The Trendscendentalist

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Michael Kors to be added to the S&P 500 . Should be a boon to the stock. Index funds will purchase the stock for the long haul and add a stronger institutional base of investors.

Michael Kors to be added to the S&P 500 . Should be a boon to the stock. Index funds will purchase the stock for the long haul and add a stronger institutional base of investors.

Filed under mk michael kors sp500

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LVMH has added Loro Piana to its vast Luxury empire by acquiring an 80% interest in the Company for €2 billion in CASH. Based on estimates, this would value LP at 3.9x sales (according to management guidance of €700 million for 2013 sales); at an estimated 17.5% EBITDA margin, this would value the company at 16.3x EBITDA.  This valuation is above the industry average of 11x EBITDA and 3x sales. LP’s geographical sales are as follows: 46% Europe, 22% North America and 32% Asia and rest of world. My sister’s affluent friends in China love the brand, but think its apparel is too plain. LVMH must help LP grow in China at a greater pace for this deal to make sense.

Loro Piana’s famed cashmere is grossly overpriced, because it is extremely plain. If LVMH can infuse fresh creativity and luxurious pazazz to this aging brand, the deal could generate a healthy return. Until then, I believe this deal from an economic perspective is fairly priced, but over-valued aesthetically. LVMH should’ve held out for Hermes! Go big or go home!

LVMH has added Loro Piana to its vast Luxury empire by acquiring an 80% interest in the Company for €2 billion in CASH. Based on estimates, this would value LP at 3.9x sales (according to management guidance of €700 million for 2013 sales); at an estimated 17.5% EBITDA margin, this would value the company at 16.3x EBITDA.  This valuation is above the industry average of 11x EBITDA and 3x sales. LP’s geographical sales are as follows: 46% Europe, 22% North America and 32% Asia and rest of world. My sister’s affluent friends in China love the brand, but think its apparel is too plain. LVMH must help LP grow in China at a greater pace for this deal to make sense.

Loro Piana’s famed cashmere is grossly overpriced, because it is extremely plain. If LVMH can infuse fresh creativity and luxurious pazazz to this aging brand, the deal could generate a healthy return. Until then, I believe this deal from an economic perspective is fairly priced, but over-valued aesthetically. LVMH should’ve held out for Hermes! Go big or go home!

Filed under lvmh loro piana luxury acquisition cashmere apparel cash gotpaid hermes

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Apple has hired former Yves Saint Laurent CEO Paul Deneve to work on “special projects”. Wearable tech = Trendscending .  This is a horrible move.  Tech guys need to realize that it’s NOT the CEO, it’s the Designer!  Apple should’ve hired Nicolas Ghesquiere as a consultant. He’s available! Imagine a collaboration between Jonathan Ive and Nicholas on Apple’s next killer product? Or perhaps a designer like Hussein Chalayan who is at the fore front of wearable tech?

Filed under apple ysl fashion tech wearable technology design dream collaboration east meets west american french iphone ipod iwatch ireadytowear jonathan ive nicholas ghesquiere hussein chalayan

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Jay Z and Yeezy’s album covers for their latest releases resemble that of Givenchy’s prints for the upcoming AW 2013 and SS 2014 Collections. Ever since Riccardo Tisci designed the giant flag for the “Otis” video, Jay and Ye have been sportin Givenchy on their sold out tours. Is it a coincidence that there are elements of Givenchy in the two rap Titans album covers? 

Filed under Givenchy magna carta holy grail yeezus jay-z kanye west hova riccardo tisci

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Neiman Marcus plans to raise $100M through an IPO. The Company generated net income of $140M in 2012, on $4.35B in revenues. TPG (Texas Pacific Group) and Warburg Pincus took Neiman’s private in October of 2005 at a value of $5.1B. I estimate Neiman’s value to be around $4.8B or 1.1x 2012 revenues. This would be in-line with the valuation for retail companies, but shy of the $5.1B acquisition in 2005.

Neiman Marcus plans to raise $100M through an IPO. The Company generated net income of $140M in 2012, on $4.35B in revenues. TPG (Texas Pacific Group) and Warburg Pincus took Neiman’s private in October of 2005 at a value of $5.1B. I estimate Neiman’s value to be around $4.8B or 1.1x 2012 revenues. This would be in-line with the valuation for retail companies, but shy of the $5.1B acquisition in 2005.

Filed under Neiman Marcus IPO Luxury Retail

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D&G = Dungeon & Gaol … at the end of the day, no matter how creative and visionary you are, it’s the financials and financial practices that matter! Dolce & Gabanna sentenced to 20 months each in jail for tax evasion on $1.34 Billion in unreported revenues! 

D&G = Dungeon & Gaol … at the end of the day, no matter how creative and visionary you are, it’s the financials and financial practices that matter! Dolce & Gabanna sentenced to 20 months each in jail for tax evasion on $1.34 Billion in unreported revenues! 

Filed under D&G Dungeon & Gaol Dolce Gabanna Tax Evasion

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LVMH announced 1Q13 sales of €6.95bn (+7% growth) that were -3 below consensus forecast (+9-10%). Sales included a 1-time benefit from the consolidation of DFS’ Hong Kong airport concession last December. Excluding this benefit, sales were up only +5%. Sales were driven by strength in Asia and United States, offset by weakness in Europe and Japan. On a category perspective, sales were soft at Louis Vuitton Fashion & Leather (+3% vs +5% consensus) and Watches & Jewelry (+2% vs +4% consensus), while Wine & Spirits drove the sales growth (+7%). Management did not provide guidance for the year, but noted that Europe remains challenging.  I expect overall sales for the year to be challenging given the weakness in Europe and slowing growth in China and Japan. I expect Fiscal Year 13 sales growth of +7%. The Fall 13 Collections for Fashion & Leather looked solid and the Dior Cosmetics and Sephora businesses continue to be strong.

LVMH announced 1Q13 sales of €6.95bn (+7% growth) that were -3 below consensus forecast (+9-10%). Sales included a 1-time benefit from the consolidation of DFS’ Hong Kong airport concession last December. Excluding this benefit, sales were up only +5%. Sales were driven by strength in Asia and United States, offset by weakness in Europe and Japan. On a category perspective, sales were soft at Louis Vuitton Fashion & Leather (+3% vs +5% consensus) and Watches & Jewelry (+2% vs +4% consensus), while Wine & Spirits drove the sales growth (+7%). Management did not provide guidance for the year, but noted that Europe remains challenging.  I expect overall sales for the year to be challenging given the weakness in Europe and slowing growth in China and Japan. I expect Fiscal Year 13 sales growth of +7%. The Fall 13 Collections for Fashion & Leather looked solid and the Dior Cosmetics and Sephora businesses continue to be strong.

Filed under lvmh

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 Prada reported 4Q12 EBITDA of €325m that was +19% to last year, in line with consensus estimates. Gross margin was up 50 bp to 72.3%, slightly below expectations.  Management attributes this to specific 4Q markdown activity in shoes and RTW. I foresee the upcoming quarters as challenging for Prada, as well as the rest of the Luxury players. Tourism into Europe is declining and Chinese consumption appears to be slowing as well. Although both the core Spring and Fall 2013 Collections were impressive, Prada’s Miu Miu line was a bit disappointing. Management notes that there is huge upside in Miu Miu, which has been difficult to leverage.

 Prada reported 4Q12 EBITDA of €325m that was +19% to last year, in line with consensus estimates. Gross margin was up 50 bp to 72.3%, slightly below expectations.  Management attributes this to specific 4Q markdown activity in shoes and RTW. I foresee the upcoming quarters as challenging for Prada, as well as the rest of the Luxury players. Tourism into Europe is declining and Chinese consumption appears to be slowing as well. Although both the core Spring and Fall 2013 Collections were impressive, Prada’s Miu Miu line was a bit disappointing. Management notes that there is huge upside in Miu Miu, which has been difficult to leverage.

Filed under Prada earnings luxury

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China’s First Lady, Peng Liyuan, has caught the attention of the fashion world. Rather than wearing Jason Wu, Thom Browne, or the Uber Luxury brands from Europe (LVMH, PPR), she is sporting a Chinese label, based in Guanzhou called “Exception.” In the past few days, Exception’s website has crashed as a result of the numerous hits to the site by Chinese consumers. Could this signal a shift in Chinese consumer behavior towards more up and coming local brands? China accounts for 25% of the global Luxury purchases and 50% of luxury sales in Asia. This Trendscending display by the First Lady of China could have ripple effects for sales of the established Luxury brands in the years to come. Certainly a potentially Trendscendental movement to follow! 
Exception is designed by Ma Ke and the website is mixmind.com

China’s First Lady, Peng Liyuan, has caught the attention of the fashion world. Rather than wearing Jason Wu, Thom Browne, or the Uber Luxury brands from Europe (LVMH, PPR), she is sporting a Chinese label, based in Guanzhou called “Exception.” In the past few days, Exception’s website has crashed as a result of the numerous hits to the site by Chinese consumers. Could this signal a shift in Chinese consumer behavior towards more up and coming local brands? China accounts for 25% of the global Luxury purchases and 50% of luxury sales in Asia. This Trendscending display by the First Lady of China could have ripple effects for sales of the established Luxury brands in the years to come. Certainly a potentially Trendscendental movement to follow! 

Exception is designed by Ma Ke and the website is mixmind.com

Filed under LUXURY Peng Liyuan Exception LVMH PPR JASON WU Thom Browne Ma Ke

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As I predicted a month ago, Saint Laurent’s A/W2013 Menswear Collection was a prelude to the impending failure of the Womenswear Collection. Hedi should change his last name to Mugatu, because the Collection was “Dereclite” (think Zoolander the Movie). PPR is lucky that it has Bottega Venetta, which produced another spectacular Collection, to offset future lost sales from YSL. Last quarter, YSL’s sales grew at +13%. I expect YSL’s sales to grow at below +5%, if lucky. Remember August 2012, when YSL announced sales growth of +42%? What happened? Oh, that’s right, Stefano Pilatti was at the helms. It’s the price you pay in fashion when you roll the dice with a changing of the Creative Guards. Unfortunately, when you’re a publicly traded company, investors won’t be kind!

As I predicted a month ago, Saint Laurent’s A/W2013 Menswear Collection was a prelude to the impending failure of the Womenswear Collection. Hedi should change his last name to Mugatu, because the Collection was “Dereclite” (think Zoolander the Movie). PPR is lucky that it has Bottega Venetta, which produced another spectacular Collection, to offset future lost sales from YSL. Last quarter, YSL’s sales grew at +13%. I expect YSL’s sales to grow at below +5%, if lucky. Remember August 2012, when YSL announced sales growth of +42%? What happened? Oh, that’s right, Stefano Pilatti was at the helms. It’s the price you pay in fashion when you roll the dice with a changing of the Creative Guards. Unfortunately, when you’re a publicly traded company, investors won’t be kind!

Filed under YSL yves saint laurent Saint Laurent PPR bottega veneta DERELICTE