- Prachi Singh |
Abercrombie & Fitch Co. has announced that Arthur C. Martinez will step down as executive chairman of its board of directors at the conclusion of its fiscal year ending February 3, 2018 in connection with his plans to retire as a director and not stand for re-election at the company's 2018 annual meeting of shareholders in June. The company added that Terry L. Burman, Lead Independent Director and Chair of the nominating and board governance committee will assume the role of Non-Executive Chairman at that time.
"I am proud of the demonstrable progress that Abercrombie & Fitch is making under the leadership of Fran Horowitz, who was appointed Chief Executive Officer early last year," said Martinez in a media release, adding "My decision to step down as executive chairman and not stand for reelection to the board is part of a planned transition of the chairman role. With the company on a solid trajectory, this is the right time to hand over board leadership to Terry, who has outstanding credentials as a retail industry leader and is the right person to assume the role.”
Abercrombie & Fitch Executive Chairman steps down
Abercrombie & Fitch said that Martinez and Burman both joined the company’s board in January 2014 and Martinez was appointed non-executive chairman of the board at that time, and has served as the company's Executive Chairman since December 2014.
"In the realm of business leaders, Arthur is a singular talent," said Burman, adding, "Abercrombie & Fitch has benefited enormously from his deep expertise and steady hand at a time of turbulence both at the company and in our industry."
Martinez, the company added, has enjoyed a long and highly accomplished career in retailing. He led the turnaround of Sears in the late 1990's as its chief executive officer, restoring the company to profitability after years of losses. He also served in a number of senior executive positions at Saks Fifth Avenue, among other companies. He has also served as chairman of HSNi until it was acquired in late December 2017 and of ABN-Amro, the largest bank in the Netherlands, and a director of AIG, PepsiCo, International Flavors & Fragrances and Kate Spade, among other companies. He is currently Chairman of Greenwich Hospital and a Trustee of Yale-New Haven Health System and Northwestern University.
Burman, the company further said, currently serves as Chairman of the Board of Tuesday Morning Corporation and as a Director of Learning Care Group. During his career he held the positions of president and chief executive officer of Barry's Jewelers, chief executive officer of Signet, chairman of Zale Corporation and was a member of the board of directors of Yankee Candle Company. He has also served as chairman of the board of St. Jude Children's Research Hospital.
- Vivian Hendriksz |
London - Compagnie Financière Richemont SA aims to take full control of leading online retailer group Yoox Net-a-Porter (YNAP), close to three years after the Swiss luxury company merged Net-a-Porter with its Italian rival Yoox SpA.
Richemont issued a public tender offer Monday morning to purchase the shares in YNAP it does not currently own, which is equal to 51 percent of the luxury e-tailer, for 38 euros a share, for a value up to 2.77 billion euros. This is 26 percent more than what YNAP’s shares closed at on Friday. The deal values YNAP at 3.7 billion euros, according to data from Reuters. Following the announcement, YNAP shares grew 24.3 percent to 37.60 euros, while Richemont’s shares remained relatively flat at 90.6 Swiss francs.
Richemont sets its sights on taking over complete control of Yoox Net-a-Porter Group
Federico Marchetti, Chief Executive Officer at YNAP, is open to the bid and has waived a clause in its shareholder documents which would have prevented Richmond from buying any more shares in the company. “Today marks an historic event for the Yoox Net-a-Porter Group. Richemont, already our largest shareholder, has decided to make a tender offer to buy all of YNAP’s shares,” said Marchetti, founder of Yoox and CEO of YNAP in a statement. “Richemont explained that the rationale for the investment is to build on YNAP’s solid track record of growth. Richemont aims to provide additional resources that further strengthen and accelerate YNAP’s long-term leadership in online luxury. This means investing even more in product, technology, logistics, people and marketing.”
Following the deal, YNAP will continue to function as a separate company, overseen by Marchetti. However, the luxury online retailer will no longer be a listed company, which sees the founder of Yoox losing his share capital. “It was always my dream to create something much bigger. This became possible through the combination of Yoox and Net-a-Porter in 2015, a vision shared with Richemont,” added Marchetti. “Nearly 20 years after inventing YOOX, YNAP’s magic excites me even more. The prospect of no longer owning 4 percent of the share capital does not change my entrepreneurial commitment to YNAP. Dreaming and innovating to the benefit of our customers has always been my motivation; it will remain so in the years to come.”
In addition to taking full control of YNAP, Richemont aims also to support the growth of business and strengthening its position in the luxury e-commerce market. “Thanks to our long-term commitment and resources, we see a meaningful opportunity to strengthen further Yoox Net-a-Porter Group's leading positioning in luxury e-commerce, growing the business in existing and new geographies, increasing product availability and range, and continuing to develop unparalleled services and content for today's highly discerning consumers,” said Johann Rupert, chairman of Richemont.
The complete takeover of YNAP will also change Richemont’s current business strategy, which previously focused on the hard luxury market, such as high-end jewelry, watches as well as luxury lifestyle brands. “With this new step, we intend to strengthen Richemont’s presence and focus on the digital channel, which is becoming critically important in meeting luxury consumers’ needs,” added Rupert. Richemont’s hesitation to embrace e-commerce is said to have impacted its sales following a decline in the luxury market. It’s bid for YNAP indicates a change in strategy and Richemont’s new focus on the digital channel.
The offer comes as competition for YNAP within the online retail sector continues to grow. Rival luxury e-tailers, such as Farfetch and Matchesfashion.com, continue to increase their share in the market, as other luxury brands are embracing e-commerce by opening their own online stores. However, with increased backing from Richemont, YNAP can accelerate its business growth to go head to head with its rivals.
Photo: Federico Marchetti, courtesy of YNAP
- Angela Gonzalez-Rodriguez |
ANALYSIS “We’re still vastly over-stored,” said Rod Sides, vice chairman of Deloitte LLP. “It’s not that the industry is dying, we’re in a correction.” That’s the view of attendees this week at the National Retail Federation’s trade show.
Experts agree: continued fallout is expected for the next two to five years as expiring leases at troubled locations aren’t renewed and more retailers file for bankruptcy.
Going online, first option of retailers facing bankruptcy
Take The Limited, for example. The female fashion brand announced a year ago, on January 7, 2017, that it would no longer operate stores, closing down all its 250 shops along with its website. It filed for Chapter 11 bankruptcy protection a week later in U.S. Bankruptcy Court to be partially rescued a month later when private equity firm Sycamore Partners announced it had purchased the Limited’s brand and website. Sycamore relaunched the brand’s website in late 2017.
Fast forward twelve months after parting ways with the physical world and no sales figures for the now fully online The Limited are available. Limited.com is still in its first quarter of operation strictly as a web retailer and Sycamore declined comment on how the brand’s online conversion has fared, recalls the ‘Chicago Tribune’.
Another women’s fashion chain, Bebe, also filed for bankruptcy and closed all of its stores to focus on selling online. This decision costed the company’s shares tank by 45 percent. Although temporary relief in the form of a slight stock’s price lift came for Bebe recently, after news broke on how the retailer was negotiating deals with landlords to help the closures go smoother than expected and avoid bankruptcy, a recent SEC filing revealed lease terminations could cost up to 65 million dollars (almost three times the record charge of 20 million dollars related to the store closings Bebe anticipated publicly in April last year.)
American Apparel, BCBG Max Azria, Rue21 and Wet Seal also went into bankruptcy in 2017, burdened by declining sales and increasing debt. In fact, last year was dubbed by many the ‘Year of Retail Apocalypse’, a year that left about 6,700 U.S. stores closed. The list of the brick-and-mortar doom is a never ending one which already contains the likes of JC Penney, Sears, The Gap, Banana Republic, Eastern Outfitters, Payless ShoeSource, and others.
”A company with no stores “has shed itself of painful fixed expense”
“Most of the retailers that are struggling still have loyal core consumers,” Garrick Brown, head of retail research at Cushman & Wakefield, said in a recently released note to market. “They just don’t have enough of them. I think that if a brand is a household name, or if it has a positive reputation or brand cachet, it will be a candidate for this (digital focus). Someone will eventually buy the intellectual rights for many of these brands and eventually they will start popping up online.”
On a related note, retail analyst Simeon Siegel, executive director at Nomura/Instinet Equity Research, said pure e-tailers’ physical stores validate the brick-and-mortar strategy. But “it is clear that certain companies may simply not be able to sustain them. And if a company has no stores, it will have shed itself of painful fixed expense (i.e., rent).”
Bebe does not have any term loans or bonds, and had about $67 million in cash at the end of 2016, according to its financial statements.
The company said in March that it had retained investment bank B. Riley & Co to explore strategic options, and a real estate adviser to work on lease negotiations with landlords.
- Angela Gonzalez-Rodriguez |
ANALYSISRetail in the U.S. is largely a domestic industry, agree market experts. As such, the new taxation announced by Trump’s Administration will generally favor national retailers.
The Tax Cuts and Jobs Act’s lower corporate tax rate benefits retailers more than other businesses in the country as this is a predominantly national market. Lowering the corporate tax rate from 35 percent to 21 percent will make the cost of new equipment cheaper, helping the industry invest in much-needed new technology.
Better tech, lower prices, and more lay-offs, the trade-offs of lower corporate tax
In such a scenario, one area that will be key, according to Deloitte, is mobile, which has emerged as companies’ most valued tool for interacting with customers. The consultancy firm sustains that retailers’ money is best spent on improving their products and consumer experience, rather than adding fancy technology in its stores, which he said is less effective.
But not all retailers will get a windfall from the bill and leveraged, unprofitable companies will fare worst. There is now a limit on how much interest expense on debt can be deducted against income. The amount of operating losses that can be deducted against future income also is also now capped, recalls Bloomberg. This implies that leveraged companies will face new struggles related to use debt expenses and losses to lower their tax bills.
Extra cash can be a double-edged sword for apparel retailers
"It's an additional drag on your ability to right the ship, and it's possible it accelerates the number of bankruptcies," said Josh Chernoff, managing director of the retail practice at EY-Parthenon. In a recent industry’s tradeshow, market analysts pointed at Neiman Marcus, Sears and Claire's among other big players to be impacted by the new tax framework. "They may be investing in process automation, which is good for shareholders, but doesn't add more jobs," said EY's Chernoff.
The threat of even lower prices and further discounting from Walmart and other stewards of affordable shopping is more real than ever in Trump’s lower corporate tax environment. Off-price retailers will have more cash available, being able to invest in boosting technology, lowering pricing, and improving delivery.
"A handful of them are going to come calling, 'Hey, if you can't show me that there's a path to daylight, sustained investment that's meaningful, give me my cash back so I can invest it elsewhere,'" said Aaron Cheris, head of Bain's Americas retail practice. "It gives retail the opportunity to invest to save itself, but it doesn't mean they're going to do it," added Cheris.
Image:Neiman Marcus Online Store
- Angela Gonzalez-Rodriguez |
Set to be a gloomy week – initiated by Blue Monday, the third week of January saw how Artificial Intelligence (AI) took the fashion industry by storm with two AI-heavy startups securing a total 60 million dollars in seed capital investment.
“The retail industry is experiencing an exciting and profound shift toward great, personal experiences, and rich, data-driven personalization is at the core driving the growth,” said William R. Adler, CEO, True Fit.
The retail industry’s data-driven personalization platform for apparel and footwear last week announced a new 55 million dollars Series C investment, led by Georgian Partners with participation from existing investors Jump Capital, Signal Peak Ventures, Intel Capital, and new investor Cross Creek Capital.
The new funding will further develop True Fit’s robust AI data platform, as well as advance innovation of its personalized style, fit, and analytics solutions. It will also expand the company’s offerings to include more robust open APIs, new AI-driven integrations, and new capabilities such as personal outfitting, chatbot virtual stylists, and enhanced visualizations.
True Fit secures 55 million while Finery raises 5 million dollars
Barely days later, The Finery, an automated online wardrobe platform with predictive analytics for styling and shopping, announced a 5 million dollars seed round led by NEA with participation from Farfetch, BBG Ventures, Adrian Cheng through C Ventures, Correlation Ventures, Next Coast Ventures, Halogen Ventures, RetailMeNot Founder & CEO Cotter Cunningham and TheSkimm founders, Carly Zakin and Danielle Weisberg. Finery’s founding angel investors include Brooklyn Decker, Andy Roddick, Miroslava Duma, and Nasiba Adilova.
Funds from this round will be used to grow the company’s team of top developers and data scientists. With a proprietary, automated backend process, Finery integrates seamlessly with a user’s shopping history and purchase patterns, optimizing the second most valuable room in the home - a woman’s closet. Since launch, the platform has garnered more than 100,000 users.
“With thoughtful investors from both tech and fashion by our side, we’re committed to building out the most powerful set of software tools that are easy to use and invaluable to savvy female consumers - the kind of technology that makes women smarter about how they spend their money, style themselves and shop every day,” said Whitney Casey, co-founder and CEO of Finery.
Casey went further ahead to say they “are the first consumer facing, apparel based data company to capture and understand these deep insights and then seamlessly put that powerful information directly to work for the women that data belongs to. We don’t want to sell women more ‘stuff,’ we want to help them to wear the things they already own, potentially monetize their closets and then give them tools to shop more strategically.”
Image:True Fit Web
- Angela Gonzalez-Rodriguez |
ANALYSIS That Amazon is taking the world by storm – a digital one – is no news. But that the e-commerce’s giant’s foray in fashion is already bearing fruits, is. Analysts expect Amazon to sell 28 billion dollars’ worth of clothing in 2018.
“We knew that Amazon dominated most retail verticals. But when we saw the survey results, we were pretty surprised that over 50 percent of shoppers opted to buy their apparel on Amazon in the past six months,” said Rick Backus, CEO & co-founder of CPC Strategy.
Dramatically improved shopping experience, key to Amazon turning the world’s favourite fashion retailer
“That speaks volumes about the work Amazon has done to improve their apparel shopping experience, and it’s a strong call to arms for apparel retailers and brands to take their e-commerce strategy to the next level,” further adds Backus in CPC Strategy’s recently released ‘U.S. Apparel Shopping Trends Forecast: How Shoppers Will Browse and Buy Clothing in 2018’ report.
According to this survey, 52.1 percent of online shoppers said they bought clothing from Amazon in the last six months, while 46.7 percent cited a retailer’s website, compared to the 14 percent who preferred browsing eBay for retail therapy and the 10. 8 percent that said to use search engines such as Google.
Fast shipping is definitely Amazon’s key differentiator, with a 30.8 percent of surveyed shoppers purchasing apparel on Amazon because of the fast/free shipping.
Meanwhile, Amazon’s offencive in the fashion world, which has seen a string of niche brands such as ModCloth being acquired by Jeff Bezos’ e-commerce unstoppable power, is also paying off: 54.9 percent of respondents purchased “casual apparel” online.
The digital imperative is also favouring Amazon, with 25.6 percent of shoppers preferring to shop for apparel on their phone or tablet, and 20 percent of respondents valuing the ability to filter products on an apparel site.
Image:Amazon Fashion U.S. Site
- Prachi Singh |
Geox S.p.A., in a statement announcing unaudited preliminary results for the year said that consolidated net sales amounted to 884.5 million euros (1,084.5 million dollars), down 1.8 percent at current and down 1.7 percent at constant forex, with the growth of the wholesale channel partially compensating for the planned optimization of the mono-brand store network. The company also announced resignation of the current CEO Gregorio Borgo and appointment of Matteo Mascazzini as the company’s new CEO.
“The expected figures for 2017 reflect the first concrete results of our new strategy focused on boosting profitability and achieving a healthy and profitable business,” said Mario Moretti Polegato, the company’s Chairman in a statement, adding, “On behalf of the entire board, I would like to thank Gregorio Borgo for his commitment and valuable contribution to the company, for the projects undertaken and for the results achieved this year. I also welcome Matteo Mascazzini who will be the new CEO with effect from February 1, 2018.”
Review of Geox’s preliminary results
Wholesale revenues, representing 45 percent of group revenues amounted to 401 million euros (491.7 million dollars), up 1.4 percent at current and 1.6 percent at constant forex. This trend, the company said, is due to a substantially stable performance in Italy and in the rest of Europe, double-digit growth recorded in Russia, Eastern Europe, China and by the online channel.
The company added that sales of the DOS channel, which represent 41 percent of group revenues, declined to 362.1 million euros (444 million dollars), down 2.3 percent at current and 2.1 percent at constant forex due to the planned network optimization in Europe and expansion in more responsive markets such as Russia, Eastern Europe and China with overall 16 net closures, stable LFL sales growth of 0.5 percent generated by the directly operated stores against 1 percent decline in 2016.
Sales of the franchising channel, which account for 14 percent of the group revenues, amounted to 121.4 million euros (148.8 million dollars), with a decrease of 9.8 percent at current and 10.3 percent at constant forex due to 62 net store closures and decline in comparable sales. At December 31, 2017, the overall number of Geox shops was 1,095 of which 439 were DOS. During 2017, 70 new Geox Shops were opened and 136 were closed in line with the rationalization plan.
Geox performance across geographies
Sales in Italy, which accounted for 29 percent of sales and reached 257.5 million euros (315.7 million dollars) compared to 270.1 million euros (331 million dollars) in 2016. This trend, the company said, is mainly due to 48 net store closures, the slight reduction in LFL sales recorded by DOS and a stable wholesale channel. Sales in Europe, which accounted for 43 percent of group sales, amounted to 382.9 million euros (469 million dollars), compared to 396.6 million euros (486 million dollars) in 2016. The 3.4 percent decrease is again due to 36 net store closures, slight increase in the LFL sales recorded by DOS and a stable wholesale channel.
North American sales amounted to 56.9 million euros (69.7 million dollars), down 6.2 percent or 5.6 percent at constant forex due to the performance on the Canadian market, the stable LFL sales recorded by DOS and closure of 6 monobrand stores. Sales in other countries, Geox added, increased by 8 percent or 7.9 percent at constant exchange rates with positive performance both in the wholesale channel and in terms of LFL sales recorded by DOS with a particularly strong growth in Russia, Eastern Europe and China.
Footwear sales represented 90 percent of consolidated sales amounting to 796.7 million euros (976.8 million dollars) were down 2.3 percent or down 2.1 percent at constant forex. Apparel sales accounted for 10 percent of consolidates sales at 87.9 million euros (107.7 million dollars), increased 3.1 percent at current and 3 percent at constant forex.
Matteo Mascazzini named new CEO of Geox
Mascazzini, the company said, brings a twenty-year career experience in the global fashion and luxury industry, with experience in retail and international development. He comes from the Gucci Group where, for over ten years, he held leading roles in EMEA, US, Japan and Hong Kong and in the retail and consumer management. Previously, from 2003 to 2007, he was COO/CFO in the US and Japan for Giorgio Armani and, from 1995 to 2002, for Gianni Versace Group he held the position of controller in the US and then in the group.
- Sara Ehlers |
Louis Vuitton is losing one of its long-term artistic visions. After serving the French fashion house for seven years, Kim Jones is officially set to leave the lifestyle brand. Louis Vuitton announced this in a press release.
Jones will leave his role as men's artistic director this week. He will show his last collection for the fashion house Thursday in Paris. “It has been a huge privilege to work with Kim,” said Michael Burke, Vuitton’s chairman and chief executive officer, in a press release of his departure. “All of us who have been fortunate to work with Kim wish him continued success in his next venture.”
Kim Jones to leave French fashion house Louis Vuitton after Paris show
Currently, there is no public statement on why Jones left, although there is speculation that he could move to another elite fashion house. Although nothing is confirmed, there is a possibility that he may work with Burberry, as reported by Business of Fashion. If he does move to another fashion house, it seems that there will be no ill-will towards the designer coming from Louis Vuitton, in reference to Burke's statement of wishing Jones "continued success."
After being recruited by Louis Vuitton for menswear design in 2011, Jones ultimately helped shaped the vision and creative flow of the brand for the next following years. With Jones' work, he took control of one of the ready-to-wear label's main lines introducing an infusion of streetwear and luxury.
Under Jones' creative direction, Louis Vuitton sparked the highly controversial collaboration with New York-based label Supreme. The streetwear fashion brand was introduced into the prestigious fashion house at the Autumn/Winter 2017 collection show. Louis Vuitton then held various exclusive pop-up shops, including one in Los Angeles that fared well. He worked to create unique, engaging looks as well as sparked several collaborations for the fashion house.
Following this news, Louis Vuitton has yet to name a successor or plans for a replacement. Both Louis Vuitton and Jones could not be reached immediately for comment.
Photo credit: Patrick Kovarik / AFP