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 Jun
 01
 2017



Ulrike

Hello,

Happy Thursday and welcome to a new edition of The Spin. Today, Ulrike Howe focuses on the high cost of US production, the deep decline of Michael Kors' shares and Stella McCartney's patronage of P&C Düsseldorf's Designer for Tomorrow Awards. Enjoy the read and feel free to share the newsletter.



brands

Michael Kors tanks. Even though New York-based Michael Kors Holdings Corporation beat earnings forecasts in Q4, a lower guidance for FY18 sent the company’s shares down 8.5% to $33.18 which made it the worst performer on the S&P 500. To improve profitability, the company plans to close 100 to 125 of its full-price locations, reduce promotional activity and enhance product offerings. In mid-2016, the company operated 390 retail stores and concessions in the Americas plus 278 international retail locations in Europe and Asia.


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Expensive homecoming. The Bollman Hat Company is one example of the challenges of bringing fashion production back to the US from low-cost production locations. Funded by a successful Kickstarter campaign, the 149-year-old hat and cap maker moved some of its production from China to Pennsylvania last year. Since then, the manufacturer of the famous Kangol caps has been struggling with higher costs and lower productivity and claims that it is losing money on every single Kangol cap.


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retail

Forever 21 shrinks. To turn a profit with Forever 21, the fast fashion retailer's Indian licensee, Aditya Birla Fashion & Retail (ABFRL), plans to reduce store sizes. ABFRL operates 17 Forever 21 branches, mostly between 1,400 and 1,900 sqm in size. This year, it plans to open 15 shops sized 750 sqm to 1,100 sqm. Some of the existing locations will also be downsized. In the US, Forever 21 will open 13 "Riley Rose" beauty boutiques at top malls of developer General Growth Properties (GGP). Experts expect Forever 21 to be among the next 34 companies to announce store closures in the US.



Popups on the rise. This year alone, more than 7,000 stores are predicted to close in the US. As vacancies mount, more and more landlords are opening up to new retail concepts. Even exclusive, high-profile locations are starting to allow short term leases and experimental popup shops.





people

Stella McCartney oversees DfT-Awards. British designer Stella McCartney has been named patron (in German) of the 10th edition of P&C Düsseldorf’s Designer for Tomorrow awards. The German multibrand retailer's awards show is going to take place on July 6th during Mercedes-Benz Fashion Week in Berlin. Meanwhile, British online retailer Asos continues the Asos Supports Talent initiative which assists young creatives in turning their passion into real-life projects.





markets

Paris calling. To bring tourists back to Paris, Galeries Lafayette offers a personalized Parisian Shopping Experience . A €49 ticket provides access to a private lounge, personal shoppers, gifts and refreshments. After a string of terrorist attacks in 2015 the number of Chinese and Japanese tourists to the City of Light dropped 21.5% and 41.2% respectively. But the tide might be turning: Tourism growth should boost Europe’s luxury sales by as much as 9%.



US designers court Melania. Since several US designers like Tom Ford, Marc Jacobs and Zac Posen have openly refused to dress Melania Trump, the American First Lady has turned to European fashion names. One of her current favorites is Italian label Dolce & Gabbana, which she has prominently featured during her recent trip to Saudi Arabia, Italy and Belgium. To the chagrin of some US labels, the Italian designers’ $51,500 floral jacket has been featured all over the world. Now, some defectors want back in on the action: Fashion deliveries to Trump Tower have already picked up.





last

Max Azria reappears. After leaving BCBG Max Azria Group LLC last summer, company founder Max Azria has resurfaced as CEO of Los Angeles-based light and insect zapping device manufacturer ZappLight. In March, BCBG Max Azria which was launched in 1989 filed for Chapter 11 bankruptcy protection and started to close 118 stores.







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