Fashion Notebook

Lesssons In Branding: Is Vera Wang the Next Martha Stewart?

Vera Wang, a high-end designer who has made a name for herself over the past two decades creating wedding gowns (with price tags to match, and photo'ed, right), is now opening her own wedding registry—a first in the designer market. Which kind of surprises us, and then, eh, not so much, and then we're all like: "Hey why did no one think of this before?!"

(Full disclosure: It was a late night, and stayed up party with the Cuervo people waaay past our already respectably late bedtime, so if we seem a little dazed today, it's not you, or Vera for that matter. It's us, sweetcakes.)

Anyhow... back to the relevance. VeraWangonWeddings.com will allow not only custom registries for engaged couples, but also a breakdown of runway trends, e-commerce, couples quizzes and wedding planning ideas from Wang herself.

But the bridal registry and e-commerce site is only the tip of the branding iceberg for Wang. In a series of moves similar to those of the one-woman empire orchestrated by love-her-or-hate-her-you-betta- respect-her Martha Stewart, the designer has recently expanded into diverse categories such as bedding, home goods and stationary. Additionally, Wang launched a collection for Kohl's stores late last year.

"Our authoritative position in bridal and bridal registry has allowed us to leverage this [consumer] trust into a lifestyle brand," said Wang. "The next logical step is to capitalize on our relationship with the client over the course of their lives. Our objective is to continue to grow our lifestyle product offering and keep pace with the evolving needs of the consumer."

Wang added that, moving forward, her company is exploring expansion into furniture, decorative fabrics, rugs, lighting and even a Wang-branded line of paint. Now we just won't know who's jungle green to trust when we repaint the bathroom: Vera's or Ralph's?

But what's to stop Wang from becoming like others who burst into multi-category expansions like Bill Blass or Halston, and getting less than sterling results? (Take "less than sterling" to mean abominable here, dears.) Well, apparently, it's because, as Dylan used to croon in that nails-on-a-chalkboard voice: The times they are a-changin'. And so are consumers and designers, y'all!

"We're at a different time for both consumers and designers; and I think Vera is really capitalizing on the ability to do both high and low in the design realm," said Wendy Liebman, CEO of WSL Retail, New York. "The level of sophistication and level of exposure of shoppers has changed and that acceptance, through what's gone on with H&M's designer collaborations, has really opened a door."

For Liebman, Wang's strategy makes sense and she doesn't seem to be stretching the bounds of her brand potential. "The expansion into bridal registry is a logical one, and the home goods are the same . . . Certainly her work with Kohl's appears to be working," said Liebman. "When you look at what Bill Blass or Halston did, versus what Martha or Vera are doing now, you've got a convergence of a smarter shopper and a smarter designer."

Yes, yes, all well and good. And we think V might actually pull it off.

But if her marketing folks are reading this, please, please let us make one wish for how she rolls out home goods, particularly kitchen appliances. Forget the Today Show and get Ms. Wang's face on Food Network's "Paula's Party." We're salivating at the proposition of having Paul Deen (photo, left) do a wedding cake episode with Wang brought on as creative consultant, and having Deen shout out: "We're making weddings today, y'all, and I've brought along my good friend, hot cutter, I'm sorry, I'm sorry, howit creature... Oh whatever y'all, it's fashion designer Vera Wang!" The episode practically writes itself.

This is a sure-fire way to sell Wang, and her image, unequivocally to the lucrative Middle America and mass markets.

Financial Desk: Have a Cigar, Mr. Frankfort, Coach Sales Rise 19% in Q3

It's good to be Lew Frankfort. 

The Coach CEO today announced that third quarter sales had risen 19%, to $744.5 million, and profits rose 8% to $162.4 million, despite an economic slowdown in the North American market that has shaken the retail industry, and been the scape goat for much recent poor financial performance.

"We were pleased with our performance, especially in light of the worsening retail climate in the U.S.," Frankfort said, in a conference call with analysts this morning. "Overall, Coach's quarterly performance reflected the strength of the Coach franchise and the continued out-performance of the U.S. handbag and accessory category as compared to overall retail sales."

And while the macroeconomic landscape is still too murky for Mr. Frankfort to crystal ball fiscal 2008 performance, he did reveal that he expects to post $3.18 billion in sales for fiscal 2007 (which closes in June—you know, screwy fashion financial calendar), a more than 20% increase that will lift earnings per share to an estimated $2.06.

But it wasn't all sunshine and rainbows. Frankfort also said that the strong quarter reflects also "the critical balance provided by our multi-channel and international business model," which, of course, means that overseas sales were a significant factor, particularly in the Asian market. More telling on the domestic front was the department store weakness, where sales grew only 5% for Coach, versus a total revenue increase of 15% across all channels.

Frankfort attributed the growth, first and foremost, to the company's product, bound together with the "brand proposition" of Coach (read: something of perceived quality, for a range of price points), as well as the company's "broad and loyal  consumer franchise." OK, whatevs Lew, basically you owe the success to having products people want at prices they can still afford, or think they can, for now.

Of course, we'll have to wait and see how this whole recession thing shakes out, but if we had to call it earlier, we'd say that Coach looks to be one of the brands that will weather the storm, and perhaps even make a little bit of money in the process.

There's also some speculation, per WWD, that Frankfort might be getting ready to launch into the women's ready-to-wear business, big time, after poaching a series of designers from the house o' Marc Jacobs. Stay tuned.

Oh No She Didn't! Jill Granoff Leaves Liz Claiborne for Kenneth Cole

The Gossip Girl in us finds this one kind of delicious, but the journo in us finds it kind of a headscratcher.

Jill Granoff has left her spot as the EVP of direct brands at Liz Claiborne (overseeing the company's golden children: Juicy Couture, Mexx,  Kate Spade and  Lucky Brand) to become the CEO of Kenneth Cole Productions. At her new gig, which starts May 5, Granoff will be in charge of retail, wholesale and licensing for all domestic and international operations, effectively taking over the responsibilities of brand namesake Kenneth Cole who will continue on as chairman and chief creative officer to manage the brand's positioning, product, design and advertising (maybe he can make it seem less tired and derivative!). Both are pictured, at right, in our fun-with-Photo Shop estimation of what the new deal must look/feel like.

Ok, we get it from an ego perspective, CEO trumps EVP, no question. But it kinda seems like she traded one sick child for another. While Claiborne has its own issues, including that recent $451 million loss, they at least appear to be on the road to recovery. (For more on Claiborne's situation, check out our feature, "Rough Measurements"). Kenneth Cole, on the other hand, seems to be in some seriously bad shape and we don't hear any buzz about them getting better. In fact, we've been hearing that they're on the verge of a turnaround for at least the past two years. And nothing.

In its most recent earnings report (from March 4), Kenneth Cole Productions posted net sales of $119.5 million for the fourth quarter, practically flat against last year. For the full year 2007, sales were $466.4 million, down 5.5% from 2006. Not so bad. Er, until you look at the profits. The company posted a net loss of $3.1 million, or 16 cents per diluted share, for the fourth quarter, versus a gain of $8 million, or 39 cents a share, in the year-earlier period. When the last cash register chimed in for 2007, the brand posted only $7.1 million in profits, or 35 cents a share, down almost 75% from 2006, when they posted net income of $26.8 million.

If you can't read between the lines, or you don't have your abacus out: that's not good. And why do people leave jobs that seem like they could be promising for ones that will likely be a total mess? Beaucoup d'argent, cherie! Then again, maybe Granoff's been shown a plan we're, and the earnings analysts, aren't privy to. Or maybe she just likes a challenge.

But hey, a little financial thunderstorm won't prevent us from giving you guys the PR love fest, fresh from the release:

"We are extremely excited to have Jill on our team. She has a great track record of building brands, and I look forward to working with her and leveraging her strategic and operational capabilities to improve all aspects of our company," said Kenneth Cole, in a statement. "It is a new era for me, and the company. I am confident that having an executive of Jill's stature and abilities, to partner with me and our strong management team, will allow the company to achieve even greater successes in its next chapter."

And Granoff's air kisses:

"I feel privileged to have the opportunity to work with Kenneth and the management team to realize the extraordinary potential of this global lifestyle brand," said Granoff, in a statement. "I am particularly excited to help build upon the strong brand heritage while helping to drive new growth initiatives in the retail and international arenas."

Honey, we think you'd have a better chance of doing that with Juicy Couture than Kenneth Cole, but, hey what do we know? Oh, and there was also this fun little nugget from Liz Claiborne CEO William McComb, that we're reading as a kind of "bitch please" statement:

"We have made a lot of progress towards the execution of our strategy over the last eight months, in particular by placing strong leaders in the multi-functional roles each of these companies requires to successfully expand its business," said McComb, in a statement. "We thank Jill for her valuable contributions to the company during the past two years and we wish her the very best on future endeavors. While we're disappointed to see her leave, we have a deep bench of talent at the management level, and I am confident that this will be a seamless transition."

For some reason, we picture McComb penning this while Tina Turner's "When the Heartache Is Over" booms in the background.

Financial Desk: Strong Gains in Q1 Portend Bright 2008 For LVMH

In the words of one Flavor-Flav, LVMH Chairman and CEO
Bernard Arnault "knows what time it is."

Remember when the luxury house's head honcho (pictured, right), whom we've always thought was like a lost member of the Rat Pack, said this, a while back?

"I believe that [the recession's] consequences on LVMH will be limited, weak, or even non-existent. In fact, the clientele that we are dealing with is far less affected than the rest of the economy by these short-term economic swings.  They have high purchasing power, located in a number of countries where the economic climate will be bouyant, even if there's a minor recession in the U.S."

Well, he wasn't just puffing his sails. First quarter revenue reports show that, with the sole exception of the wine and spirits group, all divisions of LVMH are up.

Fashion and leather goods grew 7%, led by the strength of Louis Vuitton, which received its own TV commercial this quarter, in addition to recently inking a deal to have Rolling Stones' guitarist (and, we think, animatronic wax doll) Keith Richards star in its current print campaign. On the product front, the company said that the collaboration between Marc Jacobs and Richard Prince (the artist of "Let's not and say we did, XOXO, Jennifer Aniston" fame) was particularly successful. Meanwhile, perfumes and cosmetics grew 8%, attributed to the continued momentum of the Christian Dior brand offerings, as well as the new Midnight Poison fragrance and Addict High Shine lipstick.

But the real winner of the quarter was the watches and jewelry group , which posted 12% revenue gains over the year-earlier period. Strength came from brands including TAG Heuer, Zenith and the Christal collection from Dior. The company added that Chaumet and De Beers also continued their retail expansion plans and increased revenues. New watches previewed at Art Basel in Switzerland have reportedly attracted "large increases in orders" from retailers.

And the bottom kicker of the sales release seems to only confirm what Arnault had promised earlier:

"LVMH will continue its growth in 2008 despite the challenging monetary environment and an uncertain economic climate at the beginning of this year. Increasing market share and the profitability of its leading brands as well as improving the results of its developing companies remain LVMH top priorities."

If they can keep these numbers up, or better yet, best them, then we think it's fair to say that the strategy we outlined a while back, that of weathering the recession by only appealing to the top end clientele, has indeed proved not only stable, but a money maker for LVMH.

Breaking News: Commes Des Garcons' Rei Kawakubo To Design Next Guest Collection for H&M

Now this is one that actually has us a little hot under the collar.   

Lagerfeld, sure. Viktor & Rolf, cute. Cavalli, sexy. Stella McCartney, feh. Rei Kawakubo, what?!

That's right, empress of whimsical Japanese luxe label Comme des Garcons, Rei Kawakubo, has announced that she will be the featured artiste on H&M's next designer collaboration. The collection launches first in early November, to coincide with the opening of H&M's second Tokyo store. In the following days, it will roll out to doors in the rest of H&M's global markets.

The collection will include apparel for men, women and children, as well as accessories and a unisex fragrance. This certainly is a much more expanded program than the fast fashion retailer has done in the past, and it would seem that the growth of product offering owes everything to the freshness that Kawakubo can bring to the brand.

Much like the Japanese designers Issey Miyake and Yohji Yamamoto, with whom she formed the Japanese triumvirate that defined much of the new wave fashion of 1980s American culture, Kawakubo's designs are structurally intense, and often include popular cultural references in a rather Pop Art motif (such as a series of men's suits she rolled out a in spring 2006 back that featured the iconic Rolling Stone's lips n' tongue logo splayed across the fabric). She was also the mentor for another fashion avant-gartist whose star appears to be ascending these days, Junya Wantanabe. For a look at some of her work, check the photo above.

That said, we're so interested to see what she turns out when she's not using high-tech fabrics or restrained by price points that might tie in some of her more flights of fantasy designs. As we see it, this could be a love it or hate it collection, and we just hope that the quality matches up to the buzz that will no doubt follow this collection's launch. We remember hearing that there were some issues with the clothes that Cavalli put out on the racks, not to mention those of the McCartney collection (said one of our friends, at the time: "I walked out with a cute dress that turned into a pile of buttons and thread after two weeks.").

Anyways, as always, here's the mutual lovefest that always follows these kinds of announcements.

"I have always been interested in the balance between creation and business," said Kawakubo, in a statement. "It is a dilemma, although creation for me has always been the first priority. It is a fascinating challenge to work with H&M since it is a chance to take the dilemma to its extreme and try to solve it."

See what we mean? Seems like old Kawakubo might be prepping us for the design vs. quality vs. price issue we outlined above. Less avant garde, but better quality, or more envelope pushing and delicate? Again, will be so interesting to see her "solution" as she calls it.

And now from H&M's creative advisor Margareta van den Bosch (great name, non?!):

"Rei Kawakubo has been at the top of our wish list for a long time and we are thrilled that she has chosen to collaborate with us," said van den Bosch, in a statement. "We have tremendous respect for Kawakubo's fashion philosophy of questioning fashion's ingrained patterns, and admire her artistic approach to design. We are particularly excited that the collection will be launched in Japan, Kawakubo's native country, at the same time as the launch of our new store there."

Ok, so we'll have to stay tuned, but we think this could be good news. It will drive some buzz—as these collections have done in past incarnations—for both the designer and the retailer, exposing the younger, less monied set to Kawakubo's work and perhaps building brand affinity there, while probably giving H&M a much fresher and more high-concept street reputation for the risk they're taking in bringing her in.

We'll be checking back in November to see what the product looks like!

Lessons in Branding: Why Going Logo-less Might Be A Good Idea For Luxury Brands During The Recession

There's an interesting  article today in the New York Times' "Thursday
Styles" section.

No, no, read on! It's not another critique of an out-of-touch story on youth trends or pandering pitch about how great the rich are and why we, the not-so-rich should thank our lucky stars they exist. Our friends over at Marx Marvelous have that end covered pretty well.

Rather, today, we're calling out a piece about the absence of logos on Bottega Veneta's luxury sportswear.

The piece, which can be read in full here, looks at how the Italian luxury label has revamped itself without going the route of high-profile monogramming or logoing.

Within the article, journo Ruth La Ferla, extolls the virtues of creative director Tomas Maier's consistent attention to high quality goods that hit the real deal in luxury, rather than merely the perception of luxury, and how his actions have driven the brand to a $500 million annual business, thereby making it the second highest earner for parent Gucci Group.

And then our favorite luxurist, Milton Pedraza, CEO of The Luxury Institute, chimes in to tell La Ferla that during a recession, the rich "don’t want to be screaming luxury right now...They don’t want something flashy that everybody else has. They are looking for unique handcrafted things that can’t immediately be reinterpreted at every level of the marketplace.”

The thing about logos, as we've long felt, is that they can cut both ways. In fact, we've been thinking about our own logo, for Fashion Notebook, which you can check out, at right, but the tech guys haven't yet gotten around to installing it. And maybe, now, we're thinking that's a good thing.

But back to the relevance.

Taking Vuitton, for example, when one of perhaps mass-affluent or aspirational means has laid down the dollars for a fashion piece that is truly of excellent quality, not to mention name recognition, it's, we think, safe to assume that we'd like others to know it. After all, that monogram tells others that we care about quality, perhaps that  we're hip to hot or established names in the industry, and, let's be honest, that we could afford to purchase it. In a sense, we want everyone else to know what that handbag, dress, or accessory was worth, and, by proxy, that we're worth something as well.

The problem, of course, is logos also tell us what everyone else is worth, too. And if we see a bunch of Louis Vuitton monograms on my friends' purses, or luggage, shoes, or, god help us, something bigger and obviously more expensive than the piece we bought, suddenly, Vuitton just doesn't seem so special anymore.

This is to ignore the further complications that arise from knock-offs. If everyone on Canal Street is rocking the monogram, and for a mere percentage point of what we paid, why we'd have a fit and would feel somewhat obligated to inform everyone we saw that, well, no, ours is in fact, real and then go into a litany about the stitching and leather quality that, at best, wouldn't gain us any friends, and, at worst, would lose us those we already count in our ranks.

And let's not forget that this isn't, obviously, just a Vuitton problem. Many other luxury brands feature highly-identifiable logos, monograms, or signature patterns on their products that identify the brand with all the subtlety of a bull horn. Think about those brands you recognize within seconds on some of the products worn by your friends: Coach, Gucci, Burberry, Chanel, Marc Jacobs, Dolce & Gabanna, DSquared, etc. 

As far as the recession, the no-logo route is probably a good idea. After all, those who can afford luxury goods without batting an eye are usually so acclimated to that lifestyle that, well, they don't need to scream it, as Milton says, like the rest of us. And those customers are precisely the ones luxury brands need to be going after in times of serious economic downturns. Sound familiar? Yeah, we've said that before.

And we've also dished with Maier on his strategy. When we were writing that tome about the opportunities and potential pitfalls of lower-tier secondary collections for high-end designers, it was Maier who said (towards the end of the article) he would never consider such an extension because he felt that it would potentially overexposure of the handbag business that is the core of Bottega's sales.

"The philosophy of Bottega Veneta is to produce innovative designs with the highest quality materials and contemporary functionality," Maier told us at the time. "All of this comes with a cost that can't be recreated at a bridge level price."

What remains to be seen, however, is whether or not Mr. Maier's activities give the brand something of a glass ceiling when we're in economic boom times, and everyone is scrambling for top-end designer merchandise. Then again, at $500 million in annual sales, I don't think he's got anything to worry about.

UPDATE: No Calvin TV Campaign For Eva Mendes

So we had some questions regarding that Eva Mendes story we posted yesterday.

Turns out that there won't be a TV push for the launch of "Seductive Comfort." Rather, it will be a global print and outdoor campaign, just like the stuff she'll be doing for the Fall 2008 skivvies ads, and we imagine that will likely also be the plan for the forthcoming fall fragrance launch.

Also, no color, so to speak, on Eva's ability to appeal to the Hispanic shopper demographic. A rep told us that Eva was picked for her "universal appeal" and general hotness. Sometimes, we guess, there is no angle when a company picks a mass-culture celebrity.

Breaking News: Eva Mendes Will Be the Face of Calvin Klein Underwear for Fall 2008 Campaign

Calvin Klein announced today that it has tapped Eva Mendes (pictured, right) for its forthcoming Fall 2008 underwear campaign.

The actress, best known for her performances in Ghost Rider, Hitch, and Training Day, will appear in the global print and outdoor campaign, and will be used to help launch the brand's "Seductive Comfort" line. She will also be the face of a new Calvin Klein fragrance that also launches this fall. Details concerning the
fragrance were not available, but if the campaign's anything like the one for ckIN2u, then don't hold your breath. We thought the creative looked like a sex-sells job that was phoned in from the brand's edgier heritage, though we will say the mobile marketing for that launch, in Canada at least, was noteworthy and inventive.

The deal, the terms of which were not revealed, builds on a longstanding relationship between the actress and the brand. Mendes has appeared in Calvin Klein Collection gowns at various events including the CFDA Fashion Awards, Condé Nast's celeb-heavy "Fashion Rocks" parties, and most recently, last month's Independent Spirit Awards.

Here's the lovefest quote from CK prez and COO Tom Murry:

"We're very pleased that Calvin Klein will be able to capitalize on the benefits of having a beautiful and talented actress like Eva Mendes featured in two campaigns running this fall," he said, in a statement."She really embodies the essence of the Calvin Klein brand and we look forward to seeing that carried through in the creative."

We're trying to figure out if the brand will use Mendes to leverage market share with Hispanic consumers, as well as whether or not "Seductive Comfort" will feature TV spots as part of its launch push. Check back later for more details.

What the 2008 CFDA Nominations Tell Us About American Fashion

Another spring, another awards season for the Council of Fashion Designers of America. We always look forward to this announcement, and yet we always walk away from the press release disappointed. Why? Well, because year after year, it all just feels the same and it's gotten to the point where we feel we could pick out the nominees, blindfolded and drunk, and probably get them right about 90% of the time. But first, the nominees.

In case you haven't heard, the group, whose prez is none other than that lullaby-talking Diane Von Furstenberg, has announced the following nominations for 2008: [Note: The Swarovski awards recognize emerging design talent.]

Womenswear Designer of the Year                                   Swarovski Award for Womenswear
Francisco Costa (Calvin Klein)                                            Kate & Laura Mulleavy (Rodarte)
Lazaro Hernandez & Jack McCollough (Proenza Schouler)     Thakoon Panichgul (Thakoon)
Marc Jacobs                                                                      Alexander Wang

Menswear Designer of the Year                                        Swarovski Award for Menswear
Thom Browne                                                                   Patrik Ervell
Michael Bastian                                                                Tim Hamilton
Tom Ford                                                                         Scott Sternberg (Band of Outsiders)

Accessory Designer of the Year                                        Swarovski Award for Accessory Design   Tory Burch                                                                       Philip Crangi
Marc Jacobs                                                                      Justin Giunta (Subversive Jewelry)
Michael Kors                                                                     Joy Gryson

Well, congratulations to all the winners. Then again, we're sure they've heard it all before. Actually, they have. Let's take a quick, two-year trip down memory lane, just with the marquee awards.

CFDA Nominees 2007                                                     CFDA Nominees 2006     

Womenswear:                                                                  Womenswear:
Oscar de  la Renta                                                            Francisco Costa (Calvin Klein)
L. Hernandez and J. McCollough (Proenza Schouler)            L. Hernandez and J. McCollough (PS)
Marc Jacobs                                                                     Marc Jacobs

Menswear:                                                                       Menswear:
Steven Cox and Daniel Silver (Duckie Brown)                      Thom Browne
Ralph Lauren                                                                    Ralph Lauren
Italo Zucchelli (Calvin Klein)                                              Alexandre Plokhov (Cloak)

Accessory Designer of the Year:                                          Accessory Designer of the Year:
Marc Jacobs                                                                      Marc Jacobs    
Michael Kors                                                                     Michael Kors
Derek Lam                                                                        Tom Binns

Notice anything? Like maybe the fact that the nominees in the
womenswear category have remained virtually unchanged (with the
exception of Oscar de la Renta) for the past three years? Or that Michael Kors (pictured, right, doing his Project Runway duties) and Marc Jacobs have been the accessory designer of the year nominees for three years running, as well? The only thing that seems to have changed much at all is the men's category.

In his statement regarding this year's nominees, CFDA executive director Steven Kolb lauds the way in which "this year's nominees and honorees reflect the strength and vitality of the American fashion industry."

Really? It seems to us that it suggests the industry is rather stagnant, with only the same three names worthy of distinction in each of the categories. And let's not forget that chief among those names, Mr. Marc Jacobs, seemed poised, only a season ago, to take his whole operation to Paris. But we digress.

In essence, it would seem that the CFDA nominations this year, and as we've demonstrated above, the past several years, prove that American fashion is a pretty rarified echelon in which only a standard round of top names compete for industry prizes. For an industry where the bread and butter is creativity, the stagnancy (why does that word keep coming to us?) of the nominations list seems to imply a less thoughtful approach. That said, if asked which designers we thought were tops in American design, we'd be hard pressed to come up with a different list. Perhaps the fault then, dear readers, is not within the CFDA nominating committee but within our American fashion selves.

It's hard for American designers—hell, for ANY designers—to become established like these award winners anymore, given the difficulties of getting funding and the fact that we live in a world that no longer seems to care about the development of talent as much as they do about constantly having something new, something chic, and something with a name that others will recognize. To that end, CFDA (and Vogue) are to be commended for their work to bring notoriety to new design labels, as they have with Proenza Schouler, who now top the ranks of their regular awards, having graduated from the Swarovski Award for Womenswear. But it's hard to see any kind of sea change in American fashion coming—and perhaps no one wants it—given that these guys are always at the top of the list for women's design.

Here's hoping that maybe Christian Siriano, recent Project Runway winner (whom we can't help ourselves but to shill for), will liven up those ranks in the coming years.

And full disclaimer: This post is not a statement, by Fashion Notebook, that we think any of the nominated designers aren't talented, or are not worthy of awards. Rather, it is a statement that we've seen these same people getting awards and nominations for years, and we're wondering why there's no one else in the American fashion ring worthy of such distinction by the CFDA.

Week in Review Pt. 1: Louis Vuitton Rocks Out, Kohl's Gets Punked, and More Rumbles for the Luxury Market

OK, so we've kinda been bad lovers the past two weeks. Yeah, we admit it;
we haven't been updating as often as we, or you, would like. But our offline
job got a bit crazed last week and that prevented us from posting. So, in effect, it's not you, it's us.

Also, we were, like, on pins and needles waiting for the finale of Project Runway. And, hopefully you'll agree, we're so, so, so, fiercely happy that Christian Siriano won we can barely contain ourselves. Kid has some serious talent, and we're sure that we'll be hearing from him sometime soon. Is he adoptable  by the way? We might just forego that Boston Terrier we'd been planning on bringing home and swap it for that adorable pocket-gay (though he'll have to sleep in a closet, as we're still living in a New York state of reality folks!).

But let's leave all this relationship drama to the Spitzers! It's time to take a look at what's happened, what it means, and where we see things going... So without further ado...

Louis Vuitton's New Bag
Unless you've been hiding out under a mountain of paperwork (like us), you've probably already heard that Rolling Stones guitarist Keith Richards is the new, wrinkly face of Louis Vuitton (SEE PHOTO, BELOW, LEFT). (Insert "Vuitton's new, iconic wrinkled bag" joke here, hell, everyone else has. For SHAME Saturday Night Live! You, like fashion, were more inventive in the 1980s.) If you haven't seen the spot already, check the photo at right.

We have to say to say that this is an interesting choice, and it's already done its job many times over in terms of exposure (more than we'd imagine placing, say, Katherine Heigl, or some other, safer choice, in front of the camera). But hasn't Vuitton really missed the rebel-rock-me boat by like, say, 40 years? We would prefer to see the ads featuring this Keith.

Also, how does John Varvatos feel about all of this. Certainly, the Stones trump Cheap Trick, not to mention the fact that the campaign pretty much cribs from Varvatos' own advertising mantra: Bring back old rockers and consumers will come. Of  course, Varvatos seems to have more credibility here and we're still not sure what a great cover boy Richards is for the brand. After all, while he's definitely rich beyond words—and amazingly still alive—we're just not sold on him as a real luxury guy. Then again, maybe that's what rehab and old age will do to you. I'm sure that he has a wonderful assortment of organic teas backstage, but is he really throwing those outfits in a Vuitton steamer?

Love to hear your thoughts on this. Drop us a line, here.

Kohls Pumps Up Its Juniors Jam with Avril Lavigne
Yeah, the girl ain't punk kids. Then again, Richards sold his ass to Louis Vuitton, so what does define the legitimate rocker persona? Anyways, Avril Lavigne maybe didn't steal your boyfriend, but she did ink a deal with Kohl's to produce "Abbey Dawn," a collection of apparel (priced $24 to $48) and accessories (read: jewelry, for now) that will hit the mass merchant's doors nationwide in July.

The move obviously means that Lavigne will get some dollars in her coffers—seriously, is she even that hot anymore?—but it also seems to really define her audience in a way that could be limiting for the popstar. Launching just in time for back-to-school shopping, the line is allegedly for the "broad group of shoppers" that Lavigne attracts, according to SVP Don Brennan, but we're calling bullshit. If it's B-T-S, the tricks are for kids, and that's fine, after all, those are the types that will pay retail for her album "The Best Damn Thing," which came out last year and for which the star began touring to support last week.

According to spokeswoman Vicki Shamian, the line shouldn't cannibalize any of the retailer's other exclusive brands, like Candies given Avril (and by proxy, her collection's) "feminine yet rock n' roll attitude." [Side note: Meanwhile, no notes on how the Simply Vera collection is doing. If you've got deets, or reactions, or if you've tried on the products, send a note here]. Advertising, on which details aren't yet available, will be handled by the Kohl's in-house team, in conjunction with lead agency McCann Erickson, New York. Stayed tuned.

 

Financial Desk: Luxury Retail's Mixed Bag
Ok, so we've probably hammered this to death, but there might be trouble with the luxury market.

Saks Fifth Avenue announced last week that it had approached roughly $1 billion in sales for the quarter ended Feb. 2, up almost 5% from the year-earlier period, but with comp store sales increasing by 9%. Meanwhile, net income rose dramatically, some 83% drama, to $39.5 million, or 26 cents a diluted share. However, gross margin slipped about 50 basis points to 37.4% of sales.

But there's trouble ahead. According to a statement by chairman and CEO Steven Sadove, January and February comp store sales grew by only 4.1% and 3.4%, respectively, and "previously high-growth rate businesses such as handbags, footwear and men's have slowed."

"As expected, the more challenging promotional and overall macroeconomic environment that we began to experience in the third quarter continued throughout the fourth quarter and put pressure on our merchandise margins," Sadove continued. "Our outsized comparable store sales growth indicates that we significantly improved our competitive positioning by market, driven by our merchandise, service marketing and capital investments."

And then  came the wahn-wahn moment.

"Nothwithstanding our improved performance and the longer-term outlook for the luxury channel, we expect to continue to face an increasingly challenging macroeconomic and promotional environment in 2008, and are taking a more conservative approach to planning the business this year," Sadove said, adding that the company expects to see comp store sales growth in the mid-single digits for 2008, with low-to-mid single digit growth in the first half of the year.

Meanwhile, at Neiman Marcus, positive earnings were also overcast by ominous notes. Revenues at the luxury department store grew almost 6% to $1.37 billion in the second quarter ended Jan. 26, while net earnings grew 8% to $44.3 million. However, February comp stores sales posted a 7.3% decrease.

In a conference call, Neiman Marcus chairman and CEO Burt Tansky seemed to feel, well, pretty much like every other luxury retailer these days. He's playing a cautious game as the news of a buckling economy and decreased consumer spending prophecies an even rougher year.

"As we all know, the entire U.S. retail sector has seen sales growth diminish somewhat, and this slowdown has affected some parts of the luxury market," he said in the call. "Our sense is that the aspirational customer has pulled back somewhat in response to concerns about the U.S. economy in stock and housing markets. However, this aspirational customer appreciates quality and can be expected to buy more as the economy improves. Nevertheless, we feel confident that the pure luxury customer, the affluent to the very affluent, will continue to demand only the finest."

Seems plausible, of course, except that we're not getting at raw numbers here. What's the proportion of aspirational consumers to pure luxury consumers? Wethinks it be disproportionate and that Neiman's might have a few, hopefully not too many, pricey dresses that are staying on the racks as Sex and the City fangirls start closing up their upper-middle class purses.

UPDATE: Target Prez Says Analysts "Over Representing" Significance of Isaac Mizrahi

We had a feeling the top dogs over at Target would have to  respond to designer Isaac Mizrahi's jumping ship to head design over at Liz Claiborne's women's division.

As we said in our previous post, Mizrahi reportedly brought in about $300 million in annual sales to the retailer, which reported annual sales of $61.5 billion yesterday.

Here was the statement regarding Le Mizrahi's defection, from Target President Gregg Steinhafel.

"As it relates to Isaac Mizrahi, we've enjoyed a terrific five-year relationship with Isaac, and I think you all are over representing what it means at Target," Steinhafel said, in an earnings conference call. "It's approximately 3% of our apparel and accessories business, and we really view his strength as a niche contemporary collection, and any efforts that we have had to move beyond that were unsuccessful at best. And so, when the contract became renewable, we had the opportunity to, he had the opportunity to broaden his involvement with an apparel company, and we took it as an opportunity to move beyond this partnership, because we did not want to pass on higher royalty rates to a small collection business within the stores."

OMG, this is like sooo totally high school, and Target's all, like, pissed, because they got dumped first. So then they fire back, like, well, whatever we didn't really like Isaac that much anyways. But wait, it gets better.

"We're focused on our Go International and our Emerging Designer strategy," added Steinhafel. "WE can very easily replace these four or five racks on our apparel floor in the small section that we had in accessories and footwear with these new emerging designers, which frankly have been very successful, and we've got a terrific portfolio of new emerging designers coming on-stream this year, which we'll share with you as the year progresses."

Oh snap! Burn!

Ok, so maybe we did overestimate Isaac's influence, and while $300 million sounds like a lot to our poor Brooklyn writer budgets, it pales in comparison to $61.5 billion.  But still, the guy added a great personality to the floor at Target, and that's not so easy to replace. Plus, we still firmly believe that consumers connected to Isaac in a way that they will have trouble connecting with designers who are in for one quarter and out the next. But hey, what do we know? We're not making $61.5 billion a year.

While you ponder your own thoughts, here's a video clip for you to enjoy, and remember the personality that once lived at Target. Clip is from The Isaac Mizrahi Show, in a segment featuring Rufus Wainwright, the über-gay singer/songwriting, and full-time Judy! Judy! Judy! fan, who is now starring in H&M's "Fashion Against AIDS" campaign. (Seriously, how can you not love this guy? Enjoy!)

Financial Desk: Target Treads Water With Q4 Sales, Earnings Fall 8%

Another retailer, another disappointing earnings release. Seriously
folks,  we might just have to turn off our stock ticker for the rest of the day.

Target reports flat sales for the quarter ended Feb. 2, at $19.34 billion, though year-end sales grew 6.2% to $61.5 billion. What?! No sales losses!? This is great news!!

Well, it would be if Target hadn't also posted earnings of $1.03 billion, pr $1.23 per share, down 8.2% from last year. For the full year, the brand only moved the needle 2.2%, growing income to $2.85 billion, or $3.33 a share.

Below, the most obvious conclusions from Target's top dog.

"Our  financial performance in 2007 fell short of our expectations as the pace of sales and earnings slowed considerably in the second half of the year," said Bob Ulrich, chairman and CEO, in a statement. "As we enter 2008, we remain keenly focused on the disciplined execution of our core strategy, positioning Target to deliver improved financial results, even in the face of continue challenges in the current economic environment."

Unfortunately, Bob doesn't elaborate (and we're still waiting for the conference call where, you know, he actually might give us more color on this bland statement) so we don't know what kinds of tricks he's got up his corporate sleeves.

The report also makes no mention of the loss of designer Isaac Mizrahi to Liz Claiborne. Of course, Les Mizrahi's goods will still be sold through the retailer until the end of 2008, but nonetheless, his defection to Liz Claiborne was a major hit.

The designer's namesake collection for the brand brought in a reported $300 million in annual sales, in addition to have a sales-halo effect on the other brands in the store. Given his name and popularity, we get the feeling that it's going to be rather hard to replace him, and certainly the one-offs for the Go International collections which have featured up-and-coming designers probably won't make up the sales loss. Moreover, the collection might not pull in as much this year, given that Target isn't likely to promote it since they won't have the goods after the holidays.

For more on the Mizrahi switcheroo, check out our previous post, here.

Financial Desk: On Q4 and FY07 Losses, Macy's To Investors: "Hey, We're Not Doing As Badly As The Others!"

It's not a good day for retailers, with many reporting sales
and earnings slumps.

In its report this morning, Macy's appears to be hoping that they might at least look better than the competition.

"While a weakened economic environment led our industry to softer financial results than initially expected, Macy's, Inc. did outperform most of our primary competitors in the fourth quarter," said Terry Lundgren, chairman, president and CEO, in a statement. "We also generated significant cash flow despite weaker-than-expected sales trends. Going  forward, we are aggressively pursuing our recently announced market localization initiative to drive future sales and earnings."

What's he talking about? Well, earlier this month, the brand announced that they would be consolidating their various Macy's regional divisions into three primary groups: Macy's East, Macy's West, and Macy's South. Within each of those divisions will be 20 "districts," each consisting of about 10 stores, governed by a new workforce of about 250 managers. The thought is that by having more management in more localized markets, the company will be able to make much more specific marketing appeals to its consumers, tailoring everything to their particularly tastes, whims, or geographic proclivities. Of course, that consolidation also includes the downsizing of some 2,550 jobs across the previous geo-divisions. More on that, here.

 

Oh, and also, Macy's announced that it will no longer be reporting same-store monthly sales figures, which, you know, are the clearest indicator of a retailer's performance inbetween earnings reports. Oh, and another thing, they're not going to be giving anymore estimates about sales and earnings for the future. That certainly sounds like an underwhelming vote of confidence in the company's ability to perform.

"In total, 2007 was a year of significant strategic progress," added Lundgren, in a statement. "We successfully launched exclusive new brands such as Martha Stewart Collection, invested for continued growth in the direct-to-consumer business, expanded Bloomingdale's, changed our corporate name, and launched a breakthrough new marketing approach under the umbrella of 'The Magic of Macy's'."

You probably remember that particular campaign from the holiday season, when you were besieged by a commercial with a melee of images of Donald Trump, Sean Combs, Martha Stewart (who almost seemed warm and whom we were also relieved to see unshackled from KMart), and mental eyesore Jessica Simpson hawking their products sold through the mega-retailer.

Lay your chips down, folks, we're betting on Martha as the sales driving leader in the full collection category this year. Hopefully, for Macy's she'll be "a good thing."

Financial Desk: Despite Q4 Weakness, Nordstrom Rolls on With Seven New Stores for 2008

Another sign that the luxury market might be buckling, Nordstrom reported declines across the balance sheet for the fourth quarter.

Net sales dropped 4.4% to $2.51 billion for the quarter ended Feb. 2, and net earnings declined 8.6% to $212 million, or 92 cents a share. For the full year, sales increased 3% to $8.83 billion, and earnings rose 5.5% to $715 million, or $2.88 per share.

The declines were caused, in part, by a "trailing effect" from the previous quarter, according to President Blake Nordstrom's statements in a conference call.

"[That trailing effect] coupled with the softer environment impacted our bottom line," he added, noting that the first half of the year had been, "in terms of sales," successful. "As we look ahead to 2008 and beyond, we are focused on executing our long-term strategy of increasing market share with our core customers by offering great service and the best merchandise the market has to offer. We are in a position of strength financially, which allows us to take advantage of opportunities that may come our way, as well as weather any current challenges that we may face."

Increasing market share with  core customers, boosting service and merchandise, eh? Seems that's exactly what Milton Pedraza, of The Luxury Institute told us was precisely the strategy the luxury market needed to combat the pending/current recession.

While the year-end increases do support Nordstrom's contention of his company's strong financial position, we have to think that moving ahead with the retailer's growth plan is unwise at this time. Nordstrom plans to open seven more stores this year—in Honolulu, Hawaii; Burlington, Mass.; Clinton Township, Mich.; Thousand Oaks, Calif.; Indianapolis, Ind.; Pittsburgh, Pa.; and Naples, Fla.—in addition to the 165,000 square foot store it opened Feb. 15 in Aventura, Fla.

No notes about changes to their marketing plan that we've seen yet, but those cartoonish inserts they've been running for a while now certainly haven't made us want to shop there.

Oscar Wrap-Up: Why Marketing Was the Night's Most Interesting Star

So if last night's ceremony, presenter banter, and Jon Stewart had us yawning in our
seats, at least the marketing plugs were there to wake us up! In fact, we might go so
far as to say that marketing was the real star of the show.

Things kicked off with some good designer plugs in the women's dress category. Headline news: Cotillard up, Kidman down. For a more comprehensive breakdown, check out our previous Oscar post, here. (Or, er, scroll below!)

But we left one of those ladies out of the line-up, because she was just such a good piece of marketing collateral that we thought her more appropriate for this part of the wrap-up. Drum roll please: Heidi Klum in that gorgeous red dress by John Galliano, a philanthropic tie-in for Coca-Cola, which ran its Red Dress campaign spots during the event. The dress (pictured, with Klum, below) will be auctioned off on MyCokeRewards.com, with proceeds going to the charity Heart Truth, which raises awareness about heart disease in women.

Then there were the commercials, and I have to say that the fashion set more than represented. The new J.C. Penney ads for the "American Living" collection seemed to translate well (at least, among our viewing audience last night in a cramped Brooklyn apartment), and everyone seemed pleasantly surprised by the American Express ads with Diane von Furstenberg. Both ads got some prominent sponsorship play before the commercial break had even commenced.

So for the fashion marketers, it seemed like the night sailed on smoothly, unlike Cameron Diaz's attempt to pronounce such difficult words as "cinematography" (again, we still don't understand why she gets Galliano's Dior dresses!).

And then there were these weird product plugs.

Here's Jon Stewart bemusedly futzing with his iPhone. If ever there were a completely smooth pitchman, Stewart's not one of 'em. In a lame segue, he talked about getting to catch up on all of the year's great films right there at the podium. (Because, you know, the square inches of the iPhone really help to communicate the Old West grandeur of "There Will Be Blood." Seriously, has Stewart even used this device?). Then of course, he announces that they're better viewed in widescreen. He turns the phone horizontally and the camera pans in for a great shot of the iPhone and Apple logo. In the end, it's not a bad plug, it's just, well, kinda shameless and we're sure that even those who aren't marketers recognized this little bit for the sham it is. Kind of like the Bluefly.com "Accessories Wall" in Project Runway or the numerous mentions Coke gets during American Idol.

And then there was this COMPLETELY SHAMELESS PLUG for the Nintendo Wii. Coming back from commercial, Stewart and the little girl from that Gospel choir, were engaged in a heated game of Wii Tennis, projected on enormous screens for the whole audience to see. No joke followed, no setup really introduced the plug. It was suddenly just there.  Check out the video below.

Do marketers seriously think the American public is this stupid that they wouldn't know a complete corporate shill when they see it? Why not give away sponsorship titles for the awards at this point? And the Oscar for the Coca-Cola Best Actress goes to... Marion Cotillard! Just think of it! She could thank Diet Coke, of course, for all of those days on set when she needed a fizzy drink that calmed her stomach but didn't contribute to any stress-induced weight gain. Well, that's if San Pelligrino doesn't get the award sponsorship first.

Now that we're mulling it, is this a bad idea? Everyone knows these shows are rigged shams anyways, I don't care how many staged videos I have to see of Frank Pierson being denied at the doors of Price Waterhouse Cooper.

Oscar Wrap-Up: Which Actresses Repped Their Brands the Best on the Red Carpet

So we're back after a late night staying up for that tired annual awards show: The  Oscars. (We know the show ended just after 11:40 our time, but we stayed up late bitching to our bicoastal friends about lame montages, good/bad dresses, and, like everyone else apparently, Diablo Cody).

Seriously, if it weren't our job to stay up  until the wee hours tracking who was wearing what, how they wore it, and how brands made their way onto the stage or in the commercial slots, we would have wrapped this up by 9:00 pm EST and sailed off to bed on a few DVR'ed episodes of "Paula's Home Cooking."

But, for better or worse, we stayed up, enduring less-than-pithy commentary by John Stewart, and some heartbreaking losses ("Surf's Up" losing out to "Ratatouille" for Best Animated Feature and "There Will Be Blood" losing out to "No Country For Old Men" for Best Picture). And it's a good thing we did, because the marketing, as far as we're concerned was the star of this year's drag-along show. But let's kick it off chronologically, with some of the more notable carpet dress-vertisements. (Note: All pictures per WWD. "Fierce Factor"s, our own judgment of how well the star wore her particular dress, set against how likely the placement is to boost the brand, are awarded on a 1.0-5.0 scale.)

Name: Amy Adams
Film: Enchanted
Dress: Proenza Schouler
Fierce Factor: 4.0
Our Take: Aesthetically, this is the perfect pairing. Adams' red hair and ivory white skin work wonders against the emerald gown. The edgy, classic appeal evokes a more colorful version of John Singer Sargent's "Madame X" or the femme fatale of H. Anglada- Camarasa's "Retrato de Sonia Klamery." Unfortunately, points off for that eye-gouging performance, though the girl did have to pimp her movie. Also, she's not that high-profile. 

Name: Penélope Cruz
Film: No noms this year, most recent was "Volver"
Dress: Chanel
Fierce Factor: 4.5
Our Take: Even so-so dresses look amazing on Penélope Cruz. Not only does the girl have extracurriculars to add to her hotness (Cruz speaks four languages! Name one of her American contempos that can claim that), but she can pull off designs that would look perhaps silly on a lesser body. Straight up: she's a stunner every time with no bad publicity to drag her down. With her small frame and captivating gaze really pronouncing this dress, Karl gets the most out of a rather ho-hum haute couture look.

Name: Cameron Diaz
Film: No noms this year, er, like every other year. Most recently, "Shrek The Third"
Dress: Dior by John Galliano
Fierce Factor: 3.0
Our Take: We will never understand why Diaz always gets Mr. Galliano's best. Don't get us wrong, the girl has a great frame, an established bold-faced name, and she photographs well. That, in and of itself, is worth the plug. But c'mon! Certainly the upper crust clientele doesn't want to share threads with Hollywood's leading empress of the Ditzy Dame shtick, right? And we're not going to hate on the pleats, like E! did. But, at the end of the day, it's a rather dull dress, on a very dull girl.

Name: Marion Cotillard
Film: "La Vie En Rose," WON: Best Actress
Dress: Jean Paul Gaultier
Fierce Factor: 5.0
Our Take: Perfect storm here, folks! Not was this fish-scale detailed mermaid dress equal parts daring and stunning for the red carpet debut, but its wearer walked away with the Best Actress award. And did so with one of the most genuine speeches we've seen in some time from the Oscars! As an added bonus for Mr. Gaultier, she's been the talk of the papers this morning, with pictures abounding. What she'll also likely add to that nice stew is that her figure looks like a real woman (admittedly, a thin woman) and she fills out the dress in a wonderfully tasteful way. This is as good as it gets!

Name: Nicole Kidman
Film: "The Golden Compass"
Dress: Balenciaga
Fierce Factor: 2.5
Our Take: What goes up must also come down, and the real low point (ok, with some obvious exceptions that we'll note later, we're lookin' at YOU, Diablo) came with this unfortunate placement on Nicole Kidman. Even preggers, she has the kind of body (read: alien model-esque) that could really show off some of Nicolas Ghesquiere's more ambitious designs, easily clinching the press coverage for the next day. Instead, she walked the carpet as a pretty, pregnant girl in a pretty boring black dress. And that diamond necklace just looked like a sad, glittery trapeze.

In summation, these were just a few of those that stood out to us last night. But we would be remiss if we didn't mention that, while Keri Russell looked great (as we imagine all women do) in the Nina Ricci gown, we were stunned that the label couldn't get more of an A-lister to work a look, especially following that stunning little yellow dress that worked so well on Reese Witherspoon last year! Also, all of our friends were screaming (screaming!) about Diablo Cody, and not in a good way. The dress was terrible, no wonder the maker