Business of Fashion Uncategorised

Will Luxury’s Winning Streak Continue?

THE CHEAT SHEET

Luxury’s Top Performers Report Results

Louis Vuitton’s campaign featuring actor and rapper Kris Wu | Source: Louis Vuitton

  • LVMH and Moncler report results July 24, Kering July 25; shares in all three companies are at or near record highs. 
  • Louis Vuitton CEO Michael Burke in June highlighted “unheard of growth rates” for the label in China
  • Richemont, the first major luxury group to release quarterly results, reported a surprise drop in watch sales last week 

This week we’ll get our quarterly snapshot of the luxury industry. LVMH has signalled that its run of booming sales of leather goods — particularly in China — is nowhere near an end. Barring any surprises on those fronts (not impossible, Richemont did indicate the Hong Kong protests dented watch sales), watch for an indication of how Rihanna‘s new Fenty ready-to-wear line is performing, and an update on the LVMH’s acquisition strategy in the wake of its investment in Stella McCartney. Though still growing fast, Kering faces more pressing questions, including offsetting slowing growth at Gucci and the potential end of the “dad sneaker” craze that supercharged sales at Triple S maker Balenciaga. The answer may lie with struggling Bottega Veneta, where Daniel Lee’s first collection is entering stores. Will he repeat Riccardo Tisci’s strong performance at Burberry

The Bottom Line: Outside of the big two, Moncler’s results are also worth parsing next week. If the outerwear brand reports another stellar quarter for its strategy of monthly drops, then we can expect more brands to join Tod’s and Calvin Klein on the list of “Genius” copycats.

Brexit Back in the Headlines

Brexit | Source: Shutterstock

  • The UK Conservative Party’s 160,000 members will vote for Boris Johnson or Jeremy Hunt to succeed Prime Minister Theresa May; results are expected on July 23
  • Both candidates support exiting the European Union by the Oct. 31 deadline, but Johnson, the favourite for the job, has taken a harder line
  • A no-deal Brexit would shave 2 percent off UK growth and impose 4 percent tariffs on goods traded with the EU, according to a UK government watchdog

Boris Johnson looks likely to be named the UK’s next Prime Minister. What does this mean for fashion? For starters, a no-deal Brexit is now firmly on the table, with all that entails: at minimum, a projected recession in the UK, tariffs on clothing imports and exports, and shortages of foreign workers many brands rely on to staff garment factories and shop floors.

The Brexit process has felt like a two-year challenge to walk as close to the edge of tumbling out of the EU without actually doing so. But Johnson’s rise points to a hardening of the UK’s stance, and he’s shown little appetite for hearing out objections from fashion and other affected industries.

The Bottom Line: Even with a Brexit hardliner installed at 10 Downing Street, the fashion industry may be no closer to seeing a resolution to its current state of uncertainty. The new head of the European Commission, Ursula Von Der Leyen, has floated the idea of extending the Brexit deadline yet again.

Instagram Pulls the Rug Out From Under the Influencer Economy

Instagram’s Checkout feature allows users to shop directly in the app, through influencer accounts | Source: Courtesy

  • Instagram is hiding posts’ “like” counts from followers in Canada, Japan, Italy and other countries
  • Likes are a key measure of audience engagement for influencers, but some observers believe they take a mental health toll on users
  • Instagram has introduced new ways for influencers to earn an income on the site, including shopping features

The like button below Instagram posts exists at the heart — no pun intended — of the influencer economy. Its removal will change how brands, influencers and celebrities operate on social media in potentially unpredictable ways. Instagram has introduced other ways for influencers to earn coin, from Stories (where views, not likes, are currency) to shopping features. Some of these options are only available to top-tier influencers like Chiara Ferragni and Kylie Jenner, though Instagram is likely to roll them out to others if they prove successful. Removing likes may help guarantee that outcome by nudging users toward other features on the site, and will help brands filter out lesser influencers whose relationship with their followers begins and ends with the heart button. Or it could alienate users and influencers alike, to the benefit of rival platforms. For now we’ll have to head to Canada or Japan to find out.

The Bottom Line: By prioritising e-commerce and video views over more nebulous forms of engagement, Instagram is accelerating a shakeout in the influencer economy.

Editor’s Note: The July 14 edition of this newsletter stated that Burberry had recently set a goal to go carbon neutral by 2022. This is incorrect. Burberry announced this goal in 2017; it recently set new greenhouse-gas emission targets. 

COMMENT OF THE WEEK

A Zara store

“Whereas this is very positive move from their side, I only see environmental targets, what about the labour or human rights concerns like paying living wage to their workers? Social impacts are within the definition of “sustainability” and should be taken more seriously.” @aeyildirim88, commenting on “A Rare Look Inside Zara.”

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