COLLECTIONS IN THE FALL, AND SPRING COLLECTIONS IN THE SPRING OF THE CURRENT YEAR. BUT LVMH-OWNED BRANDS DID NOT RELEASE ANY STATEMENT IN CONCERN TO THE INDUSTRY’S STANDARD SEASONS. AS THE INDUSTRY’S LARGEST LUXURY GROUP, LVMH IS EXPECTED TO CONTINUE WITH TRADITIONAL INDUSTRY SEASONS. COLLECTIONS WILL BE AVAILABLE FOR CLIENTS TO VIEW OR PRE-ORDER UP TO A YEAR BEFORE THE COLLECTION IS IN-STORES. BUT WITH INTERIM NUMBERS AT A CRITICAL LOW, AND KEY FIGURES IN DISAGREEMENT OVER THE SYSTEM OF FASHION SHOWS, FORECASTS CAN ONLY ESTIMATE HOW THE INDUSTRY WILL OPERATE IN 2021.

ACCORDING TO BAIN & COMPANY/ALTAGAMMA, THE GLOBAL LUXURY GOODS MARKET MAY HAVE CONTRACTED 25% IN THE FIRST QUARTER OF 2021.

“THE PANDEMIC HAD AN IMMEDIATE IMPACT ON THE LUXURY GOODS INDUSTRY WORLDWIDE,” PRESIDENT OF ALTAGAMMA, MATTEO LUNELLI STATED IN A PRESS RELEASE. “HOWEVER, THE LONG-TERM TREND REMAINS POSITIVE—THE ALTAGAMMA BAIN MONITOR ESTIMATES A GROWTH OF 2-3% BETWEEN NOW AND 2025.”

IN THE SHORT-TERM, LUXURY SECTORS MUST ADDRESS KEY PRIORITIES: SAFEGUARD SUPPLY CHAINS, DIGITAL STRATEGIES, AND ENVIRONMENTAL AND SOCIAL SUSTAINABILITY. EUROPE IS PREDICTED TO HAVE THE HIGHEST IMPACT IN LUXURY GOODS CONSUMPTION WITH A 29% DECLINE, FOLLOWED BY A 22% DECLINE IN NORTH AMERICA. A “SHARP DECREASE” IN WORLD CONSUMPTION, WITH PROFITABILITY IN THE LUXURY SECTOR DOWN BY 30% IN 2020, ALTAGAMMA PREDICTS A RISE IN DIGITAL MARKETING AND SALES. BUT SECOND QUARTER RESULTS AT AN EXPECTED 50%-60% MARKET FALL PREPARE FOR DIFFICULT FULL YEAR PREDICTIONS. THE INDUSTRY IS EXPECTED TO RECOVER THROUGH REGIONAL MACRO-TRENDS, LOCAL CONSUMER CONFIDENCE, TOURISM, AND PROACTIVE STRATEGIES IMPLEMENTED BY LUXURY BRANDS. BAIN & COMPANY/ ALTAGAMMA PREDICT THE BEST-CASE SCENARIO OF A GRADUAL RECOVERY, STABLE PERFORMANCE WITH A POSITIVE UPTURN FOR THE SECOND HALF OF 2020, AND THE WORST-CASE SCENARIO OF A SLOW RECOVERY AND 20%-25% MARKET SHRINK BY THE END OF THE YEAR.