Robert Burke appears on Bloomberg Surveillance with Vanessa Friedman of the New York Times.
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Robert Burke appears on Bloomberg Surveillance with Vanessa Friedman of the New York Times.
Robert Burke appears on Bloomberg Surveillance
Robert Burke, chairman and chief executive officer at Robert Burke Associates, examines the holiday shopping season and what it means to luxury retailers. He speaks on “Bloomberg Surveillance.”
Robert Burke, chairman and chief executive officer at Robert Burke Associates, discusses the buying habits of Chinese consumers. He speaks on “Bloomberg Surveillance.”
Sept. 5 (Bloomberg) -- Robert Burke, Chief Executive Officer at Robert Burke Associates, discusses the challenge for retail to find the winning formula combining in-store sales with e-commerce. He speaks on “Bloomberg Surveillance.”
May 23 (Bloomberg) -- In today's "Morning Must Read," Bloomberg’s Scarlet Fu recaps the op-ed pieces and analyst notes providing insight behind today's headlines on Bloomberg Television's "Bloomberg Surveillance.”
May 23 (Bloomberg) -- Robert Burke, chairman and Chief Executive Officer at Robert Burke Associates, discusses the sales slowdown for teen retail and the overall concerns for retailers following the harsh winter weather. He speaks on Bloomberg Television’s “Bloomberg Surveillance.”
BLOOMBERG BUSINESSWEEK | COTTEN TIMBERLAKE
PARIS, France — Sophie Fiszman, a Paris finance executive with a taste for fashion, used to stick to European brands like Louis Vuitton and Gucci. No longer.
Now she shops at the Michael Kors store on Paris’s tony Rue Saint-Honoré, joining a growing contingent of European consumers who have embraced the American designer. She recently bought a blue python-print bag at the store, pleased that she could find such a purse for less than 300 euros ($412).
“The price is very good for what you get,” said Fiszman, 53, who works as co-director general for OFI Asset Management. “I like the new style they have.”
For Michael Kors Holdings Ltd., the burgeoning appeal is letting the brand outpace European luxury handbag makers in their own backyard. After challenging Coach Inc. in the U.S., Kors is opening stores near those of European rivals, aiming to steal customers with self-described “jet-set” looks and relatively low prices.
The company’s European sales more than doubled to $140.3 million during the holiday quarter, accounting for 14 percent of its total revenue. The European luxury-goods industry, meanwhile, grew just 2 percent last year, slowing from a 5 percent rate in 2012, according to Bain & Co.
Kors’s European store openings are being met with “great anticipation” and goods are selling out, according to Chief Executive Officer John Idol. The designer’s record for getting trends right is appreciated by the European shopper, who is astute about fashion, he said on a February conference call.
Biggest Market
The challenge for Kors now is winning over the holdouts — Europeans who remain leery of American attempts to produce luxury fashion. The company also is less diversified than the industry’s giants and growing from a much smaller base. LVMH Moet Hennessy Louis Vuitton SA sells everything from cognac to fine jewelry, while Kering SA owns brands ranging from Gucci to Saint Laurent.
Europe’s residents and tourists buy 34 percent of the world’s luxury goods, according to Bain, making the region the single biggest battleground for high-end brands. Globally, the industry generated about $300 billion in sales last year, Bain estimates.
The European inroads have helped send Kors’s stock up almost fivefold since its initial public offering in 2011. The shares fell 2.5 percent to $92.64 yesterday in New York.
Before the financial crisis in 2008, more luxury consumers were loyal to their favorite high-end European brand and wore it head-to-toe, said Lorna Hall, head of retail and strategy for the London fashion forecasting firm WGSN.
“They wouldn’t slum it,” she said.
Mixing Brands
Then came the recession, followed by a slow recovery. The euro region’s economy contracted again in 2012 and barely grew in 2013 after an initial rebound.
In recent years, many European consumers have been adopting more “contemporary” fashion, which often costs less than designer goods, Hall said. The Internet also has fueled an internationalization of taste, she said. That means the typical European consumer may be wearing a mix of high- and low-end brands.
“She is more open-minded,” Hall said, “She might have a Michael Kors bag and Gucci loafers and a Zara top.”
European brands have sought to tout their exclusivity by opening fewer new stores and pushing up prices, said Robert Burke, founder of a New York-based luxury consulting firm. That’s created a particularly good opportunity for Kors to step in with more affordable merchandise, he said.
Mulberry’s Struggles
Mulberry Group Plc, for instance, tried to make its brand more expensive and suffered for it. After embarking on a plan to court more upscale shoppers globally, the Somerset, England- based handbag maker saw sales shrink in its last fiscal year. Mulberry lost two-thirds of its market value, and CEO Bruno Guillon announced plans to step down last month.
A Michael Kors bag is seen as a status symbol for “smart shoppers,” since it suggests that they spent less and got more, said Pam Danziger, founder of luxury research firm Unity Marketing Inc. in Stevens, Pennsylvania.
Not everybody is a fan. Maria Maortua, a 29-year-old developer of pop-up stores in Madrid, said she has never bought a Kors purse because she feels the label is overexposed and doesn’t produce true luxury.
“The brand name appears everywhere,” she said. “That is why I don’t like it very much.”
While Kors’s European blitz hasn’t appealed to everyone, it’s helped elevate the brand from relative obscurity two years ago. In February 2012, its European holiday quarter sales amounted to barely $28 million, and just 35 percent of survey respondents in the region were aware of the designer.
‘Project Runway’
That compared with 70 percent in the U.S., where celebrities wear the brand and it has wider distribution. Michael Kors himself had gained fame for appearing as a judge on reality TV show “Project Runway.” The 54-year-old designer, who is based in New York, left that job in 2012.
Kors sought to boost its European recognition by increasing marketing and opening stores in high-profile locations. It ended last quarter with 76 European stores and plans to add 36 this fiscal year.
Idol believes the region can support 200 Kors retail locations in total, generating revenue in excess of $1 billion. Two years ago, he had only foreseen 100 stores.
Coach, based in New York, has opened stores in Europe as well, though it only has about as third as many. Kors also is expanding in the region faster than fellow American design houses such as Kate Spade & Co. and Tory Burch. Kors’s upscale locations include New Bond Street in London and Via della Spiga in Milan.
Overhead Costs
The company’s selling, general and administration expenses jumped almost 55 percent last quarter to $254.6 million, partly because of its higher store count and advertising spending.
The marketing is hard to miss, said Allegra Perry, an equities analyst at Cantor Fitzgerald in London.
“I was amazed at how much advertising there was for Michael Kors in Paris in the subway, at the bus stops, on the streets, everywhere,” she said.
At Kors stores open at least a year, sales increased 73 percent last quarter. LVMH and Kering remain much larger, though they don’t report directly comparable figures.
“We’re starting to take market share there,” Idol said on the call. Kors declined to comment for this story, as did LVMH and Kering, both of which are based in Paris.
Under 1,000 Euros
Kors uses the European formula of creating high-profile runway fashion, though it produces goods at lower prices and adds a dash of American novelty, Perry said. Most of its bags cost 300 to 1,000 euros, compared with 1,000 to 2,000 euros for its biggest European rivals, she said.
Kors has successfully appealed to the European aspirational customer, who has been hungry for new brands, as well as top-of- the-line shoppers, Burke said. The company also is siphoning off tourists, including Chinese travelers, who had been buying the French and Italian brands, he said.
“It appeals to the customer at the very high tier,” Burke said. “There are European consumers who might be able to afford any bag they want, but they want something that is fashion- forward and that is also very American classic.”
By Cotten Timberlake, with assistance from Andrew Roberts; Editor: Nick Turner
Robert Burke, Chairman & CEO at Robert Burke Associates, and Bloomberg Contributing Editor David Kirkpatrick preview fashion week and examine technology’s role in the fashion industry on Bloomberg Television’s “Bloomberg Surveillance.”
BLOOMBERG | KATIA DMITRIEVA
Bain Capital LLC, the global private investment firm with $70 billion in assets under management, bought a majority stake in Canada Goose Inc., the maker of parkas worn by researchers at the South Pole.
Dani Reiss, chief executive officer of Canada Goose, will remain in his position and will keep a “significant minority stake” in the company, according to a statement today. The price wasn’t disclosed.
“Bain Capital has a long and impressive track record of successfully investing in beloved Canadian companies, and we are thrilled to bring them on board,” Reiss said in the statement.
Bain Capital, based in Boston, has invested in other Canadian retailers and consumer brands including Toronto-based Shoppers Drug Mart Corp. and BTI Systems Inc.
Canada Goose, which began in a small warehouse in Toronto about 55 years ago and is headquartered in that city, employs more than 1,000 people. Its fur-lined coats are sold in 50 countries, and are used by researchers in the South Pole and the Canadian high Arctic, the company said.
Canaccord Genuity Group Inc. (CF) advised Canada Goose, with financing for the deal provided by Canadian Imperial Bank of Commerce.
Robert Burke Associates Chairman and CEO Robert Burke discusses the high end retail holiday shopping season on Bloomberg Television's "Bloomberg Surveillance."
Full episode of "Bloomberg Surveillance." Guests include Belus Capital Advisors Chief Equities Strategist Brian Sozzi, Bugaboo Chief Marketing Officer Madeleen Klaasen and Robert Burke Associates Chairman and CEO Robert Burke.
BLOOMBERG NEWS | SUSAN BERFIELD
For fifteen years, Tamara Mellon was the muse, face, and legs of Jimmy Choo, the luxury shoe company she co-founded in London with her parents’ money in 1996. The stilettos regularly appeared on Sex and the City and quickly became an object of desire; wearing them suggested a life of carefree glamour. Eventually, she says, Jimmy Choo became a $900 million business. Mellon had an extravagant clothing allowance, and a make-up artist and hair stylist on call, too. She was photographed at store openings and celebrity-filled parties, on the red carpet, on vacation in St. Bart’s, in her closet, in the nude. Her 2000 wedding to Matthew Mellon, an heir to the banking fortune, was photographed for British Vogue
It turns out, though, that for much of this time, Mellon felt aggrieved. She says she was unappreciated by executives at the company and exploited by the private equity investors who funded its expansion. She was betrayed by those close to her. She had night sweats and panic attacks and was always exhausted. She left Jimmy Choo in 2011 with a reported $135 million and enough resentment to fill a book. It’s called In My Shoes and went on sale Tuesday. “To me the truth is always the best way,” she says.
This autumn, Mellon, who’s 46, is launching her own line of clothes and shoes. It’s called Tamara Mellon. On an afternoon in late September, she sits amid racks of sleek dresses, skirts and jackets in her Manhattan office as her staff prepare for fashion week in Paris. Louis Vuitton suitcases are open on the floor. Mellon is calm, almost still, and sits very straight with her hands in her lap. Her hair is pulled back into a tight pony tail. She’s wearing a deep blue wool skirt and vest with a black cashmere turtleneck from her label. Her black suede boots are thigh-high and, like all of the shoes in her collection, are made in the same Italian factories as Jimmy Choo stilettos. She named the boots Sweet Revenge; they will sell for $1,995.
Mellon says the idea for her new line had been percolating while she was at Jimmy Choo: she will introduce new items every month, instead of a new collection every season. Most luxury brands still sell only four collections a year; they’re shown months before they’re in stores. The knockoffs, of course, arrive much sooner. “I guess you could say this is fast fashion for luxury. That’s where we are. We want new things and we want them in season,” she says. “What she wants to do is hard. But I think it has real potential,” says Howard Davidowitz, the chairman of Davidowitz & Associates, a retail consulting and investing firm. “In the fashion business, speed is life.”
That her memoir often comes off as the rant someone might write to an ex-boyfriend or boss—and then never send—would seem to complicate the prospects for her new project. That’s not the case, she says. “I have the luxury now to choose who I have in my business. I’ve chosen people with good ethics and values. It’s very different.” One of them is Ronald Perelman, the billionaire investor who is friends with Mellon and has taken a small stake in her company. “I trust her implicitly, her judgment and loyalty and on top of it I think she’s a fun girl, a great girl.”
Notably, the targets in her book do not include the people she now depends on: her new investors; Fritz Winans, her chief executive; the stores that will carry her line. “You never want to make enemies when you’re starting a company,” says Milton Pedraza, the head of the Luxury Institute, a research and consulting firm. “The fact that she expresses a hard-edge point of view might give her the notoriety she needs to get a brand going. Look at Donald Trump: He’s negative about almost everyone and he still seems to have a thriving business.”
Mellon met Jimmy Choo in the early 1990s. She, the daughter of privilege who had gone to finishing school in Switzerland, was an accessories editor at British Vogue who often needed custom-made shoes for photo shoots on short notice. He was a young Malaysian shoemaker living in London’s East End, a technical master with uncompromising work habits. Soon discerning Vogue readers were tracking down Choo and placing orders of their own. Mellon, meanwhile, was using drugs and staying out all night with London’s other “It girls.” After she was fired from the magazine, she entered rehab. Six weeks later she emerged with a business plan: a Jimmy Choo line of ready-to-wear shoes.
“I had my share of demons. One of them was, of course, my mother and the enigma of why she’d always despised me so,” Mellon writes. “But the other force at play was a demonic drive for the financial security I hoped would keep me out of her clutches.” Elsewhere, Mellon describes her mother, Ann Yeardye, as a narcissist, a sociopath, and an alcoholic who’s responsible for Mellon’s adolescent depression, adult addictions, and sense of victimization. Yeardye, through her son Gregory, declined to comment on Mellon’s depiction of her or their family. Gregory, a real estate agent and developer in Beverly Hills, is three years younger than Tamara. “I don’t recall my mother being a raging lunatic,” he says. “It’s hard for me to understand where Tamara is coming from. I think a lot of it is sensationalism to sell the book.”
Jimmy Choo started as a family business. Mellon’s father, Tom Yeardye, had been the money man behind the Vidal Sassoon empire and turned out to be the only investor Mellon could find who believed starting a luxury brand from scratch made sense. The Yeardyes took a 50 percent stake in the company; Jimmy Choo owned the other half. Trouble soon emerged. Mellon says that Choo was incapable of putting together a collection; she and Sandra Choi, the shoemaker’s niece and apprentice, were the real designers. “I had set up a business with a ‘creative head’ who, in fact, had no creativity,” Mellon writes. “The few times Jimmy had anything to say about design, it was with a complaint that I was making the heels too high.”
Five years after starting the company, Mellon and her father offered to buy Choo’s half, but he wouldn’t sell, she says. They turned to a private equity firm, Phoenix Equity Partners, that bought out Choo for $13 million and claimed a 51 percent stake. Choo also had to agree to never speak publicly about the company without permission—a deal the current owners likely wish they were able to extract from Mellon.
Phoenix turned out to be the first of three private equity firms that would own and flip Jimmy Choo over the course of a decade. During that time, the company grew from four stores to 110 and its valuation increased from about $29 million in 2001 to nearly $900 million in 2011. Yet it was certainly disruptive, and stressful, for the company to be sold every three or four years. For Mellon, it seemed worse: twice, she was almost pushed out. “Private equity will use you, suck every ounce of blood, and then kick you to the curb when they exit,” she says. “They are the sociopaths of investment banking.”
During those ten years, Robert Bensoussan served first as chief executive, then as a board member. He had run Christian Lacroix and Gianfranco Ferrè and he built the managerial and strategic infrastructure that made Jimmy Choo’s rapid growth possible. Mellon, though, resented what she considered interference in the creative side and questioned many of his business decisions. When conflicts arose, it was Mellon’s father who helped resolve them. But he died suddenly in 2004, leaving the company without a mediator and Mellon without a confidante. “Robert was very effective at opening stores and in bringing in partners, but that skill set was replicable,” Mellon writes in one of the less emotional passages about Bensoussan. Elsewhere, she describes him as insecure, small-minded, and stingy. Also: “an obstructive, pain-in-the-ass employee who could be replaced.”
Bensoussan calls this “rubbish,” and says he feels more sadness than anger toward Mellon. He also says he hasn’t read the whole book yet. “She always wanted something bigger for herself, she wants to be a celebrity, another Tom Ford,” he says. “But she’s starting by tarnishing the Jimmy Choo story. And I wonder if she’s tarnishing herself, too… It’s not very elegant.”
Lyndon Lea, a partner at Lion Capital, the second firm to own Jimmy Choo, says that the company’s performance speaks for itself. “The results were due to the strong leadership of Robert Bensoussan and the hard work of many people in the organization,” he wrote in an email. Towerbrook Partners, which owned Jimmy Choo from 2007 to 2011, offered similar praise for Bensoussan, noting his outstanding reputation in the industry. Phoenix didn’t respond to requests for comment.
Mellon’s home life was often tumultuous, too. She met Matthew at a London Narcotics Anonymous meeting in 1998; six months later they were engaged. She says he was bipolar; soon after their wedding he began taking drugs again and disappearing for days. Becoming a father didn’t change his behavior. “We had a board meeting at my house a week after I gave birth and all the while I was worried my husband might be freebasing in the kitchen,” she writes. Their divorce in 2005 received as much press as their wedding did. The Mellons are on friendly terms now; Matthew didn’t respond to a request for comment.
Around that same time, the Yeardye family began feuding. Tom’s death had precipitated the sale of their stake to Lion Capital. That led to confusion among everyone but Mellon about some of the money they received. The fight between Mellon and her mother, over some $7 million, eventually ended up in court, in the Isle of Jersey, in 2009. During the trial, which Mellon attended with her therapist, her mother withdrew the case.
Jimmy Choo was sold to its current owners, the private equity firm Labelux, in May of 2011 for almost $900 million. Three months later, Mellon resigned as chief creative officer. She says Labelux refused to allow some designers and marketers to move to New York, where she had relocated with her daughter. Nor was it paying her enough. The final insult: No one tried to stop her from leaving. The company issued a statement about Mellon that says in part: “We note comments made by Tamara in conjunction with the promotion of her autobiography. We remain ever grateful for the start she gave to Jimmy Choo and confirm that her legacy lives on.”
“Me and Francesco, the most amazing last shoe maker. Back in the factories!” Mellon tweeted from Italy on May 15. She says she’s using the same factories Jimmy Choo uses and the same quality fabrics as other designers, but she’ll reduce her margins to keep prices down: Dresses will sell for $800 or so; a cashmere T-shirt goes for $295; a pony skin leopard-print trench coat is $4,500.
“Tamara is the customer. That’s what she’s always based her business on,” says Robert Burke, the founder of consulting firm Robert Burke Associates.
“It will be interesting to see how she differentiates her shoes from Jimmy Choo,” says Jane Kellock, a senior vice president at Stylus.com, a research and advisory firm. “She claims she was Jimmy Choo. Now she’ll have to reinvent that.”
Mellon has gathered a cozy group around her. Her investors are all friends: in addition to Perelman, Tory Burch has a stake. Mellon raised $22 million in total, she says, and put in some of her own money. She has a majority stake in the company and will be the creative director. Mellon has known her artistic director, Charlotte Pilcher, for decades. Winans, her chief executive, came recommended by friends. (He also came from Hudson Bay.) “It’s not necessarily that I can trust them because I know them. It’s that we want the same things,” she says. Should they worry about providing material for her second book? “I don’t think they have anything to worry about,” she laughs. “I expect to have a much easier working relationship with them.” Perelman says he won’t be involved in the company. “I’m a small investor. Even if I were a big investor I have such confidence in her that I would just close my eyes and let her do whatever she wants to do.”
The line will be sold in Bergdorf Goodman, where the one Jimmy Choo executive she got along with, Joshua Schulman, is president. It will be in Neiman Marcus, which owns Bergdorf, and Harrods. It will also be available on Net-a-Porter, the website that sells luxury designer clothes. Back in 2000, Jimmy Choo was the first brand to agree to sell on the site. Mellon hopes to introduce her own website, as well as boutiques in London and New York, next year. “If she’s successful, she’ll get more money when she needs it,” says Davidowitz. “All is forgiven if you make money, nothing is forgiven if you lose money.”
BLOOMBERG | COTTEN TIMBERLAKE
Coach Inc. (COH) has fought for relevance in recent years by introducing bling-laden products to attract younger shoppers and then bringing back more classic lines for its long-time customers. Yet the company remained true to its roots: finely crafted leather bags.
Now, in a defensive move as upstarts such as Michael Kors Holdings Ltd. (KORS) and Tory Burch LLC challenge its dominance of that market, New York-based Coach is trying to become a full lifestyle brand that outfits customers from head to toe.
It’s starting with shoes, a business that is more competitive and growing more slowly than handbags, while also presenting challenges Coach hasn’t faced much before. Where bags will always fit over a woman’s arm, Coach runs the risk of having too many or too few shoe sizes in stock. Shoes also don’t lend themselves to the gallery-like presentation of Coach’s bags. Analysts say the whole idea could put the company’s legendary profitability at risk.
“Coach’s shoe strategy is an uphill battle,” Brian Pitera, a Chicago-based principal at the consulting firm A.T. Kearney, said in an interview.
In an e-mail response to questions, Andrea Resnick, a Coach spokeswoman, said footwear is “a significant opportunity.”
“We are in the early stages,” Resnick said. “We will move purposefully.”
While Coach isn’t the first company to try to extend its brand into new areas, it is trying to do so from a position of weakness, said Robert Burke, founder of a namesake luxury research firm in New York. Companies typically expand this way when they’ve grown so strong in their initial market that customers demand the brand on other items, Burke said.
Designer Halo
Successful lifestyle brands usually start in apparel and enjoy the halo that comes from a celebrity designer sending fashion down runways, Burke said. Ralph Lauren began selling men’s ties four decades ago and diligently built his English country life and American West brand imagery, methodically applying it to more and more categories from men’s to women’s to kids’ to home goods, layering in labels in different price ranges. Tory Burch started out in 2004 with apparel.
Accessories-driven brands such as Prada SpA (1913) have turned themselves into successful lifestyle brands by moving quickly to stage fashion shows and add categories, Burke said.
In recent years, Michael Kors, Ralph Lauren Corp. (RL), Tory Burch, and Fifth & Pacific Cos.’ (FNP) Kate Spade brand moved more aggressively into Coach’s territory, chasing handbags’ lucrative margins. Coach for the first time lost North American handbag market share in the quarter ended in December. In January, Coach responded by saying it would work harder to become more of a lifestyle brand after spending years content to dominate the handbag market.
Faux Python
Coach has offered some shoes before, such as $98 casual “C” logo sneakers. Its new line, introduced in more than 170 North American stores in March, is larger, more fashionable and higher-priced, with styles including “Nala” faux python pumps for $248 and “Dalia” ballet flats at $138. The company has installed shoe salons in some flagship locations and made shoes the feature of its windows in more than 75 locations.
The shoes will be added globally in the second half of this year, and Coach also plans to work on boosting sales at the department stores that carry its wares. The retailer will consider developing men’s shoes in the quarters ahead and may add footwear to its factory outlets, executives have said.
“We see ourselves growing a very substantial footwear business,” Victor Luis, who becomes chief executive officer next year, said at an investors conference last month.
The new shoes are being produced by Jimlar Corp., the Great Neck, New York-based company Coach has had a licensing deal with since 1999.
Footwear Sales
Coach said footwear sales at retail would be about $250 million in the fiscal year ending in June, while declining to provide the previous year’s footwear sales or provide targets. In the previous year, Coach got about 7 percent of its revenue, or about $333.4 million, from products other than accessories and handbags, a category that also includes scarves, jewelry and sunglasses.
Investors and analysts have so far been skeptical of Coach’s plans. The shares rose 4.9 percent this year through yesterday, trailing the 20 percent gain for the Standard & Poor’s 500 Consumer Discretionary Index and Michael Kors’s 25 percent increase. Coach traded at a 22 percent discount to the index on a price-to-earnings basis and a 52 percent discount to Michael Kors yesterday. About 55 percent of the analysts tracking Coach recommend buying the shares, compared with 84 percent for Michael Kors. Coach was little changed at $58.25 at 9:31 a.m. in New York today.
Shoe Market
Part of the caution is due to the business Coach is pushing into. Total U.S. sales of women’s shoes climbed 3.5 percent to $23.5 billion in the 12 months ended in March, slower than the handbag category’s 5 percent advance to $7.24 billion, according to NPD Group Inc., a Port Washington, New York-based market-research firm.
Stores also have to carry lots of sizes, and markdowns to clear inventory could eat into margins, said Faye Landes, an analyst with Cowen & Co., who is based in New York, said in a phone interview.
Coach’s gross margin -- the portion of sales left after subtracting the cost of goods -- was 72.8 percent in its most recent fiscal year. Ralph Lauren posted 59.8 percent while shoe-focusedDeckers Outdoor Corp. (DECK)’s was 44.7 percent.
Coach Chairman Lew Frankfort said last month that footwear will help boost sales and profitability and won’t materially affect the company’s overall operating margin.
The early read on the shoe strategy has been positive, Coach said. Shoes as a percentage of sales at the Coach stores where they were reintroduced grew to almost 12 percent in the first five weeks from 3 percent, according to the company.
‘Powerhouse’ Brand
Coach is making “a very good move” because shoes are a hot category and the company has a “powerhouse” brand that can sell a lot of footwear along with its handbags globally, said Mortimer Singer, president of New York retail consulting firm Marvin Traub Associates.
While the early shoe sales results are encouraging, the boost occurred in a limited number of stores and was helped by national ads, Landes said.
The gain also may not last because the shoes look like “a me-too product,” with some being discounted down to $69 a pair Pitera said.
Cowen’s Landes, who rates the shares neutral, the equivalent of hold, sees another reason for caution, the same one that drew Coach to expand beyond handbags.
“There is more competition,” she said. “The competition has greater momentum.”
BLOOMBERG | Robert Burke, chairman & CEO at Robert Burke Associates, takes us inside New York fashion week and highlights the importance of the internet in spreading the new fashions around the world. He speaks on Bloomberg Television's "Bloomberg Surveillance."
BLOOMBERG | COTTEN TIMBERLAKE
Bespoke, long the province of Savile Row, has come to the lingerie department at Nordstrom Inc. (JWN)
Last month, shoppers at the upscale department store chain’s White Plains, New York, location were invited to add a message in sparkly text to their Hanky Panky panties. Samples: “Wow!” and “You & Me.”
Personalized merchandise is proliferating as the likes of Nordstrom, Williams-Sonoma Inc. (WSM) and Burberry Group Plc (BRBY) try to differentiate themselves -- and persuade discount-addicted shoppers to pay full price. By allowing customers to monogram merchandise and “build” garments from a range of styles and colors, stores are catering to shoppers’ yen to put an individual stamp on what they wear and put in their homes.
“There is a new kind of importance placed on self- expression and on items that are made just to be identified with an owner,” Robert Burke, who runs a namesake luxury consulting firm in New York, said in a phone interview. “It is very popular currently, and will probably have long staying power.”
Retailers are pulling out the stops to win market share amid disappointing sales as American consumers wrestle with stubborn joblessness and higher taxes. Holiday sales grew 3 percent in November and December from a year earlier, far short of the 4.1 percent forecast by the National Retail Federation, a Washington-based trade group.
Nordstrom’s profit in the three months through January may gain 20 percent, according to the average of analysts’ estimates compiled by Bloomberg. Williams-Sonoma’s earnings in the period ending Jan. 31 are projected to gain 10 percent. Nordstrom shares advanced 1 percent to $55.95 at the close in New York. They climbed 7.6 percent last year. Williams-Sonoma retreated 0.4 percent to $47.13 at today’s close. The company rose 14 percent last year, compared with a 25 percent gain in the Standard & Poor’s 500 Retailing Index.
Yuppie Initials
In centuries past, royalty monogrammed their gear to herald higher status. More recently housewives looking for a touch of class monogrammed silver flatware, linens and towels. Preppies began applying their initials to canvas totes in the 70s, and, in the following decade, Wall Streeters monogrammed the cuffs of their white-collar, striped shirts.
Maison Goyard, the Paris-based trunk maker, helped kick off the latest obsession with personalization when it began letting customers choose colored stripes and letter combinations on its $1,000-plus totes and other bags.
“We went through a period in the ’90s when it was all about designers’ initials,” Burke said. “Then it became about the individuals’ initials.”
IPad Cases
Customization has also been spurred by the explosion in small consumer electronics, which has created demand for such personalized accessories as cases for Apple Inc.’s iPad tablet, said Steven Dennis, founder of SageBerry Consulting LLC, a Dallas-based luxury consulting firm.
Williams-Sonoma’s bet on personalization is Mark & Graham, a monogramming service on steroids for a range of gifts, including jewelry and leather goods.
Tapping into shoppers’ surging interest in typography and design, the San Francisco-based home goods chain is offering a wide range of typefaces -- modern and ancient -- and letting customers splash their initials and slogans on everything from throw pillows to glassware. In a modern twist on an old theme, Mark & Graham will monogram items with e-mail addresses and twitter handles.
The website features a $199 Peruvian alpaca wrap with initials in, say, an “undisputed classic” Gothic font designed in 1948 by the late American typeface designer Jackson Burke.
Brand Pressure
“There’s a lot of pressure on branded goods that are everywhere,” said Marta Benson, Williams-Sonoma’s senior vice president for strategy and business development. “At some point, it becomes a race to the bottom.”
Burberry, meanwhile, is dabbling in mass-customization, which allows shoppers to choose from a range of options. The British company’s online bespoke service lets customers build their own trench coat. They can choose silhouettes of varying length, types of fabric or leather and such colors as honey and navy. The list of options extends to sleeves, lining, collar, buttons and belt. Naturally, a monogram is part of the package. One randomly selected trench cost $2,490, and its delivery was promised in six to seven weeks.
Burberry, the U.K.’s largest luxury-goods maker, reported third-quarter revenue yesterday that beat analysts’ estimates. Sales rose 7 percent to 613 million pounds ($985 million), exceeding the 601.4 million-pound average of nine analysts’ estimates compiled by Bloomberg.
Street Slippers
The service at Stubbs & Wootton, which started out as a Palm Beach boutique in 1993 and has helped turn $900 slippers into stylish street wear, works similarly, though requires fewer steps. Gothic crown monogram? Maybe a cheeky motif instead, say, a skull? Shoppers can view multiple combinations.
Seattle-based Nordstrom hasn’t confined itself to Hanky Panky. The chain holds events at which artisans paint $50 Toms canvas slip-on shoes. It also offers a Joseph Abboud line of made-to-measure men’s clothing; the customer uses an iPad app to choose the style and silhouette that best fits his body type as well as select lapels, pockets and jacket vents.
Burke, the luxury consultant, is sold on personalization. He owns a yellow-and-red striped and monogrammed duffel made by Louis Vuitton, which offers a service similar to Burberry’s.
“When it comes around on the conveyor belt, you can certainly identify your luggage,” said the frequent traveler. “And it stands out above the rest.”