When the News Speak for Themselves - The Next Months of the Fashion Industry Will Be Rocky
Hello and welcome to the tenth issue of moderated, a newsletter created to dive into insights and phenomenons in the Fashion Industry. It also has a curation and summary of the most talked last week’s events of the industry, offering further readings for more details.
if you are here for the first time, welcome! I hope I can somehow help you to keep up with the fast-paced Fashion Industry. If you haven’t subscribed yet to receive a weekly issue by e-mail, you can just by clicking below.
This week’s moderated will is a little bit different. From my point of view, last week was crucial for the fashion industry. With the opening of commerce in some countries consolidating, we manage to get a glimpse of how the next months will be…and what a glimpse. While preparing the recap of last week, I felt like the news told the story by themselves. So this week, I will leave the recap for you to read – because a lot happened - and close it with some observations.
A small summary of it: brands are ready to go back to normal, while the market isn’t, more bankruptcies and lawsuits, more racism accusations, more brands trying to be diverse and…ah... Emma Watson is part of Kering now.
So let’s jump into last week’s recap of the Fashion Industry.
Last Week’s Recap
Emma Watson, Jean Liu, and Tidjane Thiam Join the Board of Kering
In a moment when diversity and sustainability are top discussions in the fashion industry, Kering, the luxury fashion group that owns brands such as Saint Laurent, Gucci, Alexander Mcqueen, and others, announced that the actress Emma Watson and the executives Jean Liu and Tidjane Thiam became part of its board of directors.
Jean Liu is the president Didi Chuxing, a multi-billion dollar Chinese app similar to Uber. Tidjane Thiam, Kering’s new Chair of the Audit Committee, is the former CEO of Credit Suisse Group AG and the African Union Special Envoy on Covid-19. Emma Watson, best known for her part as Hermione in Harry Potter, was appointed as the Chair of Sustainability Committee. In the last years, the actress has been extremely vocal about sustainability in fashion as the face of the Good On You rating app.
In addition, Jean Liu, who is Chinese, and Tidjane Thiam, who is a black and from Cote d'Ivoire (known as the Ivory Coast), are the only people of colour on the board. Until now, Kering's board was entirely white and European. François-Henri Pinault, Kering CEO, highlighted the importance of this new diversity to the board in a statement:
“Their respective knowledge and competences, and the multiplicity of their backgrounds and perspectives will be invaluable additions to Kering’s Board of Directors (…) The collective intelligence that comes from diverse points of view and the richness of different experiences are crucial to the future of our organization. I am proud to add such impressive talents to the team.”
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Anna Wintour Apologises After Allegations of Racism at Vogue
Last Wednesday, Anna Wintour, who is the editor in chief of the American Vogue and the Artistic Director and global content advisor of Condé Nast, sent an email to colleagues apologizing for race-related mistakes in the past. The email came after racism accusations in Condé Nast's workplace and in the content made by its publications. Amid these allegations, rumours that Anna Wintour would be stepping down from her position surged, but were already shut down. This scenario resulted in the apology sent last week, in which Wintour stated:
“I want to say plainly that I know Vogue has not found enough ways to elevate and give space to Black editors, writers, photographers, designers and other creators. We have made mistakes too, publishing images or stories that have been hurtful or intolerant. I take full responsibility for those mistakes.”
Some big media vehicles, including New York Times, The Guardian, and New York Post, are questioning if Anna Wintour, who has been probably the most important name in the fashion industry for years, could survive the social justice movement. Adam Rapoport, who until recently was the editor in chief of Bon Appétit magazine (which is also owned by Condé Nast), resigned his position after former employees accusations of racism and insensitive Halloween photos of him resurged. Could Anna Wintour be facing a similar path?
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Burberry and Dior Announce Solid Runway Shoes Plans
While some brands are taking risks in new formats and fashion calendars, Burberry became one of the first ones to announce solid plans for the autumn. The British label confirmed it will be presenting its Spring/Summer 2021 collection on 17 September, but in an outdoor location. The company did not disclose yet where the show will be, but it stated that the experience will be available digitally for those who can’t attend the event. This news can come as a surprise, since Burberry was one of the first fashion luxury brands to attempt a new fashion calendar and runway show format, implementing the see-now-buy-now format back in 2016 (which they have abandoned) while live-streaming the show. Promotional video of Burberry In Nature show:
Dior also announced during a press conference on 22 June that it will go ahead with its fashion Cruise show in Puglia and confirmed the participation on Paris Fashion Week in September. Pietro Beccari, the brand’s CEO, stated their positioning of keeping the shows was in order to support Dior’s small and large suppliers, which have many artisans depending on the company. To know more details about the shows, check this Vogue article.
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Gucci Raises Its Handbags’ Prices, Said Analyst
After Louis Vuitton and Chanel, it was now the Kering owned Gucci that raised its prices. The Italian brand increased handbags’ prices by up to 9%, in a bet that brands will still lure the wealthy. The information came from Jefferies luxury goods analyst Flavio Careda. He compared the prices of two Gucci’s handbags – the Dionysus and Zumi models - in various countries from May to June and identified price hikes between 5% and 9% in Italy, UK, and China. According to Careda, the price increase is an opportunistic move to compensate for the revenues lost due to the pandemic. Gucci has not commented about it yet and declined to address it to BOF. A Reuters review of online prices for handbags also stated Louis Vuitton had further increases in Europe and the United States.
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Gap is Being Sued by Landlords for Missing Rent Payments
Last week, Brookfield Property Partners LP, which owns shopping centres across the US, filed a lawsuit against Gap. According to the landlord, Gap owes them more than US$2 million in rent for the Texas locations alone. “For three months running, Gap has failed to pay rent at virtually every Brookfield location nationwide, even for stores that Gap is operating”, stated the landlord in the filed court papers. Brookfield is the third company to sue Gap, which also owns Old Navy and Banana Republic. Previously, Simon Property Group Inc., another large mall owner, and a New York landlord, owner of Gap’s Times Square store space, sued Gap for missing allegedly failing to pay over US$65.9 million in rent and other charges in recent months. Last Thursday, Gap made a statement addressing this situation:
“We remain committed to working directly with our landlords on mutually agreeable solutions and fair rent terms, just as our industry and government partners have sat with us in good faith to shape the post-Covid business landscape. We are pleased with the progress we’ve made with hundreds of our landlords as we’ve reopened stores across the country.”
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Boohoo Agrees to Buy Oasis and Warehouse
It’s a new chapter for Boohoo's shopping spree. Oasis and Warehouse went into administration (the UK version for Chapter 11 bankruptcy) in April, cutting off 1,800 jobs. During Covi-19 lockdown, the brands, besides having to close its 90 stores and 437 concessions in department stores in the UK, weren’t able to maintain their e-commerce running for weeks. In this scenario, Boohoo agreed to purchase Oasis and Warehouse from its previous owner Hilco Capital, which has bee looking for buyers interested in the brands for a while. Boohoo is one of the few fashion companies that is profiting from the pandemic, with sales going up 45% in the three months to May.
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Forever 21 Returns to European Market
After retreating from Europe in 2019, Forever 21 announces it is coming back to the continent with a new strategy. The fresh start of the retailer in Europe will be e-commerce focused, adapting as much as possible to local markets. The strategy will have a cross-border approach, sending orders straight from the United States to Europe. This format was already applied by the brand in Asia and Latin-America and brought extremely good results.
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Businesses in Trouble: New Bankruptcies, Shutdowns and Brands In the Watch Out List
Bankruptcy: The Brazilian group InBrands, owner of brands such as Ellus, Richards, Alexandre Herchcovitch, Salinas, and Tommy Hilfinger Brazil, is said to be preparing to file for bankruptcy, according to Estadão. The group has been struggling since the Brazilian financial crisis in 2015-16. The group bankruptcy would be focused on restructuring the strategy to keep its brands alive.
Shutdowns: Sies Marjan, a popular New York-based brand designed by Sander Lak announced it is shutting down its operations for good. The news comes as a surprise, once, different from most brands that are filing for bankruptcies or closing now, Sies Marjan was not struggling prior to the pandemic. The reasons behind the brand closure, however, represents way more than just another victim of Covid-19. It comes as a result of investors’ loss of patience for brands that don’t turn over profits. To understand better, check this GQ article – such an important reading! Other brands that announced the closure last week: Long Tall Sally, Matter, and Virtue.
Watch Out List of Next Bankruptcies: All Saints is renegotiating rent terms with landlords to avoid bankruptcy due to lockdown measures. The retailer entered a process called company voluntary arrangement (CVA) in order to force landlords to substitute fixed rents for a turnover model linked to the store’s actual sales. Other retailers in the watch out list of bankruptcies: Ascena Retail Group (owner of Ann Taylor and Lane Bryant) and Francesca’s.
When the News Speak for Themselves - The Next Months of the Fashion Industry Will Be Rocky
Last week was quite intense for the fashion industry. On one side you have brands guessing everything will be back to normal very soon, on the other one, brands panicking and even closing businesses due to the pandemic impact. Then you have the whole social justice movement affecting the largest players of the industry - for good or for worse. The week represented more or less how the next few months will probably be for the fashion industry: hard and shaky. With the opening of stores and lockdown measures termination consolidating in some countries, we are being able to see that the crisis for the fashion industry is just starting. Even in regions where stores reopened, sales are not back to normal, many are still struggling and many are just ignoring the whole debate of how much the industry needs to change. The next months will be like this week, each brand approaching the situation differently because the truth is that no one really knows the answer now.
As someone that works in fashion, it is a little scary to see the whole industry so confused. I just hope the industry refinds its purpose and balance - this search is at least what I have been doing lately, as well many people in fashion around me.
Thank you for reading this week’s moderated and next Tuesday I will be back with more. If you haven’t already, subscribe below to receive the moderated newsletter straight to your email, and if you really liked it, share this post with friends and family.
Bye-bye and see you next week!
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