Mixed Results For Hermes And Tiffany & Co. – 31/8/09

Recent news has continued to slightly confuse our take on the luxury market and their respective results as we hear them, although we are mindful we are reviewing Tiffany & Co.'s quarter and Hermes first half year. How we seem to have moved past the dire financial announcements of six months ago and are now moving towards more positive sentiments and cautious optimism.

At the moment, we have Tiffany & Co. where "Revenue shrank 16 percent to $612.5 million in the three months ended July 31, beating the $600.7 million average analysts’ estimate in a Bloomberg survey. Tiffany raised its annual profit forecast". According to a Bloomberg article, cost cutting is being sighted as the main reason for the better than predicted performance. Analysts are now predicting sales will decline 10 percent versus 11 percent previously. One point is very important at this end of town…

Meanwhile, on the other side of the coin we have Hermes, who announced a 7 percent drop in profits for their first half year results. This was a worse than expected figure and they have "blamed the drop on currency fluctuations and a lower rate of return on financial investments," according to a New York Times article. Despite this setback, manufacturing of their covetable silk scarves and Birkin bags will still continue with gusto.

Article by: Melinda O'Rourke

The Good Times Roll Once More For Richemont’s Swiss Watchmakers – 28/8/09

We’ve been watching how the sales of timepieces have been travelling and finally we have promising news. Swiss watchmaker IWC, part of Swiss luxury goods group Richemont*, is now performing "astonishingly well" in the U.K. And it is also performing very strongly in China and some of the key Asian regions.

IWC Chief Executive Georges Kern said in a Reuters article, "China and the most important markets Hong Kong and Macau are proving to be robust for us and are developing better than we had feared a few months ago."

Kern also stated, “We remain cautious and don't see any reason for euphoria. But the first signs of at least a stabilisation are there.”

This development is a nice contrast to recent reports that timepieces have been the fly in the ointment for luxury goods conglomerates, dragging down their overall profits due to inventories... We’ve red flagged this issue on the MO Down several times, including on March 11 when we reported: ‘Bulgari Profits Slump As Customers Watch Their Spending’. Click here to read the full report.

*Richemont is controlled by South Africa's Rupert family, and is the world's third-largest luxury goods group behind LVMH and Hermes.

Article by: Melinda O'Rourke

Louis Vuitton Celebrate Contemporary Art and Fashion - 27/8/09

Q: What's 400 pages and includes three book-in-books (not shop in shops)?

A: It's the soon-to-be released livre grand by the name of "Louis Vuitton: Art, Fashion and Architecture" due out in September. The tome celebrates the collaboration between Louis Vuitton and many known and unknown artists, architects, photographers and designers over a centenary (or so). According to a blurb on publisher Rizzoli's website, "Louis Vuitton can claim to maintain the richest and most varied associations with the world of art. Included in this volume are Louis Vuitton’s important collaborations with an elite group of artists, architects, designers, and photographers, such as Jun Aoki, Shigeru Ban, Vanessa Beecroft, Olafur Eliasson, Zaha Hadid, David LaChapelle, Jean Larivière, Annie Leibovitz, Takashi Murakami, Richard Prince, Stephen Sprouse, James Turrell, Inez Van Lamsweerde, and Vinoodh Matadin..."

The pioneering house continues to be at the forefront of innovation looking to other complimentary and interesting areas such as contemporary art and design. As previously reported at The MO Down, these collaborations, in our opinion, add ongoing cache to the brand and reinforce the investment value in every purchase.

Article by: Melinda O'Rourke

Beijing Is Officially Billionaire Central – 26/8/09

According to the latest Hurun Report*, Beijing has “143,000 multi-millionaires and 8,800 billionaires.” And Shanghai is following close behind with “116,000 multi-millionaires and 7,000 billionaires.”

We read in a China Daily article that the Hurun Report stated, "High-rollers in Beijing need to spend at least 87 million yuan [AU $15,209,688] on property, cars and other luxury goods in order to be regarded as one of the city's ‘new aristocrats’, or upper class."

This article also reveals that in Beijing, they consider Cartier as their favourite luxury brand, and are not as fond of Louis Vuitton. Which we have to say surprises us, given the growth of the Louis Vuitton brand in China and also the Chinese tourists in Australia purchasing up the brand to take home. Mercedes Benz at 1 million Yuan (AU $174,824) or BMW is their car of choice, they wear Bvlgari platinum and diamond watches and invest in art, amongst other things.

Another article in the Shanghai Daily, entitled Luxury Living Getting Tougher, offered another interesting overview of China’s luxury industry. It said, “Despite the slower pace, the price of luxury products rose steadily as a result of inflation. Because rich people's income rises faster than for average people, the inflation for rich people is much higher," said Rupert Hoogewerf, chairman and Chief Researcher of Hurun Report magazine, which is known for its "China Rich List".

The Shanghai Daily article revealed that, “Price hikes for cigars, liquor and MBA education contributed most to the rising luxury living cost."

*The Hurun Report, established in 1999, is regarded by some as the foremost authority in tracking the rapid changes among China's high net worth individuals.

Article by: Melinda O'Rourke

A French Champagne Row Is Causing Sour Grapes – 25/8/09

There is a champagne crisis threatening to pop at the moment, according to an Economist article.

The main point of this thought-provoking article is that when the good times rolled, everyone was celebrating with a sparkle. French Champagne houses such as Veuve Clicquot and Moet et Chandon owned by LVMH, which has just over 18% of the global champagne market, were negotiating to buy more grapes from smaller growers to feed demand. But it’s amazing how much can change in a small period of time. Now, major champagne houses seem to be backing off. “According to the Comité interprofessionnel du vin de Champagne (CIVC), a trade body, champagne-makers’ sales fell by 23% in the five months to May relative to 2008."

The article also stated, "Each year the CIVC determines how many grapes the champagne houses must buy from the growers. In 2008 it opted for a high level of 14,000 kg for every hectare farmed. This year the champagne houses, looking for a way to reduce stocks, are pushing for just 7,500 kg a hectare..." Ouch, that's a lot of excess stock. In the good times, some growers held back from selling their grapes to some of the key houses to prevent them from producing too many bubbles, keeping it a little more exclusive and luxurious perhaps. Now that there’s an oversupply, I see sour grapes on the horizon… and this time it's the growers turn to gripe.

In the past few months, popping a champagne cork in public may have been seen as a bit ostentatious given the fiscal environment, but perhaps indulging in private has become the new M.O. of many corporate types? Or has it become twist and pour sans bubbles in celebration; shhh, stealth and sleek? Where to now? Well, the light is starting to shine brighter on the economy, so perhaps by the year’s end there will be just a few more things to celebrate… publicly.

Article by: Melinda O'Rourke

All May Not Be Lost For Bankrupt Escada – 24/8/09

Will LVMH Moet Hennessy Louis Vuitton SA or PPR SA come to the rescue of German brand Escada? Or will the institutional investors who are sniffing around save the day? We’re not sure, but we were sure glad to read this good news in a Bloomberg article, as we thought any heroic rescue attempts were lost for Escada.

For background information on Escada’s recent financial crisis, see The MO Down for 14 August (Escada Officially Insolvent). There’s also another more detailed article on 13 August.

Article by: Melinda O'Rourke

Italy Bails Out Its Debt-Ridden Luxury Brands – 24/8/09

It's not often that you hear Fascist dictator Benito Mussolini and luxury mentioned in the one paragraph. But that’s exactly what we read in a very interesting Bloomberg article over the weekend, which claimed Italian banks are spearheading corporate bailouts, something that Mussolini did after the Great Depression.

The article claims that, “So far, Italy has avoided the high-profile bankruptcies that have plagued European and U.S. companies,” like Christian Lacroix SNC. It also goes on to say that “Only one publicly traded company, IT Holding SpA, owner of the Gianfranco Ferre fashion house, has filed for bankruptcy protection this year, amid the worst recession in six decades. No publicly traded company has gone out of business."

Another interesting point we read is that, “About 130 lenders agreed this month to let as many as a million small and medium-sized companies postpone loan payments for a year, giving them additional liquidity of as much as 40 billion euros.”

So the Italian banks are once again the knights in shining armour for their luxury industry. That is ‘benissimo’ [very good] to hear. They must have found the endless pot of gold at the end of their rainbow.

Article by: Melinda O'Rourke

Casting An Eye On Luxury In The Middle East – 21/08/09

Today, a report in the United Arab Emirates’ Business 24/7, entitled Luxury Brands Are Getting Ready For Life After Recession, struck a chord with us.

To summarise this lengthy article, it revolves around the fundamental rule that the “customer is king, especially in the luxury market.”

Patrick Chalhoub, joint CEO of the Chalhoub Group, also went on to say that you have to research and then adapt to your customers’ needs. He says, “Attitudes and aspirations are going back to values of authenticity and heritage in this period of instability." This is definitely an opportunity for new brands that are able to convey those values, to appear in the market."

“Brands should further develop their standing by strengthening their focus and investments in four key areas – loyalty and value, targeted marketing and creativity; and shopping experience of the customer," according to Chalhoub. These are key points we have flagged several times previously at The MO Down.

The Chalhoub Group is a family business that has grown into one of the leading retailers and distributors for 280 luxury brands in the Middle East. It has trusted relationships with iconic brands such as Baccarat, Chanel, Christofle, Louis Vuitton and Nina Ricci. So Patrick Chalhoub certainly has valuable insights and a number of examples to draw from.

Chalhoub also mentions Customer Relationship Management (CRM) as another key area, and we concur entirely. Our viewpoint is that many companies say, "they use CRM," but realistically the true essence of CRM is not being utilised. The data, if it is being properly captured, is not always being managed well or at all. Some companies struggle with the 'what to do with it' part. So there are many lost opportunities in CRM alone... to take just one of Chalhoub's key areas and focus upon it is certainly worth thinking about and may provide for some sobering reality checks...

Article by: Melinda O'Rourke

Yves Saint Laurent's House of Luck For Sale - 20/8/09

More treasures held by Yves Saint Laurent are up for sale. In addition to a second round of items being put up for auction, (see The MO Down, Round Two Of The Yves Saint Laurent Auction Has Been Announced 12/08/09) we read in The Associated Press that Monsieur Saint Laurent's Villa Mabrouka, or House of Luck in Tangier Morocco is also now up for sale by Christie's Great Estates, a subsidiary of the auction house and at this point they are not releasing any details.


No doubt there are more treasures to come in what form we will need to wait and see. An iconic designer such as Saint Laurent had a lifetime of designing and collecting, we haven't even got to the fashion yet. But thankfully the Pierre Berge and Yves Saint Laurent Foundation in Paris is "dedicated to conserving 5,000 Haute Couture garments and the 15,000 accessories, sketches and assorted objects that bear witness to 40 years of Yves Saint Laurent's creativity", according to the official website. So, his genius will be preserved and become a source of inspiration for many budding future designers for untold years to come.

Article by: Melinda O'Rourke

Eye Spy Luxottica In 65 Myer Stores – 19/8/09

A loyal collaborative effort caught our eye yesterday. Luxottica, the leading global designer, manufacturer and distributor of luxury, fashion and sports eyewear products, has signed a deal to set up shop in all 65 points of distribution within the mighty Myer department store chain. Thirty will be under the Sunglass Hut unit and will be branded, while the remainder will be non-branded.

Within their stable, Luxottica offer a veritable thicket of some of the biggest names in luxury, most notably Chanel, Burberry, Prada, Ralph Lauren and Tiffany & Co. to name a few.

This is a huge opportunity for both parties, and will no doubt add additional weight to Myer's already positive financial news. As Luxottica also own OPSM, they really are ensuring all retail opportunities are leveraged, and clearly have a firm 'eye' on maintaining their leadership status...

Click here to read more about this development.

Article by: Melinda O'Rourke

Condé Nast Is Forced To Cut Corners As Luxury Brands Advertise Less – 18/8/09

Last week, we reported that consulting firm McKinsey has been brought in to audit Condé Nast Publications, the publisher of Vogue, Tatler and GQ (see the MO Down for 14 August). This week, McKinsey will deliver their report, which is rumoured to be a cost-cutting program for the American arm of the group.

An article in The Guardian, No More Easy Living For Condé Nast, discusses the existing cost-cutting measures at “a magazine company that operates in the upper echelons of the market, and where editors – and publishers – are expected to fraternise with the luxury goods houses that bankroll many of their titles …”

The article also stated, “The group's titles are heavily reliant on advertising from luxury goods houses and fashion brands, which have dramatically curbed their spending this year.”

Charles Townsend, president and chief executive of Condé Nast in the U.S., was quoted by The Guardian as saying, "We feel strongly that the recovery of revenues lost through the recession will be painfully slow in the US luxury marketplace." But he emphasises that McKinsey has been asked "to look at processes and approaches to our business, not salary lines and headcount."

We’ll keep you posted on whether McKinsey forces Condé Nast to tighten another link on their fashionable chain belt.

Article by: Melinda O'Rourke

Is The Worst Over For Swiss Watchmakers Like Swatch? – 17/8/09

Only time will tell, however there is some good news to report from the Swatch Group. We read in a Bloomberg article on Friday that “Swatch Group AG, the maker of Omega and Breguet watches, led a surge by luxury-goods stocks after saying sales show ‘signs of recovery’ after a ten-month collapse."

Financial analyst Rey Wium also told Bloomberg that, “These numbers could indicate that the worst is over for the watchmakers.” This will be welcome relief as several companies reported recently that overall profits were down due in some part to watch overstocks, (see The MO Down Bulgari Down But Not Out, 4/8/09).

Swatch shares also rose 13 percent, the strongest in the past 10 months, and erased the effects of financial crisis following the collapse of the Lehman Brothers Holding Inc – which, if you wind the clock back, was almost a year ago. How time flies.

This share rise also had a domino effect with Richemont and LVMH shares both increasing, 5.5 percent and 3.3 percent respectively.

Article by: Melinda O'Rourke

Customers Are No Longer Craving Croc Skin Handbags – 17/8/09

Exotic skin handbags seem to have fallen out of favour according to an article in The Associated Press over the weekend. We read that alligator and crocodile farmers have reported huge reductions in demand for their reptiles, in some cases as much as 86 percent. Apparently "Gators bought Louisiana farmers and hunters $71 million in 2007, modest revenue even at that peak. This year, revenue is expected to be closer to $10 million in 2009, a drop like locals say they've never seen." It is definitely a case of ‘see you later alligator’!

This development is completely the opposite of what we reported in the MO Down for 8 June (Customers Are Still Snapping Up Hermes Croc Skin Bags), when Hermes’ CEO Patrick Thomas said they were experiencing “massive over-demand” on their exclusive crocodile skin bags. So what we take from this, is that it's not any old reptile handbag, shoe, belt, watch strap that will sell, it's about a brand having a history associated with using exotic skins.

Article by: Melinda O'Rourke

Conde Nast’s Vogue To Undergo A Revamp – 14/08/09

As Anna Wintour’s Fashion’s Night Out sets out to revolutionise the retail industry, we read in The New York Post that CondeNast Publications, which owns Vogue, has asked consulting firm McKinsey & Co. to give the company a major overhaul.

Click here to read more. The headline screams: Heads Spin, Some Will Roll After McKinsey Audit.

Putting ‘The Capital S’ Back Into Shopping – 14/08/09

In a global initiative to promote the retail arena and restore consumer confidence, Anna Wintour and Diane von Furstenberg, two iconic women in their own right, have joined forces and used their collective power to organise Fashion’s Night Out.

We read in a Wall Street Journal Fashion article that this exclusive global event involves 700 stores in the U.S. and 11 other countries, including the U.K., Greece, Japan, China, Russia, India and Brazil, keeping their doors open until at least 11 pm on September 10 – the eve of New York Fashion Week.

What’s the rationale behind this global retail celebration, you ask? Well, it's still about moving inventory, but not at any cost. The vibe is very different from November last year. The objective now is to try and sell new season product with little or limited reductions, and to try to shift customers’ mind sets back to 'full price.' Of course, attitudes will take time to change back, as with any type of conditioning, but it will happen given the brands and the retailers need to have flexibility as part of their strategies. Also, when there are no longer a multitude of sale items, the consumer is forced to buy what's available at the marked price... so the 70-90% markdowns look to become a distant memory.

For more information on Fashion’s Night Out, visit their official website: http://www.fashionsnightout.com/

Escada Officially Insolvent - 14/8/09

In Munich Germany yesterday (13 August) Escada officially filed for insolvency. Unfortunately they were unable to secure a rescue plan of any sort, their White Knight seemed to have got lost deep in the Black Forest. See yesterday's The MO Down for further information.

Is Escada Next To File For Bankruptcy? – 13/08/09

German fashion house Escada Group is sadly close to biting the dust, unfortunately it's not gold dust... with a share price slump of 45.2 percent, they are expected to file for insolvency later this week.

According to a Bloomberg article, "Escada’s collapse follows years of management upheavals, design flops and a contracting market that hastened the decline of the brand whose $10,000 robes are worn by stars including Demi Moore. More than 2,200 employees are affected by the insolvency which follows the failure of fashion companies including IT Holding SpA, owner of the Gianfranco Ferre label, and Christian Lacroix SNC.”

Bloomberg was unable to reach Escada spokesman, Frank Elsner, for an official statement. But it seems the writing is on the wall for this struggling luxury brand, which has 182 of their own shops and 225 franchise shops/corners in more than 60 countries, according to their website. Click here to read more.

You can also read more at Reuters where the headlines exclaim: Escada Future Uncertain As Insolvency Nears.

Round Two Of the Yves Saint Laurent Charity Auction Has Been Announced – 12/08/09

In November, select items from the estate of Yves Saint Laurent will go under the hammer for the second time… and all for charity.

The iconic designer, who died aged 71 on 2 June 2008, gathered some incredible pieces of art and other objet d'art. His first posthumous auction in February raised a record-breaking 342.5 million euros (AU $491.9 million).

November’s auction is a smaller scale production. According to the AFP news service, "A Fernand Leger painting and Yves Saint Laurent's own Mercedes Benz and Hermes luggage are to go on sale in … the YSL-Pierre Berge collection, one of the world's great private collections."

Like the first sale, which was the biggest private art sale in history, the proceeds will go to HIV research and the fight against AIDS, according to the Christie’s auctioneers who are organising this three-day sale, in association with the Berge auction house.

Click here to read more about the YSL treasures that will be on offer in November.

Coach’s CEO Set To Stay On – 12/08/09

Accessories brand Coach is clearly happy with their longstanding CEO, Lew Frankfort, as his life at the helm has been extended until 2013, according to Reuters.

Frankfort, who will mark his 30th year with the company, is widely credited for making Coach an international success.

You can read more about Coach in the MO Down’s special report: Coach Is A Clear Winner In Tough Times.

Luxury Cars Clocking Strong Growth - 11/8/09

There's a lot to be happy about working in the luxury industry in Australia right now. It certainly has been sprinkled with gold dust. International luxury fashion, accessory and fine jewellery brands are continuing to expand their retail presence in Australia and New Zealand as retail sales continue to grow. And if the figures just released by the Federal Chamber of Automotive Industries are anything to go by while the overall car market was down 10 per cent in July, sales of luxury cars contradicted the negative trend.

According to an SMH.com article European luxury cars such as "Audi, Lexus, BMW, Porsche, Volvo and Ferrari all recorded better sales than they did last July, when the downturn was first beginning to bite."

What we at the MO Down are gasping about is that BMW doubled sales of its top cat 7-Series sedan, which will set you back somewhere between $200K - $300K, and if you're more of a Porsche cat, well the 911 supercars with a price range between $200K - $450K were twice as popular.

They are quite impressive results which tend to reinforce the brand status of these cars and the preference consumers have to purchase on brand strength, history and quality. It is interesting to see Lexus cuts the mix as the relative new comer (relative to its European buddies) to the luxury car stable. Brand status, brand awareness, brand quality equal brand loyalty, even in trying times.

Hermes Takes Customer Service To New Heights In Japan – 10/8/09

In the country where Hermes is the number one luxury brand (according to Luxury Institute's ‘Wealth Report’ released earlier this year), they have taken customer service to new heights with their own brand of helicopter to make chic haste from Narita Airport to Tokyo city.

We heard from Reuters that this helicopter, dubbed the "l'Helicoptere par Hermes", will be white with ribbons in the classic Hermes orange painted along the sides. And inside, there will be room for four people on plush brown calf-leather seats. How much, you ask? Well, it’ll set you back 75,000 yen (AU $938) for a 30-minute journey.

Click here for more info and a sneak peak inside this fashionable flying machine.

Polo Ralph Lauren Is Set For A Shake-Up – 10/8/09

According to WWD Fashion, Ralph Lauren is planning further expansion of its own retail stores by purchasing existing distributors/wholesalers of the brand and reviewing existing license agreements.

We concur that this is a positive shift for Polo Ralph Lauren, particularly with our observations of the brand in the Australian/New Zealand market, where it is currently under license agreement with the Oroton Group. We’ve noticed there is a definite difference across several levels, including inventory offer, price points and overall image.

In addition, shares of Polo Ralph Lauren jumped 7 percent last Wednesday, after the company posted low first-quarter results that still managed to easily beat Wall Street’s estimates. Clearly the market likes not only the brand, but its future expansion plans …

A Forbes article, Polo Ralph Lauren 2Q Results Better Than Expected, has the latest facts and figures on this development.

When The Going Gets Tough, Women Go Shopping - 7/8/09

A Reuters article, Crisis Pushes Men To Therapy, Women To Handbags, caught our eye this morning. It confirmed our thoughts that women carry very different baggage from men – handbag(agge!)

This article stated that, "Louis Vuitton and Hermes bags are still amongst the most sought-after luxury products compared with weak demand for watches, a traditionally male-dominated sector.” At the moment, there is definitely no contest when it comes to handbags versus watches, women are keeping those ateliers working hard around the clock, whilst the Swiss watchmakers have plenty of time for a coffee break.

The handbags versus watches argument is also about direct retail stores (handbags, leathers) versus third party (wholesale to retail), where the tap has been turned off or slowed to a trickle. The wholesalers are at the mercy of the retailers. And as watch retailers internationally (Australia is excluded, trade continues well according to our industry sources) have reduced sell throughs, their inventory naturally has grown. So they in turn have pushed back with reduced orders to wholesalers, and the domino effect continues down to the manufacturers. In essence, this all boils down to inventory issues, something that may not be fixed for a long time …

Roberto Cavalli Has Outpriced Himself, Yet Again – 6/8/09

Our friends at WWD Fashion have confirmed that negotiations have broken down between Roberto Cavalli and Italian private equity firm Clessidra SGR SpA.

"The designer’s reluctance to reduce the lofty valuation he places on his fashion brand” is said to be the cause of the conflict, according to WWD Fashion.

So the tally this week is one Italian brand, Prada, was given a reprieve from the banks (see the MO Down for 5/8), thus making it less attractive now for other investors. And now another cash-strapped Italian brand has lost a potential investment opportunity. If private equity retreats, do the ever-cautious banks even want to go there?

Click here for the latest Reuters report on the Cavalli crisis.

A Priceless Piece By Cartier – 6/8/09

What do the Action Sportman of the Year award and Cartier have in common?

Well, the Laureus statuette presented to the winner, in this case formidable World Champion Surfer Kelly Slater, is exclusively produced by Cartier and contains 670 grams of solid silver with 650 grams of gold finish. What an outstanding award! We have to congratulate both Kelly and Cartier on their brilliance.

Prada Has Won Their Battle Against The Banks – 5/8/09

The financial pressure has eased at Prada, with a report by WWD Fashion revealing that they have received an extension on their loans.

Earlier this week, there was speculation that Prada had offered a substantial share of the company to Swiss luxury group Compagnie Financière Richemont SA (see the MO Down 3/8). But a Prada spokesperson has since denied this report.

Now that Prada is no longer heading towards the poorhouse, we wonder if they’ll be as attractive to third party investors, whether they are private equity (TPG) or a luxury goods conglomerate (Richemont) …? Given Prada have secured extension of their debt they can continue with their expansion plans to the tune of their own Aria, well at least until 2012.

Click here to read more on their loan extension.

Jimmy Choo’s The Perfect Fit As Malaysia’s Tourism Ambassador – 4/8/09

Shoe designer Jimmy Choo may live in London, but he still calls Malaysia home. So he was definitely a ‘shoe in’ for the role as their new tourism ambassador.

In an article in Malaysia’s New Straits Times, Malaysia’s Tourism Minister, Datuk Seri Dr Ng Yen Yen, said, “this appointment was part of the ministry’s moves to promote Malaysia at the international level.” This is another big development for Jimmy, who was in the headlines a few months ago for his collaboration with H&M (see the MO Down for 17/6).

Bulgari’s Down But Not Out – 4/8/09

Despite Bulgari recently reporting that their second-quarter sales were down 20.5 percent versus last year, there have been vast improvements since the first quarter.

Bulgari’s Chief Executive, Francesco Trapani, said in a Reuters article, he expects “a continuous improvement” in the upcoming months.

Although Bulgari's retail sales have started to increase, their wholesale business seems to be their Achilles heel, leading to overstocks in timepieces. This mirrors what is happening at LVMH SA, who announced their second-quarter figures last week (see the MO Down for 30/7).

PPR And Prada Each Have Their Own Financial Crises – 3/8/09

The gap between Italian competitors Gucci and Prada seems to be widening as Gucci continues to deliver strong sales, while the 'other' Italian, Prada, has reportedly appealed to Swiss investors for a financial boost.

According to an Associated Press article, Gucci delivered a "solid performance" with help from emerging markets, where sales of luxury goods rose 15 percent over six months.

Sadly, French luxury and retail group PPR SA, owner of the Gucci and Yves Saint Laurent brands, reported a 76 percent drop in earnings for the first-half, after sales fell at its Conforama furniture stores, FNAC books-to-electronics chain and Redcats catalog unit. However, PPR’s Chairman and CEO, Francois-Henri Pinault, said we are "satisfied with our performance to date. We are doing everything we can to ensure that the Group weathers the current developments and seizes opportunities as soon as the crisis subsides."

The good news for PPR was that sales rose 3.8 percent at German sportswear company Puma AG, which they own 64 percent of. And for the Gucci and Bottega Veneta brands, overall global sales increased by 8.3 percent and 2.7 percent respectively in the first half.

Due to these financial woes, PPR won’t be offering to bail out Prada any time soon. We read in a Reuters report that Prada’s bankers have offered Compagnie Financiere Richemont SA, owner of luxury brands like Cartier and Montblanc, a sizeable stake in the company. This is an unconfirmed report at the moment, but we’ll let you know the minute it becomes official.