Monday, 23 March 2009

Tiffany Takes a Tumble - 21/03/09

Will Tiffany's fourth quarter tumble begin a rumble of further downgrade announcements to come? According to an article in today "The jeweler's same-store sales dropped 24% because of soft sales at U.S. stores. Analysts polled by Thomson Reuters expect earnings of 80 cents per share and fourth-quarter sales of $838 million".

Tiffany is expected to report to the market before it opens on Monday 23, they have recently closed all of their peal stores in the US. Tiffany had continued on an expansion path with strong growth (and plans for further growth over the next five years) in the Asia Pacific and Oceania region.

Originally considered a luxury brand Tiffany, by way of its expansion and high volume sales in their sterling silver line is often not considered a luxury but more a premium prestige brand now due to its wider reach and price point strategy.

Saturday, 21 March 2009

Escapism & Old World Luxury for Chanel No. 5 - 21/03/09

Is it time already for a new mini movie (think the Australian duo of director Baz Luhrmann and his leading lady, Nicole Kidman) promoting the most famous fragrance in the world, Chanel No. 5? Yes, this time though it is with the French duo of director Jean-Pierre Jeunet and his leading lady, Audrey Tautou, launching a classic and old world luxury theme for the new No. 5 mini movie.

“The spirit of this film is right for the times in which we are living. We believe this film is good timing not only for us but also for the market and the retailers. No.5 conveys authenticity and that reassures the customer; we’re adding newness without adding sku’s, and we have consistently seen a bump — not only in our own fragrance sales but the overall market’s — with campaigns like this one.” According to John Galantic, President and Chief Operating Officer of Chanel Inc. in today's

No. 5 continues as the world's number one selling fragrance, since its launch in 1921, with a product from the No. 5 collection sold every six seconds somewhere in the world, according to Chanel. No. 5 is a wonderful example of attainable luxury,where one can buy into the Chanel brand and experience the history, quality, glamour and beauty that embody this brand from the rare and exclusive Haute Couture right through to the fragrance.

See some of the first pictures released today and the full story on WWD.

Friday, 20 March 2009

The Bentley Factor... 20/03/09

....."The luxury market is similarly affected. Bentley has announced a 5% increase in price for all of its models will apply in the UK from April 2009." According to the BBC news online "However, cash-strapped consumers eager for bargains will struggle to take advantage of the car industry's woes.

While carmakers are finding it difficult to shift their vehicles from the forecourt, the signs are they are not prepared to sacrifice their profits by dropping prices.

Ford and Vauxhall both raised their UK prices in February - the Ford range increasing in cost by an average of 4.7%, while Vauxhall increased the prices of all models except the Vectra and VXR8 by an average of just under 5%...."

Bentley, as a luxury brand in the automobile industry is no doubt holding onto their strategy of maintaining the brand equity, rarity and aspiration; brave in these times. However if they can maintain this successfully, it will ensure reinforcement and exclusivity of the brand, luxury brands cannot afford to drive (excuse the pun) their business on discount (Saks?). A very difficult position to come back from. If we just had that extra 5%, we may well be interested!

Luxury and the Local - 21/03/09

The major international luxury brands continue to perform strongly at retail in Australia, despite the generally challenging retail climate that surrounds. Why you ask? They are covetable brands with a history and most of them provide unique and quality products in limited quantities backed up with service that runs from exceptional to satisfactory. This is all too true, however a significant boost (standout in fact) to all of the major global brands over the past year, in particular, has been the increasing arrival of the Chinese consumer into the market.

From the latest International Quarterly Reports (December 2008 provided by Tourism Research Australia), the Chinese tourist market has grown 41% since 2004 and represents 338K (7%) of the total inbound tourist market versus the Japanese which represent a higher number at 424K (8%), however they have declined by 36% from 2004 versus 2008. What is interesting is that the Chinese spent more dollars than the Japanese by 61%, i.e. $1.6 billion AUD$ versus $992million. The exchange rate has made Australia not only an attractive physical destination but also a relatively inexpensive one, so deja vu... we are back in the early-mid 90's when the Japanese were visiting our shores in large numbers, buying up our Opals, Ken Done, stuffed Koalas along with as many quilted Chanel handbags and Louis Vuitton monogrammed pieces of luggage they could get their hands on. Fast forward to now..

It is wonderful news on many fronts and tourism is very welcome, we have a chance to showcase the country, our lifestyle and unique assets and products. We also carry most of the major international luxury fashion and fine jewellery brands, that are at the top of their shopping list to acquire. All great news and long may this continue. The question is, at what cost to the local? Ongoing consistent success must always ensure the loyal local client is (i) remembered; (ii) purchased for; (iii) followed up; (iv) reminded and (v) invited. Despite their peaks and troughs (economic crisis or otherwise), consistent service will ensure the locals maintain their loyalty to the brand when the dollar moves back up the Rickter Scale and the Chinese seek out a new and cheaper destination... Guam or Maui anyone..!

Thursday, 19 March 2009

The Birkin Index, Hermes is up - 19/03/09

It's just so encouraging to hear some positive news right now. As reported in this morning's, Hermes International SCA reported profit that beat analysts’ estimates, raised its dividend and vowed to keep opening stores as demand for the French luxury label’s Birkin and Kelly handbags resists the recession...
"Strong brand equity, high customer loyalty, stable revenue from timeless signature products, tight cost management and net cash make Hermes the most defensive in the sector,” says London-based UBS AG analyst Yasuhiro Yamaguchi. This is the essence of a true luxury brand.

Yves Saint Laurent is not 'glamour'? 18/03/09

What would Andy say?

Pierre Berge continues to ensure the name, positioning and image of the famous Algerian born Parisian couturier, the innovative and reclusive Yves Saint Laurent, is honoured and respected in death as it were revered in life. "To show the portraits of Yves Saint Laurent with personalities from the fashion world -- even if some of them have talent -- was unthinkable," he explained in a letter to the Le Monde daily last week, in reference to a major Andy Warhol exhibition in Paris of his trademark society portraits. But a famous image of Yves Saint Laurent will be missing after a dispute over whether the late couturier was an artist or a mere designer, according to an article today in

"To put Saint Laurent in the 'glamour' section would be to show disrespect for his oeuvre and to mix him up with the 'beautiful people,'" he wrote... a somewhat ironic statement from Pierre Berge given that the raison d'etre of the Maison of Yves Saint Laurent was to dress the 'beautiful people'. Pierre Berge has indeed the right to protect the identity, however with such a large exhibition and an homage to Andy Warhol, I wonder if the absence of this portrait is not allowing the many admirers of Saint Laurent to view him, as seen by Mr Warhol. One iconic artist's take on another...

Luxury Will Not Be Deserted....17/03/09

Michele Norsa, the first non-family chief executive of Italian fashion house Salvatore Ferragamo, always carries an amber stone in his left-hand trouser pocket. The reason, is "to bring good luck, as I am superstitious". Perhaps we should all be taking to the amber stone too in these times.

Ferragamo who have forged ahead with strong expansion into the Asian markets will continue do so, however have reduced their rate of expansion. Many of the truisms of 'what differentiates a luxury brand from others' such as history, quality and rarity are Snr Norsa's maxims and some getting-back-to basics-advice relevant to these challenging times is to maximise the opportunity and simplify the business, are worthy of a read in today's Financial Times online.

Overall, he argues, recession is an opportunity for his industry to "simplify sales" and purge the excesses of the boom years. Mr Norsa welcomes signs that "the industry is now really moving in the same direction"; he and his counterparts have "perhaps for the first time" been comparing notes on how to respond to a changing marketplace. And he has plenty to say in that debate. Read more...

Amongst many pearls (or amber stones) of wisdom, he say that "Fashion buyers, will not desert luxury brands but will instead spend less, but on the best".

Luxury, A Distorted Meaning - 16/03/09

Karl Lagerfeld says many things, often controversial but he says what's on his mind and he doesn't cushion the blow, or tip-toe around the edges. Bang it's out there for publication and interpretation. His comments made recently on luxury are incredibly apt and are worth sharing. In an article by Sophia Chabbott in today's WWD, called "Luxury's Lament: The End of Flaunting", part of the problem, according to Karl Lagerfeld, is that the meaning of luxury had become distorted.

“The word [luxury]…was used for things it was never related to,” the designer said. “It became nearly obscene. Now it has to change…and go back to what it used to be about — discretion and elegance, and not bling-bling. The hint of vulgarity has to go. The luxury business will never die. Luxury is about quality, refinement, innovation, and not about price.”

It is at times like these that foundations are revisited, the layers above the core meaning are dusted off to present the shiny reality, in this case, the meaning of Luxury. So, to all those imposter's of luxury, please take note.

Sunday, 15 March 2009

It’s Not A Good Time For Swatch – 13/3/09

Profits have fallen by 17.4 percent for Swiss luxury-timepiece company Swatch. Swatch shares have also taken a battering. It’s definitely not a good time for Swatch.

So why the sudden slump in watch sales? In a article, Swatch’s Brave Face, analyst Patrik Schwendimann suggests luxury watches are a typically male purchase. And as we all know, men are holding back from shopping in these tough times, while women still can’t resist their retail therapy.

It’s sad for Swatch that people are watching their spending. Hopefully watches will come back into vogue soon.

Bulgari Profits Slump As Customers Watch Their Spending – 11/3/09

Things could be a lot better for Bulgari SpA with reports that profits fell 45 percent last year. According to a Bloomberg article, watch sales slumped the most in their portfolio, 11 whole percent, while jewellery slipped 2.5 percent and accessories declined 1.5 percent. On the plus side, perfume sales rose 12 percent.

As watches disappear from people’s wish(wrist)lists, Bulgari CEO Francesco Trapani has put all store openings on hold. He also said that jobs will be cut significantly, unprofitable stores closed, inventory reduced and the number of products decreased.

But it’s not just Bulgari watches that have fallen out of favour. In January, Swiss watch exports had their biggest monthly decline in at least 20 years. So, will the watch woes continue for Bulgari? It certainly seems likely, but only time will tell...

Gucci Under Threat From Chinese Boycott – 3/3/09

As tensions rise in Tibet, there are fears that luxury retailers, like the LVMH group, may once again come under fire.

Last year, protestors called for a boycott against LVMH after French politicians criticised China’s Tibet policy. Thousands of Chinese protestors also targeted French retailer Carrefour and picketed its shops in six cities.

This year, pressure is building once more and the latest target could be Gucci. According to a Business Week article, a Xinhua columnist pushed for a boycott, saying, “There’s no reason that Chinese people should choose to buy Gucci which sponsors ‘Free Tibet’ movements.”

Even though Gucci claims they are “not concerned about the possibility of a boycott”, they are likely to watch their step in the future. Like the rest of the luxury industry, they can’t afford to lose the lucrative Chinese market.

Buffett Spends Big On Tiffany – 19/2/09

One of the world’s richest men, billionaire Warren Buffett, has spent big on luxury jewellery chain Tiffany & Co. And no, he’s not filling his pockets with billion-dollar bling, he’s invested in their corporate bonds.

According to a Business Week article, on 12 February, Buffett’s company, Berkshire Hathaway, purchased $250 million of Tiffany’s 10.00% Series A-2009 and Series B-2009 Senior Notes. This was a big boost for Tiffany, whose holiday sales were reportedly down 21 percent. Hopefully Buffett’s splurge is enough to give Tiffany back some of its sparkle.

Consult Bloomberg’s report, Buffett’s Berkshire Agrees to Purchase Tiffany Bonds, for more detailed facts and figures.

The PPR Group Goes From Strength To Strength – 19/2/09

Despite analysts predicting profits at Gucci would go downhill, the luxury brand has performed better than expected. In fact, fourth-quarter sales at Gucci rose 3.4 percent. A New York Times article attributed this success to The stronger dollar and yen and continuing demand for luxury goods, especially in Asia.”

And Gucci is not the only PPR brand doing well. Seven of PPR’s eight luxury labels, including Balenciaga and Stella McCartney, also reported an operating profit last year.

PPR’s chairman and CEO, Francois Pinault, seemed pleased with the news. He said, “The crisis may affect the speed of our plans but not the overall strength of our group, which is solid.” So PPR may be slowing down, but as we all know, speed is not everything – slow and steady usually wins in the end.

Lagerfeld Believes Web Sales Would Be Bad For Business – 12/2/09

Why is Karl Lagerfeld so intent on keeping luxury shopping from expanding onto the World Wide Web?

Well, Lagerfeld, artistic director for Chanel and designer for Fendi, believes luxury sales and the Internet do not mix. In a recent WSJ Fashion article, he was quoted as saying “the Internet does not convey the unique feel and sophistication of luxury materials, refined tailoring and extraordinary attention to detail found in luxury fashion.” He also added that shopping for high fashion required “a multi-sensory environment.”

But is Lagerfeld’s attitude sabotaging potential sales? Armani, Hermes and Gucci, to name a few, have embraced the Internet and it doesn’t seem to be doing them any harm. And luxury e-commerce sites have proved highly lucrative. These days, luxury labels should be in tune with what customers really do want and then woo them by the best means possible, (with a strong caveat here of always maintaining a high level of service and product representation). And if that means Internet sales, so be it. By offering multiple options, everybody wins – the customers who crave the ‘multi-sensory environment’ can peruse the stores, while others can order their coveted items from the comfort of their own home.

Is Counterfeit Really The Highest Form Of Flattery? – 1/3/09

Have Burberry, Gucci, Chanel, Louis Vuitton and Prada finally won the war against China’s counterfeit trade? Not yet. But this month, there was a promising start as the Beijing’s Silk Street Market buckled under legal pressure and temporarily shut the stalls of 29 offending vendors.

Not surprisingly, the vendors were outraged at this sudden development and protested aggressively in front of IntellecPro, the Beijing intellectual property firm that are representing the five luxury brands. In fact, the protests were so intense that IntellecPro’s senior partner, Hu Qi, was afraid to go home and stayed in a hotel for three nights.

It will be interesting to see what happens with the Silk Street Market case. It’s about time that China took a stand against its often unflattering copycats. There are way too many fakes out there (and we’re not just referring to the handbags!)

Read more on this case in an in-depth New York Times article.

Who's behind the MO DOWN

Melinda O’Rourke is the founder and Director of MO Luxury, a dynamic, Sydney-based management firm specialising in luxury brands and services. Melinda and her associates at MO work with local and international brands across prestige retail, fashion, fine jewellery, timepieces and specialised services. Melinda is well-connected, well-read, and well-versed in the demands of the luxury market and its client base. Her advice is firmly based in objectivity and ultimately, accountability. Melinda offers constructive counsel and both strategic and creative thinking and is able to draw upon a strong network of specialised talent to compliment the MO Luxury team as needed. Melinda enjoys excellent industry relationships and is regularly quoted in the business and fashion media. Read more about MO Luxury,