Fashion Notebook

Financial Desk: Sales Down, But Earnings Up 40% for Gap, as Retailer Cuts Marketing Budget

We hate to see this, because it means less creative, but cutting its marketing expenses was one tactic that helped Gap bolster its bottom line, even as sales continued their slide into the red.

In addition to other cost cutting measures that included reduced remodeling efforts for Old Navy stores, and a $15 million pre-tax earnings benefit, Sabrina Simmons, Gap Inc.’s EVP/CFO, said in an earnings call late Thursday that “lower marketing expenses” also helped lift earnings 40% to $249 million, for the quarter ended May 3.

So where was the blood spilled in the marketing department?

Well, ad spend dropped almost 18% from the year-earlier period, closing at $93 million for the quarter. The $21 million reduction was due in large part to the absence of TV spots for the Gap brand, Simmons said. However, she added that shareholders and analysts shouldn’t expect such cuts to continue.

“Unlike this first quarter, we expect our marketing expenses in the second quarter to be fairly similar to last year’s level of $88 million,” she said.

Yay! Maybe we'll have some more fun creative to look forward to this summer, when we're all staying indoors and running the air conditioners to escape from global warming. That is, though of us who have TV. (We're luddites, y'all, except when we visit our wife to watch rounds and rounds of Lifetime Movies.)

While earnings might have been a bright spot, and showed the beleaguered firm capable of trimming costs for the benefit of its investors, sales trends showed signs of trouble amid an economic slowdown that has the whole retail industry reeling. Comp store sales at Gap North America dropped 7% for the quarter to $976 million, and Old Navy posted an 18% decrease, dropping to $1.2 billion in sales.

If you don't have your financial party hat on, folks, that means, pretty much, "things sucked  over the past three months." Which is too bad for Old Navy, because we, (and the wife), LOVE those new ads. It's like Gossip Girl meets Fred Flare's Crafternoon Delights. Seriously, some fierce-ass dresses that might have the retailer beating Forever 21 at its own game. Seriously, if you haven't seen these ads (also screen-grabbed, above, right), they just might change the way you view Old Navy. They did for us.

Meanwhile, on the richer side of things, Banana Republic's comp store sales dropped 4% to $538 million and Glenn Murphy, chairman and CEO,  said that the brand had been affected by challenging traffic trends, and an “uncharacteristically promotional” environment at the apparel chain’s direct competitors. Thus far, Banana Republic has avoided playing the promotional card to drive sales.

“We’re watching the competitive landscape very closely,” added Murphy. “And [we] are prepared to make the necessary adjustments to drive traffic if this promotional level that we are seeing currently was to continue.”

Yay SALES that are sure to come. Because, honey, that's a brand for the aspirational rich, not the real rich, and we ain't getting any more money any time soon. That is, until Obama is in the White House, but we don't want to get political. We just want good health care, education, and leadership that will get us out of this war, y'know, in less than 100 years. But we digress.

Net sales for the company dropped about 5% to $3.38 billion for the first quarter. The company has maintained its guidance for fiscal 2008 earnings per share to fall in the range of $1.20 to $1.27.

Lessons in Branding: Levi's 2.0

If you haven't already, check out this story about Levi's "Jumpin' In" online viral campaign.

Now, I'm sure a lot of your out there at the apparel companies are salivating over the whole online thing, but you're probably pretty uncertain how to go about doing it. After all, you're already beset with fickle consumers whose whims seem to change with the season and who are constantly pounding on the  castle door with cries of "More! More! More!" so why move into the web where EVERYONE is fickle and decisions are made in less than a nanosecond?

Well, consider this example.

That "Jumpin' In" campaign—which features online videos of teens, well, jumping into their jeans through a mélange of backflips, roof dives, etc., and launched May 5 to build buzz for the "Live Unbuttoned" global campaign for the brand's flagship 501 collection—snatched some 3.5 million hits in 10 days. And if that doesn't factor into your media membranes, here's some more traditional fodder: The spots got play on "Good Morning America" and coverage from the Grey Lady's new style challenger Wall Street Journal.

Here's our comic-strip style flip book of a scene from one of the viral videos, which by the way, we think are totally stunning in an "I can't believe he freakin' did that" kind of way.

"[Jumpin' In] was supposed to be a small seeding activity," Robert Cameron, vp-marketing at Levi Strauss, San Francisco, told journo Gregory Solman at our sister-pub Adweek. "We didn't know it was going to blow up. So we're meeting with BBH on how to chase this. What do we do to adjust the strategy and ride the wave?"

Listen, you've heard this from us and our friends a million times already. The online space, and viral videos in particular, don't necessarily guarantee the kind of success that you can see here with Levi's version. But they do allow you to experiment, without the expense of a real test market, with some creative that just might pique consumer interest in a similar way. And you know who can explain this better than we can? Kevin Kells, the CPG sales head over at Google. Kells might be more in the niche of beauty and, well, packaged goods marketing, but what he has to say about the online thought process for ad creatives is, in our humble estimation, universally applicable.

Here's an exerpt from our convo with him a while back:

          Brandweek: What do you tell CPG marketers who still rely on traditional print and TV buys?                  Kevin Kells: I tell them that online advertising is more efficient, but that they have to look at               sponsored links as doorways that take your consumer where they want to go, where you can add
          value to their life. The problem is that traditional media is ingrained for many of those CMOs and
          marketers. They have 30 years of data on TV and magazines. So even though it's easier to get ROI
          figures from online ads, you’re up against 30 years of market data.

 
BW: Would you revolutionize those departments to have them doing it all online?
KK: No. It’s not to say that they should stop doing that stuff, but there’s a way to go a little deeper online around consumer insights. Instead of focusing on a small amount of creative, they should be making more. They should be making 1,000 digital assets a year as opposed to three television assets.
 
BW: Does what you’re suggesting require multiple times the amount of creative?
KK: Yes. That’s an obstacle and that’s paralyzing to them. Conceptually now we’re beginning to get them to know that they need to be online with different stories and they have the infrastructure. But in order to put all of those assets in the right place, someone does have to make them. That can be solved by more efficiency. There’s a clunky system right now between the client and their multiple agencies. That’s why you see the emergence of agency networks like WPP.

OK, class dismissed for now. Next time, we'll take a look at those other web items that are probably giving you both a surge of excitement and perhaps some sweaty palms: widgets, the online applications that you've no doubt seen on your kids (or hey, maybe even your own) Facebook and MySpace profiles, or, if you're chic tech nerds like us, those wonderful things that pop up when you hit F12 on your Apple computer.

Lessons in Branding: How Diesel Fuel For Life Rocketed the Brand to the Top of the Fragrance Market, With Just One Launch

So no doubt you've all seen the ads for Diesel's first foray into
the fragrance category, Fuel For Life, right? (If not, check out these trés sexy photos, at right and below, left). Well, what you probably didn't know is that this one fragrance has shot the Diesel name up to the top of the men's cologne business.

According to figures from NPD Group, the fragrance was the No. 3 overall launch (across men's and women's fragrances) for 2007, despite the fact that Diesel had no history in the category. What's more, through February 2008, the fragrance is solidly within the Top 10 Men's Colognes, ranked by sales.

So how'd they do it? With an ad campaign that didn't only win over consumers, but also won awards, picking up the Fragrance Advertising of the Year via the Fragrance Foundation, in both the men's and women's category. So when we're drooling over the eye candy in both of these shots, it's for a reason. This stuff really IS solid gold.

Wanna hear more? Well, you can ready all about it in our article "Filling It Up With Premium." If you're link-a-phobic, here's a taste:

It's no secret that most every fashion brand wants to break into the fragrance business. And with good reason. While the market is fickle, materials can be found on the cheap, the bottles have a long shelf life and their contents are less prone to the more dramatic trend overhauls that characterize luxury apparel. Because customers will actually pay up to $80 for a little bottle of the stuff, the profit margins smell loveliest of all. But Diesel knew it was facing an uphill battle as an unknown in the space, which was presumably behind its decision to partner with L'Oréal, Paris, for its first foray into the category.

It's also why the introductory support broke many of the traditional rules L'Oréal applies to marketing and launching its ever-expanding portfolio of fragrances. First there was the aforementioned antimarketing viral campaign in the weeks leading up to the August 2007 launch. (Some subsequent print ads announced that the fragrance was "finally legalised.")

Next, when it came to traditional brand advertising (chiefly print and TV), the campaign took a more-is-more approach. Rather than one TV spot, the company created six, via agency FFL Paris. Instead of two, static print ads, one for men and one for women, that feature either a celebrity or single model, FFL created four executions, each of them utilizing a new model to express the individuality of the fragrance. The tag read simply: "Are You Alive?"

"For us, this was an ambitious project," said Ulli Lindauer, vp-marketing of L'Oréal European designer fragrances. "There is a moment captured in the photography that is a universal moment of feeling alive. It was about the brand giving each of us the opportunity to be an individual."

Puma Pumps Up Its Hollywood Jam

Looks like Puma's going Hollywood. 

The fashion athletic company said that it's opening a new office dedicated to entertainment marketing in Los Angeles next month. The West Coast operation will be geared to increasing corporate partnerships and product interaction with music and film celebrities. Can we get a "Sexy Back Speedcat"??!!

Anyways, you know what new offices mean! More staff! Puma USA is adding new roles to fill up the cubes the L.A. office (hey, it might be fashion, but it's all work-a-day office aesthetics, or so we have to believe as we stretch beyond the limits of our three walled container). Ryan Babenzien joins as head of U.S. marketing operations. He was formerly the business development and strategy consultant for Oddcast, New York, a company that does web authoring tools or some other such beep-boop-beep. Ryan Ayanian, who previously worked as a consultant for marketing agency Antenna, Ontario, Canada, has been hired as music marketing manager. And last, but not least (though we admit we have no knowledge of how Puma's hierarchy works) Ed Choi, who joined Puma in 2006 following at stint at ID Agency, Manhattan Beach, Calif., has been named entertainment marketing manager.

For Barney Waters, Puma North America's vp-marketing, the new office is a move to go "fish where the fish are," though he did note that the brand has had a smaller marketing presence on the West Coast for some time.

"These moves represent a recommitment to entertainment marketing as a real driver for the Puma brand," Waters told us over email. "We're also evolving our approach, as there are so many more opportunities beyond product placement. Hollywood is a great place to develop relationships and brand driven content, which can help reach the people that may not be spending as much time looking at traditional media outlets."

Puma has been making inroads with celebrities over the past several years, working on design and advertising projects with rapper Ludacris and socialite-heiress Lydia Hearst-Shaw (we're not saying she's 100%, but she's definitely not like the other socialite-heiresses we can think of. Barf Tinsley Mortimer and Paris Hilton!), among others. This month, Puma unveiled its new TV campaign, featuring cute-but-disposable Scottish singer/songwriter Paolo Nutini (pictured, right, smoking something). Nutini's single, "New Shoes," is being used in Puma’s lifestyle campaign. We were wondering how long it would take for that to get snatched up by the commercial world.

In May, the company will begin promotional tie-ins with the film Speed Racer, which will include a signature shoe, product placement in the movie and worldwide in-store promotional campaigns. BTW... Does anyone remember what exactly Speed Racer, the show, was about, you know besides a boy racing, like, fast? We're trying to recall, but just can't seem to do it. Somehow, this didn't seem like a movie idea to us. But 'tevs, we're not filmmakers. But why not a He-Man movie? Hey, we're just sayin'.

No notes on what they'll be spending this year to pull off these tie-ins and tie-ons. In 2006, Puma spent $13 million on advertising in the U.S., excluding online, down 23% from $17 million in 2006, per Nielsen Monitor-Plus.

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.

Lessons in Branding: Why the Woody Allen Vs. American Apparel Case Is Actually Kind of Funny

If you hadn't heard already, director Woody Allen is suing
American Apparel for $10 million, for using his image,
without permission, in one of its outdoor campaigns in May 2007.

The campaign features a photo of Allen, dressed as a Jewish rabbi in his 1977 Academy Award winning film Annie Hall, beside Hebrew script that translates to "The Holy Rebbe." (See photo, right.)

While the lawsuit is certainly interesting—or maybe not really, we find legalese to be somewhat tiresome and who isn't suing anyone else these days?—the whole situation has us kind of perplexed, then chortling, then perplexed again.

So first, you take an ego-maniac like Allen (Full disclosure: we love Allen's work; Annie Hall makes our top 10 movies of all time, though our boyfriend pulled a gifting gaff for our last anniversary by getting Manhattan, still a good movie, but it no Annie, and, for the record, we don't care if it's the deluxe edition and we once mentioned it was "our real favorite Allen movie."), and you use him in branding that doesn't, well, directly promote him and his work.

We need to note here that Allen has found a way to finagle himself into nearly all of his movie scripts, and, in the aforementioned was, indeed the main character, so this guy is no stranger to an über-level of self-promo. So we have to imagine that Allen's real beef here not that there's a promotional image of himself out there, but rather than the said image isn't promoting him in a way that he totally controls. That's totally fair, and who would want their mug on an American Apparel ad, especially without their permission? (Though some of our friends have appeared in the ads, with their all-too-eager permission.)

According to press reports concerning the lawsuit, the case argues that the use of Allen's image in the billboards in Hollywood and New York were "especially egregious and damaging," and that Allen does not endorse products or services in the United States. Hmmm... We can think of a couple things Allen has done to himself that were more "egregious and damaging" than a few billboards with a still from one of his movies, but we'll get to that later. 

Second, you take a company that has made its name with 1970s porn-style ads that feature either moist looking hipsters or their rather sleazy looking bearded brethren. We're all for it, and love the gay-themed advertisements that they've done in publications like BUTT (anyone remember those "Bottoms...And Tops" spots?!, WARNING: NSFW. A tamer spot is pictured, below, left.), but, in the end, it's just kind of an edgy sex-sells play for the apparel company, you know, with a little vintage sleaze thrown in for good measure.

This oddly brings us back to Allen, someone who's rather a 1970s vintage cartoon character, who scandalized himself with what some would call a sleazy, sexual relationship with Soon Yi, the adopted daughter of Allen's former flame, Mia Farrow. So we kind of see the relevance from a marketing standpoint. In fact, in response to a query from The Jewish Daily Forward, American Apparel rep defined Allen as the brand's "spiritual leader." And if you think about it, it's kind of dead on. Better in the 1970s, sexually provocative, somewhat over-thought and overwrought (thinking lamé swimsuits and Celebrity), well these concepts all seem to define both the American Apparel and Woody Allen "brands."

Anyhow, we're not so impressed by the outdoor ads, but they sure got a lot of attention, so perhaps this whole weird mélange is worth its weight in branding gold. Still, wouldn't something it have been cooler if AA had superimposed Allen's face on one of their own hipster-hot models? Like this. So what's the lesson here folks? Well, it remains to be seen if these ads and the lawsuit move the needle any for American Apparel (as if they need it, the stores around here are always hopping with pretty, and some not-so-pretty, young things) and if that movement outweighs any legal costs, but if so, the lesson seems to be find someone both scandalous and (considered) brilliant in their field, someone who kind of relates to your own brand values, and then slap their image up on your billboards. Without all the hassle of asking.

We're not in favor of breaking the laws, per se, or abusing someone else's likeness, but do marketers really care about such meddling things as this, you know, provided it's still selling products?

Also, it's not like American Apparel hasn't ever been on the receiving end of image misappropriation issues, but for them, it actually turned out to be kind of a good thing. They were one of the faux sponsors in a Youtube spoof dubbed "The Hipster Olympics," in which contestants from Williamsburg, Brooklyn (our nabe, coincidentally, so the satire here does sting a bit) snort cocaine to get in the game, take MySpace photos, pick out ironic album covers, and dis normals.

When we asked what they thought about it, American Apparel director of corporate finance and development Adrian Kowalewski told us that since the spot wasn't "grossly defamatory" it wasn't such a big deal.

"It's quite flattering to us that our marketing would inspire someone to do a mock ad," Kowalewski added. "We think this is a reflection of how impactful our advertising has been to our audience."

So c'mon Woody, what's the big deal, man? Can't we all just, like, brand along? Anyways, I'll let you readers sort it out.

Check out the "Hipster Olympics" video, below.

Breaking News: Elle Macpherson Signs On As Global Face of Revlon Brand

First, the news: Elle Macpherson, (photo, right) the 44-year old Tasmanian-born supermodel best known for her glossy appearances on the covers of Elle and Sports Illustrated, as well as her numerous engagements as the face of Victoria's Secret, has been tapped as the "global brand ambassador" for Revlon.

She'll join the current roster of the cosmetic firm's brand faces, which include actresses Halle Berry, Jessica Alba, and Beau Garrett, in a move that the company says "continues the long-standing tradition [Revlon] started of partnering with the most beautiful and iconic women of the time to represent the brand."

She'll be featured in upcoming global campaigns, none of which have been revealed, and will also be involved in the company's various sponsored philanthropic activities.

Now, the air kisses between Revlon prez and CEO David Kennedy and Ms. Macpherson:

"Elle's special qualities as a businesswoman, beautiful and talented model, actress and mother represent the essence of the Revlon brand," said Kennedy in a statement.

"Revlon is an iconic brand, bringing high quality products to women around the world and is complementary to my values," said Macpherson, also in a statement. "I am proud to join Revlon in its celebration of women and in its long term commitment and support for education and research to advance women's health and particularly, to fight women's cancers."

Alright, yadda yadda yadda. But what does this mean?

First of all, they're not saying it, but we have to think that there's at least two things going on here.

First is a cheap purchase of a marketable name that's a little past it's prime. Think about it: what's the last hot campaign, like big big spend campaign, that you can remember featuring Elle Macpherson? Still scratching your head? Question answered. She prolly came pretty cheap, which isn't a bad thing when marketing budgets at even the biggest spenders look like they're getting crunched. (For more on that, check out our regular news story, here.) But do you remember the name Elle Macpherson? Yeah, we thought you might. Bingo!

SIDE THEORY: One of our friends thinks Elle might actually be the face of the brand's anti-aging product line, dubbed "Age Defying," which has featured celebs including Melanie Griffith, and Julianne Moore, in the past. Revlon hasn't yet revealed exactly which campaigns Elle will be appearing in, just that they'll be global.

Second, it would seem, is a play at attracting the older consumer set, the ladies about our mom's age, maybe a little younger or a little older, who probably remember idolizing Macpherson when she was hot, and they were also her age. Like Elle, they're around 44 years old, and want to feel that you can still be glamorous at any age. And from a sales perspective, it makes sense if you consider that the size of the boomer generation.

Breaking News: Reebok Names New CMO

Less than a month after former Reebok CMO Uli Becker took over as the brand's president and CEO, the top marketing spot has been filled at the Canton, Mass.-based athletic company.

And, much to our surprise, it's from someone inside Reebok and not an Adi ex-patriot, like Mr. Becker was.

The new CMO will be Matt O’Toole, former (and brief) President of Reebok North America, pictured, below, left. He gets most of his accolades (via Becker) for the work he did in growing the business at the Reebok-CCM Hockey division, where he had been president and CEO, prior to assuming his Reebok NA duties.

In his new role, O’Toole will lead the brand’s global marketing efforts, including product and design, sports marketing, brand marketing, and public relations. In addition to those duties, he will continue to direct the hockey business.

And now, the lovefest from Becker.

“Matt was appointed to lead our U.S. organization on the strength of his exceptional track-record in building Reebok-CCM Hockey’s brand and business, as well as his outstanding strategic marketing expertise,” said Becker, in a statement. “These are the skills that make him a natural choice for the role of CMO. In his short time as president of Reebok North America, Matt made a huge impact on the brand, leading our restructuring efforts for the U.S. market.”

Taking over O’Toole’s old post, will be Jim Gabel, who has been tapped as President of Reebok North America. Gabel was formerly svp at Adidas America, where he managed the U.S. Adidas brand business as well as its TaylorMade and Adidas Golf Canada divisions.

O’Toole will be officially installed April 1, with Gabel’s appointment effective mid-April.

It's not news that the brand is in troubling times. In an earnings statement released earlier this month by adidas, Reebok, which reports in euros, posted sales of $3.55 billion (at current exchange rates) for the fourth quarter of fiscal year 2007, down 6% from the year earlier.

The company slashed its advertising budget nearly in half last year, spending only $17 million on measured media, excluding online, for 2007, per Nielsen Monitor-Plus. That's down from $28 million in 2006. Maybe they'll pump the tank back to "Full" this year.

Here's hoping that the new team will be able to turn things around.

And now, in case you've missed it, a brief recap of stuff Reebok's been cooking up:

-Forthcoming, casual athletic-themed "Your Move" campaign, that we saw last year.
-A new line of Kool-Aid scented footwear.
-Oh yeah, and that "Freestyle World Tour" collection that's supposed to appeal to chicks across the globe. 

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.

Week in Review Pt. 2: In Which Gap Rethinks Marketing Spend, Reebok's CMO Moves Into the Driver's Seat, and Airwalk Taps MySpace Celebrities

Once again, we're sorry that we've been silent for so long! But we've been writing a lot for that dying industry: the print book. Hey, you gotta eat!

Anyhow, here's a brief recap of our stories from last week, and this week, along with that snarky commentary that you guys seem to love. So here's a few things that you might have missed.

And now... back to the recap. (We promise some new stories very, very soon!)

Gap Brand Forgoes Spring TV Spot, Amid Tightening Following Rough Quarter
After Gap reported fourth quarter sales of $4.67 billion, a 5% drop from last year, the company had some interesting news on the marketing front.

The company is actively looking to trim costs as it weathers a “volatile economic environment,” said CEO Glenn Murphy, in a conference call to analysts on Feb. 28.

The struggling retailer will reexamine its marketing plans for the second half of 2008, once it has a better understanding of its holiday efforts, said Murphy. “We’re very aware of the environment in which we’re operating in 2008, but not all of our marketing money is being revisited," he said. "Some portion is being re-looked at to make sure it’s being used appropriately, given that consumer sentiment is where it is, and that particularly applies at Old Navy.”

The immediate marketing plans for Old Navy and Banana Republic would remain similar in scope to last year’s, while the company has decided to forgo a spring TV campaign for the Gap brand, said evp/CFO Sabrina Simmons.

The primary focus of spring marketing for the namesake division will be print and in-store efforts for the retailer’s footwear collaboration with designer Pierre Hardy, due out in March. Additionally, Gap will launch a capsule T-shirt collection, a design collaboration with the Council of Fashion Designers of America, which will hit retail stores in April.

Hmm... Doesn't sound good. And add that to the fact that, according to Nielsen Monitor-Plus, Gap already cut its ad spend in half for last year, spending an estimated $55 million (down from $117 million in 2006), per Nielsen Monitor-Plus. Old Navy spent an estimated $173 million on U.S. ads in 2007, down slightly from $200 million in 2006.

For the full story, click here.

Reebok CMO Uli Becker Moves Into the Driver's Seat as Prez/CEO Harrington Exits
Uli Becker got a jump last week, when the Reebok CMO was named president and CEO of the ailing brand, following the resignation (forced?) of top dog Paul Harrington, who had been with the company for 12 years.

This is actually something of a growing trend across industries, one that we've been keeping track of. In fact, wouldn't you know, we wrote something about it today. Check out that story, about CMOs migrating to the CEO and presidential roles, here.

Back to the relevance, Becker (photo, left) joined Reebok back in May 2006, following his duties as the head of global brand marketing for Adidas (Reebok's parent company) and managing director of Adidas International in Amsterdam. When he joined Reebok, Becker announced his intent to streamline marketing operations and to unify brand messaging, as the athletic footwear and apparel maker sought to turn its business around and reposition itself in the marketplace.

We like him. He's a straight shooting guy who's looking to get all of those mixed messages cleaned up and get the brand on the track to profitability, all with the kind of efficiency you'd expect from a German executive. So we expect good things, hopefully, and, it would appear, so does Adidas jefe principal Herbert Hainer.

"[Paul Harrington] played an instrumental role in managing the integration of Reebok into our group and laid the foundations for the repositioning of the Reebok brand worldwide," said Hainer, chairman and CEO of Adidas, in a statement. "Uli Becker's proven leadership and global marketing expertise make him uniquely qualified to take the revitalization of the Reebok brand to the next level, both internationally and in the US."

Reebok's marketing for 2008 would be focused on women's running and "American major league sports," underscored in the brand's forthcoming "Your Move" campaign, said Hainer. The campaign, previewed last year, aims to cast Reebok as the brand for individuals rather than hardcore athletes and is part of a larger effort for Reebok to capture the sport lifestyle market.

Details regarding a CMO replacement were not available.

McGarryBowen, New York, is the lead ad agency for Reebok. The company's latest ad campaign launched two weeks ago in conjunction with the release of its first "Freestyle World Tour" collection (but, of course, our readers already knew about that). The product line will include five new sneaker and apparel editions, which will roll out during the course of this year. "Freestyle Tokyo," which launched Feb. 21, will be followed by other editions that derive their name and design inspiration from cities like Paris, London, and New York.

For the full story, click here. For all of our Reebok-related posts, check here. 

Airwalk Looks at MySpace for Brand Models
In its spring 2008 campaign, which hits a variety of alterna- lifestyle titles in June (and it's not the 1990s anymore honey, so we're not talking about gay pubs, but rather the skate/surf/
snowboard glossies), Airwalk went to MySpace for part of its casting call.

In addition to leveraging images of its athletes, including Rodney Jones, the brand cast Lorene Drive, a band that creative director Jeff Buice found on MySpace, to be featured in their ads (check outtake spot, right). Even more interesting is that the ads feature mini-anecdotes from the talent, and directs readers to log onto Airwalk.com to see the full story, and then write in some stories of their own.

Buice told me that the idea is basically to make a social network around ad campaign creative. Yeah, it made us do a double take too. But Airwalk has been on the online game for sometime now, and this is just the latest way that they're engaging with the online market.

"We always do print ads because it still reaches tons of the demo that we’re going after. But the online component is growing massively, out of control, for our [consumers]," Buice told me. "The hook was finding a way to get people to correlate between the two, while still maintaining a focused, singular strategy."

Intrigued? Check out the full story, here. 

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.

Lessons in Branding: Making Sense of Louis Vuitton's First TV Spot, "Where Are You Going?"

If you haven't seen, first check out the 90-second spot from Louis Vuitton, "Where are you going?", the brand's first-ever TV ad, teased in the most recent earnings report. Creative per Ogilvy, Paris.

OK, what to make of this? First, our impression:

This feels a lot longer than it is. The existential question—"What is a journey?"—is explored through some pretty engaging imagery, and we have to admit, we watched all the way through to the end, and probably would have done the same had we seen it on TV (we don't have cable folks, we read). It recalls the print campaign, featuring Catherine Deneuve at a train station, lots of fog and smoke, revealing and concealing the lensman's subjects. And the soundtrack gets us in the mood for an Alejandro Iñárritu film. We're pleased to see that we're not bogged down with a bunch of branded product, and indeed feel that the spot makes an emotional connection. It's really a beautiful spot in a world full of uglies, and doesn't come off as pandering or offensive.

But the problem we've got, ultimately, is the branding part. We have to feel that people for whom "The journey is life itself," probably aren't the same ones who want to shell out thousands for a suitcase. In fact, they'd probably spend the money that a Vuitton steamer trunk would cost on a fairly comfortable trip to Africa or Asia. Unless, of course, they're among those who prefer custom Vuitton luggage, and travel to India on a half-spiritual journey to connect a dysfunctional family (er, in case you hadn't already caught on, we're talking about The Darjeeling Limited here). So the message seems to be a disconnect with the product,  n'est pas?

And, now, point-counterpoint from two recent critiques:

From BryanBoy.com (AKA the twink blogger who actually got Marc Jacobs to create a handbag named after him): "I *LOVE* the commercial! It's quite moving and touching. In fact, the message is crystal clear to me. IMO, the folks at luxury powerhouse Louis Vuitton went back and paid homage to their roots: the art of travel. Afterall, travel is an integral part of the brand's DNA. Nowhere in this commercial you'll find the usual flash flash "bling" stereotype the average Joe associates with Vuitton. I think it's a nice little  flashback to the bygone era where only the traveling set knows about the historical and cherished by millions monogram."

From Pam Danziger (of luxury analysis firm, Unity Marketing, Stevens, Pa.): "It's atmospheric and evocative, yes, but LV has fallen into a trap that can catch many heritage-rich luxury brands, and that is thinking that brand image is the ultimate reason why people buy. In my research into the mindset of the luxury consumers, brand image plays a supporting, not a leading role in why people buy.  When affluent consumers buy a luxury brand, first and foremost they want outstanding quality.  Image may be a primary motivator for the 'aspirational' consumers who want to put on the trappings of a luxury life they have not yet attained, but not for the affluent shopper who has already made it. It is even questionable that the company's target consumers will get the brand identity message that is this commercial's primary objective.  When I viewed this ad, all I had were questions, but no answers.  'What is a journey?' is the question poised in this commercial, but the answer about why I need the Louis Vuitton brand to accompany me on my journey was left unanswered."

Anyhow, at least the ad has people talking, which is always good in this biz. Of course, Vuitton doing its first TV ad would naturally have every one talking. What remains to be seen is, as Danziger notes in her review of the spot, whether or not consumers (and critics) will go from talking to buying.

AmEx Continues Its Fashion Push, With Diane von Furstenberg Starring in New Campaign

Off the heels of the New York Fashion Week initiative
where it offered streaming runway shows among other goodies, and a $500,000 donation to the CFDA/Vogue
Fashion Fund, American Express is continuing to deepen its fashion industry connection.

The credit card company announced that designer Diane von Furstenberg (she old the large dots and wrap dresses) will star in the latest "Are You a Cardmember" campaign, per Ogilvy & Mather, New York, which breaks during the Oscars on Feb. 24. See a still from the TV spot, right.

No doubt the campaign seeks to create more brand affinity among female consumers (also the general goal of the company's effort within the fashion industry, according to Jessica Igoe, director of sponsorship and event marketing at American Express, New York), and given von Furstenberg's longevity in the industry and reputation as a fiercely independent designer and businesswoman, it should resonate fairly well.

Indeed, von Furstenberg's own statement seems to play right into that angle.

"Women inspire me and I inspire them to be independent and free, which is how I feel when I use my American Express card," said Von Furstenberg. "American Express represents a sign of independence and freedom and if you have your card, you can do anything."

See what we mean? Though we must admit, that the feeling of freedom that our credit cards (of all stripes) have given us only resulted in vast numbers of consumers in our age group (let's say 20-30 years old) entering into not-insignificant personal debt. After all, we just had to have that Vuitton throw rug and somewhere along the way, trips to Sephora seemed, well, like a necessity no matter how much they squeezed the budget.

Directed by "Capote" chief Bennett Miller, the TV spot follows Von Furstenberg from the inspirational Winter Wonderland of her backyard, through the design process in her studio. The print ads were shot by—who else?—Annie Leibovitz.

UPDATED: The Freestyle World Tour and Reebok's Search for Female Consumers

UPDATE!: Reebok flacks reassure us that "Framed" is full speed ahead. And, what's more, it's now available on Yahoo!Sports and behind-the-scenes footage has been, er, Flickr'd. Congrats! Now, what about that whole "Your Move" campaign?

For those new readers who walked into this convo like a child wandering into the middle of a movie ("You're out of your element Donny!"), check the rhymes below. Note: There won't be any more Big Lebowski references from here on out, for better or for worse...

Been around the world and I, I, I... I can't find my
Reeboks?

Forgive the indulgence of a song we've had stuck in our heads this morning (sometimes shower song sessions can drag into the work world, even for business-minded journos like us!), but it kinda, sorta ties into Reebok's new Freestyle World Tour launch that kicks off Feb. 21. Once again, it's a puzzler. But first, the deets.

Again going after the women's market, Reebok is taking a Nylon-style tour de monde with a new collection of apparel and footwear that will incorporate the particular modes of fashion capitals including Tokyo, Paris, New Delhi (huh?), Madrid, London and New York. Starting tomorrow, the first style, a send up of Tokyo street style with inspiration taken from the city's subway map hits stores. Future releases for each city will roll out as follows:

March 2008—Freestyle Paris, which references the "Can Can" in red, pink and black
May 2008— Freestyle New Delhi, featuring embossed satin and Bollywood-style vibrant color patterns
July 2008—Freestyle Madrid, which references flamenco dancers
Setpember 2008—Freestyle London, featuring an embroidered raven on the heel
November 2008—Freestyle New York, which references our city's unmistakable taxi cabs

All shoes will retail for $85, and the apparel collections that accompany them, which include hoodies, tees, and track jackets, will retail for $28-$75.

The global ad campaign, for which spend was not revealed, will include print, in-store and digital efforts. Somehow "global" just doesn't ring right without the  "TV  spots" tag, but hey, we're traditionalists. Reebok spent $27.5 million on measured media advertising in 2006, and for the first 11 months of 2007, has spent $16.6 million. Below is a list of the pitch women the brand has signed  for the campaign. Full disclosure: We had to look them all up too, so feel free to click the names if you're unfamiliar!

Tokyo—Ai Yasuda                                Madrid—Bimba Bose
Paris—Yelle                                         London—Nikki Beatnik
New Delhi—Sagarika Ghatge                New York—Sheetal Sheth (above, in a spot for the NYC collection)
 
 Since none of the girls here are names that we've heard of—and we'd like to think we're pretty up on things—the campaign is a bit of a puzzler unless they're going for super underground authenticity appeal. But isn't that the kind of marketing that a big brand like Reebok should avoid? Shouldn't Reebok be looking for bigger sales, to grab a larger share of the market and turn around their banking books?

What happened to Scarlett Johannson? And what about that IFC film series, "Framed," that they launched not too long ago.  

And what about the "Your Move" campaign we heard about back in September, when CMO Uli Becker (a straight-talking Adidas alum), told us the following:

"We need our marketing to appreciate where the consumer comes from and make them king of the whole thing as well," Uli Becker, head of global marketing, explained of the brand's "Your Move"  campaign. "It brings the message into one campaign context. Whether we're talking about running or women, we're playing into one equity image of the brand with that single slogan."

For a brand that said it was going to focus on a single, streamlined marketing approach, it doesn't seem to be delivering. "Framed", the "Kool-Aid" collection and, now, the Freestyle World Tour seem diametrically opposed to Becker's statement about a unified message. In fact, it seems like the same kind of mixed messaging that he said, at the time, had been detrimental to Reebok in the past.

Speaking of "Your Move" campaign, why haven't we seen it anywhere yet? Has "Your Move" moved on? Trust that we're on the hunt to find some answers here.

 

The Big Bang: J.C. Penney's Biggest Launch Ever for "American Living," (And Why It's Smarter Than You Skeptics Might Think!)

J.C. Penney is really going whole hog with the
marketing push behind its new "American Living" collection!

While we hear a lot of "biggest push ever" b.s. from marketers, this one's the real deal:

-First TV spot hits Univision, in Spanish, for the "Premio Lo Nuestro a la Musica Latina" Awards, on Feb. 21
-Mass-market TV spot to make full debut during the Oscars, on Feb. 24
-Month-long run on prime-time TV slots
-A 60-second in-cinema spot at an estimated 14,000 theaters for all PG and PG-13 features
-Print campaign in the usual barrage of consumer pubs (see example, right).
-Direct mail with 12 different specialty catalogs
-In-store promotions, including fixtures and themed uniforms for employees
-AmericanLiving.com dedicated Web site.
-Creative shot by Bruce Weber (sufficeth to say, ain't cheap people!)

The brand and the campaign, both by Polo Ralph Lauren's Global Brand Concepts group, will be the biggest in the company's history, according to CMO Mike Boylson. The imaging is meant as an emotional play that connects consumers with images of Americana and family.

While some may doubt the strategy of going big during a time when consumers feel like they're going bust—and Boylson said he's heard more than a few naysayers—the strategy actually works in their favor, according to Patricia Pao, of The Pao Principle, New York, who told me that J.C. Penney could potentially triple their media spend value given that they will be one of the few people making a real push.

And even though she felt the price points for the collection—a broad swath covering $24-$500 goods—might be a bit too aspirational for the times, WSL Strategic Retail's Candace Cortlett told me that the big campaign is still a good investment in the brand.

"[This effort] will live beyond the hard times," she said. "The worst thing to do is to put all of the energy into developing a brand like this and then just letting it sit on the shelf. That was Sears’ mistake when they got the Land’s End franchise."

Check out the full story here.

Financial Desk: Abercrombie Posts Gains in Q4, But Notes Problems with Ruehl Line

Seems like Abercrombie's still on top, no pun intended. 

The New Albany, Ohio-based company posted an 8% sales increase during the fourth quarter, reaching $1.23 billion, and a 9% boost in net income, which registered at $216.7 million. For the full year, sales grew 13% to $3.75 billion, and profits rising 12.6% to $475.7 million.

While the picture was pretty glossy for the most part, the company did note a slowdown in sales for its Ruehl line, according to statement from CFO Michael Kramer, in a conference call.

"Unfortunately, sales productivity declined in the second half of 2007, as we began to anniversary markdowns  from fiscal 2006," said Kramer. "We anticipate lower sales productivity compared to last year through most of the first half of 2008 as we continue to anniversary the high markdown levels associated with Ruehl...Until we can establish Ruehl as a proven  concept we will moderate the pace of new store openings."

But despite that bad news, it was all sunshine and rainbows from Chairman/CEO Mike Jeffries.

"Our brands represent high productive, consistent businesses that are the result of an unyielding focus on merchandise quality and customer experience," said Jeffries, in a statement. "We continue to make strategic investments in the business to sustain and to enhance brand quality and to support future growth, both domestically and internationally."

Well, at least one of those "strategic investments" includes a $300 million initiative to remodel existing and construct new stores in 2008, as well as the brand's decision  to bring back its porn-a-log, A&F Quarterly, which has raised eyebrows in the past for its debatably pornographic imagery, not to mention its lack of actual clothes on lifestyle models. (Well, some things never change in that department.)

The new Quarterly has puzzled us for a while too, and not just for the obvious reasons everyone else seems to have cited which include, chiefly, that the guys aren't wearing underwear in their dungarees. What's gotten us stumped is why the campaign is still all-white.

While we admit we haven't seen  the most recent installment, the images on the brand's Web site include the same line up of idealized white models that were featured (although they have changed the bodies they're using, natch, since the shelf life of fashion models is relatively short if you're not of the Naomi ilk) when we were covering their legal discrimination troubles at El Diario/La Prensa (our Spanish-language journo days).

Check out a few shots from the current campaign, below.

Listen, we're no Pollyannas about this stuff, and are well aware that it's widespread issue in the industry, but after so many issues of its own discriminatory mess (remember those "Two Wongs Can Make it White" tees?) we just have to wonder why Abercrombie wouldn't just toss a bone out and include one minority in its prominent imaging? C'mon guys, help colorize our wank bank!