The Value of Michael Kors: $666 Million Man

March 13, 2012

Let's be clear: Michael Kors is on a pretty good run, but it's not that he hasn't had a few disappointments. He, for instance, is not a teacher in Ontario.

So far, they are the real winners in Kors' December IPO. The Ontario Teachers Pension Plan Board was the only named Kors investor that didn't sell stock in the public offering.

And so instead of getting $20 a share -- as Kors himself did when he sold off 5.8 million shares, raising $117 million -- the pension plan's 13.2 million shares are now worth $42.08 each.

Kors, sadly, sold at what now seems to be a low price.

He might have another chance to get a better valuation since he, along with chief executive officer John Idol and backers Silas Chou and Lawrence Stroll, also has a stake in the Michael Kors operations in China, Hong Kong, Macau and Taiwan, which were not part of the IPO.

And he has steady employment.

The designer's contract gives him a job for life, an annual salary of $2.5 million and creative control over products bearing his name, assuming he can stay on the right side of "commercially reasonable." (The Wall Street types apparently don't approve of art for art's sake.) Kors is also eligible for a bonus and certain "perquisites" including life insurance, health club membership, car and driver for business purposes and tax services.

It's not the deal scored by Tommy Hilfiger -- who received 1.5 percent of U.S. revenues over $48 million when his company was public -- but it seems to be enough for Kors to keep the heat on.

If he does have to dip into the piggybank, he still owns 15.8 million shares of the company that bears his name, or 8.3 percent of those outstanding. On paper, that's worth $666.8 million, so he could always buy half a million of his $1,295 shearling racing jackets to keep warm.

That's something, at least.

For more information, visit: http://www.wwd.com/fashion-blogs/michael_kors_the_666_million_m-12-02

Department Stores Play an Important Role in the Success of a Designer

March 13, 2012

“American Idol” has produced Grammy winners, but reality TV has yet to produce a designer with mass commercial success. By adding retail to the formula, NBC’s “Fashion Star,” premiering Tuesday, aims to make business part of the entertainment

“It’s the fashion version of ‘American Idol,’ a real business process,” said E.J. Johnston, a former IMG Fashion executive who created the show’s concept with producing partner James Deutch, a former Hearst Entertainment executive.

The grand prize, a $6 million contract with Macy’s, Saks Fifth Avenue and H&M, will be awarded to one of 14 contestants on the 10th episode finale. In addition, each week buyers can place orders after each runway presentation, and viewers can buy product online that night and in stores the next day.

“We like the idea of big entertainment with tangible prizes, not to mention viewers like instant gratification,” said Deutch. (The show was taped over the summer, allowing retailers time to produce the clothes.)

“With other shows, winners still need to find a way to make their business work,” said Johnston. “We wanted to show that dream-come-true moment where a buyer says ‘I want that,’ so we made them the judges.”

In addition to decision making on camera, buyers must bid against one another to carry a look exclusively. “I can honestly say the show was really competitive both from the design and the buying process,” said Nicole Christie, H&M’s communications manager who was one of the show’s “featured buyers.” “It’s like going to Sotheby’s. You have to act fast and outbid the competition,” said Terron E. Schaefer, Saks’ executive vice president and chief creative officer, also a featured buyer. But the advantages far outweighed the challenges. “It’s like a 10-hour commercial for Saks,” he said.

Noted Macy’s vice president-regional planning manager for women’s apparel Caprice Willard, “We’re on the cutting edge of new ways to find talent and bring fashion to viewers. It’s important that retailers be open [to it] because we have to evolve in order to stay relevant. Customers are armed with far more product knowledge than ever before, so it puts the onus on us to be one step ahead.”

For contestants, who ranged from designers at major fashion brands to bartenders, the show means a fast track to success. “Whether or not they progress to the finale, their success is limitless. I wouldn’t be surprised if some end up in Macy’s and other storefronts,” said Willard. “There were designers who sold hundreds of thousands of dollars who didn’t win the grand prize,” added Deutsch.

While it remains to be seen how the clothes will sell, all retailers were optimistic about their profitability. As for the show, it has sold to 25 countries, and producers are in discussions to develop foreign versions with local retailers. Deutsch and Johnston are now developing a similar show with a 1,000-door home goods retailer. Said Johnston, “There are thousands of fascinating processes out there to add entertainment to.”

For more information, visit: http://www.wwd.com/media-news/film-tv/retailers-have-roles-in-fashion-star-5789620

Crocs Creating Stepping Stones For Their Comeback

February 15, 2012

Crocs Inc announced its expansion into licensing, providing opportunities for the Crocs brand to extend beyond footwear. The company has signed licensing agreements with key global and regional manufacturers for products ranging from apparel to sunglasses and other accessories.

“Licensing presents an opportunity to leverage one of our most valuable assets – the global power of the Crocs brand - by associating it with best-in-class products that go beyond footwear,” said Mike DeBell, Vice President of Global Sales. “More than 200 million pairs of Crocs shoes have been sold, in more than 90 countries around the world. That’s powerful testimony to the connection forged with consumers by the Crocs brand. Through strong international and regional licensing partners, we plan to extend the power of our brand and make new consumer connections.”

The first non-footwear Crocs-branded products included a line of adult and children’s socks from Sock and Accessories Brands, which launched in the holiday 2011 season. These are available in North America through wholesale and retail channels. Crocs-branded socks, produced by Intersocks, will also be available throughout European markets.

Crocs also entered an agreement with Accessory Exchange, which is producing a variety of Crocs-branded accessories for men, women and children, in several global regions. Accessory Exchange Crocs-branded products include hats, bags, backpacks, socks and gloves that are available now at Crocs retail stores and Crocs.com.

In April 2012, the Crocs brand will extend to children’s apparel through an agreement with the A Group. The children’s apparel will be available in 46 countries around the globe and distributed through retail and wholesale channels. Crocs-branded sunglasses and sunglass accessories also will launch in May 2012. Eye King, LLC is producing sunglasses for adults and youth for retail and wholesale distribution in the U.S. and Canada.

Through a partnership with ICER Brands, Crocs Professional Footwear Division will build on the loyal following of medical professionals with the introduction of Crocs-branded scrubs. This new medical gear is available now through specialty stores and online.

Finally, Paramount, a sports licensee, recently kicked off Collegiate and MLB licensed footwear for the brand, which is available now.

“As we continue to explore these and other new collaborations, I am confident our license partners will help us grow and spread our brand promise of delivering products with profound comfort, fun and innovation,” continued DeBell.

A world leader in innovative casual footwear for men, women and children, Crocs Inc, offers several distinct shoe collections with more than 250 styles to suit every lifestyle.

For more information, visit: http://www.fibre2fashion.com/news/company-news/crocs-inc/newsdetails.aspx?news_id=108076

The Release of Air Jordans: Several People in Jail and Several Others Wounded.

December 27, 2011

http://www.guelphmercury.com/news/world/article/644647--new-air-jordans-cause-shopping-frenzy

Black Friday results-- some win, some lose!

November 28, 2011

The results are in: Black Friday was lucrative for most retailers, thanks to some early doorbuster deals. But not every store was a winner.

Shops like Toys R Us and Walmart made gambles that paid off this year by opening earlier than ever on Thanksgiving evening. Others, including Macy's and Target, opened at midnight, also drawing praise from retail analysts, who think the move to earlier opening hours will be repeated by more retailers next year.

“We wonder if next year you will just be able to have your turkey dinner in the mall,” joked Nomura analyst Paul Lejuez in a report. His comment may not be far from the truth, as almost 25% of Black Friday consumers were shopping or waiting for stores to open at midnight, compared with 10% of shoppers last year and 3% in 2009, according to the National Retail Federation.

Since all stores were offering promotions, those that traditionally rely on shoppers seeking value may have missed out. Mr. Lejuez estimated that teen retailer Aeropostale Inc. lost out to competitors such as American Eagle Outfitters Inc. Womenswear stores such as Talbots and Ann Inc., owner of Ann Taylor and Loft, also saw weak traffic, he noted, because women are typically not shopping for themselves during Black Friday.

Though the day started out with robust traffic, shopping petered out after consumers scooped up the main promotional attractions. Retail research firm NPD Group Inc. reported that 56% of consumers who shopped on Black Friday said they would not likely shop again over the course of the holiday weekend.

“Black Friday may have come in with a roar, but it is going out with a whimper,” said Marshal Cohen, chief industry analyst at NPD, in a statement. He noted that “the consumer is tapped out or spent out.”

Even so, retailers were also banking on Cyber Monday, the Monday following Thanksgiving when most consumers shop online, to generate sales. Many, including the Gap and J Crew, were offering 30% off discounts for different apparel divisions. In the past, sites such as Target, Bloomingdale's and J Crew were overwhelmed with traffic on Cyber Monday, and experienced temporary shutdowns throughout the day. This year, however, the majority of e-commerce sites were better prepared and functioning properly by mid-afternoon on Monday.

For more information: http://www.crainsnewyork.com/article/20111128/RETAIL_APPAREL/111129924#ixzz1f2ojR0az

Sample Sales Are No Longer Exclusive

June 9, 2009

It’s the summer of the sale. Designers and retailers saddled with extra merchandise that didn’t move because of the economic downturn are trying to get rid of it — at steep discounts.

Last week, Gabay’s Outlet in the East Village (225 First Ave., gabaysoutlet.com) became a temporary downtown Henri Bendel outpost when it received huge shipments of designer denim, dresses and signature Bendel knits from the uptown luxury retailer, all marked down by 50% to 80%.

This month alone promises more than 20 sample sales, including designers like Gucci, Prada and Rag & Bone.

“I think we’re reaching a peak right now,” says Kathryn Finney, founder of thebudgetfashionista.com. Her prediction: This kind of leftover glut won’t happen again!

“I think toward the end of the year, we won’t see that many crazy, wacky sales — not at the level we’re seeing now,” says Finney (above). “I think the recession really took the retail industry by surprise and a lot of retailers have adjusted production for fall/winter.”

She’s got a few tips for maneuvering the bargain basements:

How do you find out about sample sales?

A lot of high-end designers, like Vera Wang, Prada, DVF, Vivienne Westwood and Ferragamo, are marketing their sample sales. In a given week we get 30 to 40 notices of sample and warehouse sales. Prada’s sample on Sullivan St. used to be very exclusive and you had to really be in the know. Now, you don’t have to be an insider. Go to thebudgetfashionista.com/sales for an up-to-date listing.

What kinds of deals are you seeing at sample sales and discount retailers?

There are definitely better deals on more luxury pieces and better selection. It used to be at sample sales that unless you went first day, all that was left was the stuff you didn’t want.

Now it’s actually stuff you want. You can find Ferragamo shoes for $50 to $75, Vera Wang wedding dresses for $300 to $400.

Why are we seeing such steep sales, especially from luxury brands that don’t normally get marked down?

They produced all these things they couldn’t sell, so I think that’s why we’re seeing a lot of these warehouse and stock sales. All the gluttony of things they couldn’t sell six months ago — they’re trying to clear their warehouses.

This was stuff that was made to sell, stuff that is left over in their stock, and they need to move it. It costs money to store the merchandise, and the longer it sits there the more it costs them. So it’s better to get rid of it, which is why you find things at Gabay’s.

Are there still deals to be found shopping at the major department stores?

Department stores are offering coupons, especially if you have a store credit card, because people aren’t using them right now. If you buy at Macy’s with your store card and, say, they’re having a sale in three or four days, you can buy it on sale that day and they’ll ship it to you later when it goes on sale.

You don’t even have to be there for the sale — it’s called a presale. And you can get alterations done under presale. This is what they’re offering in order to generate loyalty.

You can negotiate other perks, like free shipping and free alterations, in addition to the discount. Before you go to any store, you should go to their Web site for coupons.

Lord & Taylor has really good deals. They have sales every week. You can get coupons online (lordandtaylor.com) and you don’t need a store credit card to use them.

For further information, visit: http://www.nydailynews.com/lifestyle/fashion/2009/06/04/2009-06-04_sample_sale_frenzy_.html

Post-Recession: Luxury Clothing Sustainability

June 3, 2009

A smaller, stronger core of luxury — and fashion-forward — firms is likely to emerge from the recession, according to a new survey.

New York-based Abrams Research polled more than 100 luxury-industry experts — executives, designers, buyers, editors and bloggers, among others — and 36.8 percent said the luxury sector would evolve to a more streamlined but strengthened model, with 34.9 percent expressing confidence that aspirational consumers would be a key component.

“This has everything to do with how these brands are facing the challenge of marketing themselves through new channels, like social media,” said Dan Abrams, chief executive officer of Abrams Research, who also is chief legal analyst for NBC and MSNBC.

Respondents were asked to name retail and fashion brands that were best-positioned to thrive and were given the option of selecting as many as three brands.

Topshop ranked first, with 34.1 percent of those surveyed naming it as a brand that will flourish. It was followed by Chanel, 28 percent; Louis Vuitton, 21.9 percent; Forever 21, H&M and Marc Jacobs, all tied at 13.4 percent; Hermès, with 7.3 percent, and J. Crew, 6.1 percent. Other brands that got traction included Cartier, Yves Saint Laurent, Gucci, Rolex, Tiffany & Co., Diane von Furstenberg and Prada.

“There is a huge contrast between these top brands, and you see it within the top two names: It’s Topshop versus Chanel,” Abrams said. “These brands represent two business strategies that can survive the recession. You either stick with discount prices and strategically market your products, or you stay true to your loyal fan base and don’t compromise the quality of your goods, so as not to dilute your brand.”

Shopping brands online that respondents felt were best-positioned to thrive were: Net-a-porter; 33.7 percent; Gilt Groupe, 15.7 percent; neimanmarcus.com, 8.9 percent; barneys.com, 6.7 percent, and Eluxury.com, 6.7 percent. “The broad lesson here is that the luxury-brand community knows they have to make themselves relevant online,” Abrams said. “So how far do they go without losing that sense of exclusivity?”

The survey asked how the Internet will best be used by luxury brands for marketing and advertising. The results: 34 percent ranked “innovative advertising” as the most effective tool, including mini Web movies on brands’ sites — such as those that have been featured on gucci.com and tods.com. Partnerships with influential fashion-luxury bloggers followed with 27.4 percent and use of social networks such as Twitter and Facebook, 13.2 percent. And 13.2 percent of respondents also said distribution beyond high-end sites, such as neimanmarcus.com, to lower price-point sites, like Zappos.com, would be an effective tool for luxury brands.

“As marketing through social media moves to the forefront for many businesses, I think a lot of luxury brands are now saying, ‘How do we get ourselves on Twitter? Do we really want to be there? Does that cheapen us?’ ” Abrams said. “Brands need to figure out a way to still be exclusive within the social media platforms, because it’s an enormous marketing opportunity.” For further information, visit: http://www.wwd.com/business-news/retail-stocks-extend-gains-rise-15-percent-tuesday-2155407#/article/retail-news/after-the-recession-the-look-of-luxury-2155374?navSection=business-news

Retailers Exceeding Expections Because Expectations Were Low

May 28, 2009

Several apparel makers and retailers, including Polo Ralph Lauren, posted better-than-expected quarterly results Wednesday, helped by tight management of expenses and inventories.

American Eagle Outfitters, which topped expectations by a penny, said it was seeing early indications of its business stabilizing.

Expectations have declined for apparel retailers and manufacturers, which are among the hardest hit sectors in the recession as consumers trim spending for items other than essentials like food.

Polo, a fashion wholesaler and retailer with upscale brands like Polo and Club Monaco, said net income tumbled to $45 million, or 44 cents a share, from $103.5 million, or $1 a share, a year earlier.

But excluding charges, Polo said it earned 86 cents a share, soaring past analysts’ average estimate of 40 cents, according to Reuters Estimates.

Revenue in the period, which ended March 28 and was the fourth quarter of Lauren’s fiscal year, fell 1 percent to $1.22 billion, hurt by same-store sales declines and the stronger dollar, which reduced the value of overseas sales.

Stock in Lauren, which is based in New York, declined 35 cents, to close at $54.03 a share.

American Eagle, which caters to teenagers, posted a profit of $22 million, or 11 cents a share, down from $43.9 million, or 21 cents a share, a year earlier.

Excluding one-time items, profit was 8 cents a share, better than the 7 cents a share forecast by analysts.

Sales in the period, which ended May 2 and was the first quarter of American Eagle’s fiscal year, fell 4 percent, to $612 million.

Stock in American Eagle, which is based in Pittsburgh, fell 15 cents, to close at $14.33 a share.

For further information, visit: http://www.nytimes.com/2009/05/28/business/28retail.html