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Last week, brands and retailers continued to struggle with inventory issues and resist demand for discounts. Elsewhere, luxury spending declined in America as it increased in China, and fashion continued its love affair with film. Don’t forget to subscribe to the Glossy Podcast, the glossy beauty podcast featuring interviews and weekly review segments with fashion industry leaders and beauty industry interviews. And you can click here to receive the Weekend Brief in your inbox every Sunday. –Danny Paris, c. Fashion reporter
Fashion brands have a lot on their hands.
Last week, Under Armor reported on earnings that its inventory for the year ending March 31 reached more than $1.2 billion. Profit margins fell 3 percent as the company cut back on work on those items. President and CEO Stephanie Leinartz said there was a “sector-wide inventory problem” in apparel that led to further discounts.
In January, our sister retailer Fashion reported on the “we’ve done too much” sales trend employed by brands like Lululemon, Ursa Major and womenswear brand Carlin, turning their overstock into a selling point. But in a tough economic environment, extra inventory is no joke. Margins are squeezed for many brands in the sector as the cost of acquiring and manufacturing customers increases and costs decrease. Even the fact that shipping costs have become somewhat more affordable in recent months has not been enough to compensate.
At Monday’s Glitzy E-Commerce Forum in Manhattan, several attendees and speakers voiced concerns about excessive discounting.
“The weak market really puts me to sleep,” Heather Kaminetsky said on stage with our editor-in-chief, Jill Manoff. “Discounts are a race to the bottom. A lot of people have tons of stuff in the market, but where is it going to go?”
Luxury rate slows in US, increases in China.
Speaking of “macroeconomic conditions” — inflation, spending cuts and an uncertain labor market — a favorite talking point of executives — Canada Goose reported earnings last week. The company reported a 4.5 percent decline in U.S. revenue.
He blamed that decline on “macroeconomics,” specifically a decline in luxury spending by American consumers. In April, even LVMH, which has seen sales rise across the board, warned that US sales rose 8 percent last quarter amid a slowdown in U.S. LVMH luxury. The region. With the exception of Sephora, sales of LVMH goods are flat in the US.
Meanwhile, Canada Goose saw a 65 percent sales explosion in Asia, as luxury spending in China appears to be back with a vengeance after a few quarters of declining sales in the US.
Fashion x Film at Cannes and Venice
This past week has been a good one for fashion and film lovers like me. The Cannes Film Festival in France kicked off on Tuesday. It hosts premieres of some of my favorite movies, like Martin Scorsese’s “Killers of the Flower Moon.” Earlier red carpet looks at Cannes included Cate Blanchett’s Louis Vuitton two-piece and Aishwarya Rai’s elaborate metallic dress.
In another film/fashion crossover, Giorgio Armani has announced that he will be holding a couture show in September to coincide with the Venice Film Festival.
Fashion and film have always been natural bedfellows. Influential designer Tom Ford has made the leap to directing films. Another Cannes film I’m excited about is Pedro Almodovar’s “Strange Way of Life,” the first film from the newly launched Saint Laurent production, featuring designs by Saint Laurent creative director Anthony Vaccarello. The Saint Laurent film production company officially launched in April and is reportedly working with other filmmakers including Wong Kar Wai, Paolo Sorrentino and David Cronenberg. I’m not normally one for branded content, but these are my all-time favorite directors, so indulge me. Now I have to secure an invitation to Cannes next year.
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