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FT: Level Shoe District: Stacked heels

FINANCIAL TIMES | ELISA ANNISS

Mocktails, music and dancing marked the first birthday of Dubai’s 96,000 sq ft Level Shoe District, the world’s largest luxury shoe store, last month. Customers and luxury-world luminaries such as Vogue Italia editor-in-chief Franca Sozzani attended the party at the footwear centre in Dubai Mall.

“We bought shoes, mingled with designers and were able to put faces to names,” says Bulgaria-born Dubai resident Mira Martinova, who thinks the huge store offers “the best customer service and collections”, including her favourites Phillip Lim and Alexander Wang. Such is Martinova’s passion for shoes that she claims to own more than 100 pairs – and to shop at Level Shoe District every week.

British luxury shoe designer Nicholas Kirkwood, who also flew in for the party, says: “When I heard about the size [of the store] I thought, ‘How are they going to make it work, make it intimate, stop it being a sea of shoes?’ But it really does work. There are wide walkways and it is very well designed.”

New York designer Paul Andrew, also at the event, agrees. “Every department store is looking at their shoe floor right now – but this is impressive. Quite simply, it has the best shoe offering.” Edgardo Osorio, founder of luxury footwear brand Aquazzura, describes the place as, “Shoe heaven ... You have department stores with incredible shoe departments – but nothing at all like this.”

In London, Selfridges was the first to supersize its shoe department when it opened its 35,000 sq ft women’s Shoe Galleries in 2010. In New York, recently expanded shoe departments can be found at Barneys, Saks Fifth Avenue and Macy’s, whose shoe area stands at 63,000 sq ft. Lane Crawford opened the largest shoe floor in China (30,000 sq ft) at its new Shanghai flagship store last month. Back in London, Harrods will launch a new footwear floor in 2014.

As yet, nothing rivals the scale of Level Shoe District. But is bigger necessarily better? “Personally, I am sceptical of supersize retail concepts,” says George Wallace, chief executive of London-based retail consultancy MHE. He says that while “they are very much a feature of the Middle East”, huge areas dedicated to a single clothing sector risk overwhelming customers; he points out that 96,000 sq ft is “much bigger than an average whole department store in the UK”.

Still, Level Shoe District has its fans: 12m people visited in its first year. Nadia Revenkova, a stylist for wealthy Russian women, flies to Dubai from Yekaterinburg in Russia every month to shop for shoes. “Many of the world’s fashion houses make a collection especially for Dubai. Only in Level Shoe District have I seen such an impressive selection in one place,” she says. A large range of sizes, a VIP area for fittings and the convenience of shopping in one place all contribute to its appeal, she says.

Patrick Chalhoub, chief executive of the Chalhoub Group which runs Level Shoe District (along with many luxury retail outlets across the Middle East), says the concept has been much more successful than was anticipated and has generated interest internationally. Two US mall owners have approached him asking him to replicate the idea in America, he says, and there have been overtures from China and Thailand. But Chalhoub is adamant that there will be only one such store. “We don’t intend to take it elsewhere – we want it to be a unique place and a unique experience,” he says. He hopes the store will in time be considered as much of a Dubai attraction as the Burj Khalifa, the world’s tallest building.With 300 brands on offer at Level Shoe District, you would be hard-pressed to think of leading shoe labels that are missing. As well as 40 designer shop-in-shops – ranging from Harrys of London and Berluti to Chanel, Dior, Miu Miu, Prada and Roger Vivier – the store carries many independent brands such as Ancient Greek Sandals, Castañer, Gianvito Rossi, Grenson, Rupert Sanderson and Ugg. It also houses the 1,400 sq ft Sole Lounge – podiatrist Margaret Dabbs’ largest and first foot spa outside of London.

So is this the apotheosis of large-scale shoe retailing? Robert Burke, head of New York-based luxury goods consulting group Robert Burke Associates, thinks the Dubai store will be “tricky to top” but reflects a change in how consumers view shoes.

“In the past, shoes were bought to complete an outfit or a look,” he says. “Now they are a separate fashion statement – this is a major shift.”

FT: Christopher Bailey: Fashion’s nice guy

FINANCIAL TIMES | VANESSA FRIEDMAN

Not long ago, no matter where you were in the world, there was a particular smell to a Burberry store. An earthy scent tickled the memory, sparking thoughts of loamy ground and windswept moors, warm fireplaces and woolly sweaters.

It was also, as it happened, the smell of the Burberry headquarters, a 150-year-old landmark building with a remodelled interior a stone’s throw from the Houses of Parliament – not to mention an office on the top floor, a broad white expanse of glass belonging to Christopher Bailey, the brand’s chief creative officer.

This makes sense, in many subtle ways. Burberry Hearth, the olfactory representative of the company, was not only Mr Bailey’s idea but is also an expression of its creator. It is a candle and room scent that references his memories of growing up in the Yorkshire countryside, and has been successfully monetised.

As such, the scent represents the way Mr Bailey has long bridged the gap between fashion’s creative and corporate worlds. And it offers a clue as to why, when Angela Ahrendts, Burberry’s chief executive, announced she was moving to Apple , the board of one of the UK’s biggest luxury fashion companies took an unprecedented step by naming Mr Bailey as her replacement.

When he takes over in mid-2014, he will become the first designer of a leading public brand to take the top spot on both the business and aesthetic sides.

“It’s a unique and very risky move on Burberry’s part,” says luxury brand consultant Robert Burke. “Traditionally, luxury groups such as LVMH and Kering keep a balance between a creative director and a CEO. That makes this a case study that will be very closely followed by the rest of the industry. If it works, it will change the playing field for the future. If it fails, it will drive everyone back to the old ways.”

There are £2bn in revenues, more than 50 different collections annually, and 11,000 employees depending on the outcome.

Not that you would know it to look at him. Mr Bailey, 42, is a low-key figure who favours jeans, classic Harris tweed jackets made in a Burberry factory in Yorkshire, and button-down shirts. His hair, a nondescript dirty blond, is messed up and slightly spiky. In a world where designers use image as a short cut to fame, his nondescriptness sets him apart. Along with his politeness, this has earned him the title of “fashion’s Mr Nice Guy”. He remembers “every employee’s name, plus their children’s names, plus their dogs’ names”, according to former Burberry vice-president Justin Cooke.

This may be partly a result of a working class background that he says keeps him humble. He was born in Halifax, West Yorkshire, a historic wool industry centre, and raised with his elder sister by a carpenter father and window dresser mother. After graduating from the Royal College of Art and working at Donna Karan and Gucci, he was plucked by Rose Marie Bravo, then chief executive, to be Burberry creative director in 2001.

Yet niceness is a quality not often associated with a pioneering chief executive. This fact – combined with a lack of formal business education and the luxury sector’s tough environment – explains the mixed investor reaction to his appointment.

“We believe that in a company as big and complex as Burberry, even for a person as talented as Mr Bailey, it is hard to have enough time to carry out both these roles,” wrote analysts at Sanford Bernstein. On Tuesday, the day of the announcement, the stock closed down almost 8 per cent, even though the same day the company reported revenues up 14 per cent to £1bn in the first six months of the year.

Insiders say this scepticism demonstrates ignorance of the way Burberry has functioned in recent years. There has long been a “dual reporting” structure in place for every area of the business, from creative to licensing and retail – and Mr Bailey, with Ms Ahrendts, has had the last word in strategic decisions as much as skirt lengths.

“I was in a number of interviews with him where he was asked about the share price or expansion strategy, and he was quite capable of responding for himself,” says Mr Cooke. “When he spoke to the retail team, it wasn’t about what a hanger looked like. It was about how many units were sold.”

“This is rare in my experience,” says Mimma Viglezio, a luxury management consultant and former executive vice-president at Gucci Group. “Most creative directors can’t read a profit and loss statement.”

Mr Bailey has played a crucial role in the brand’s success, in design terms and beyond. He elevated the iconic, if dated, Burberry trenchcoat to such a multidimensional extent that he was named designer of the year in 2005 and 2009, and menswear designer of the year in 2007 and 2008. The Queen recognised his services to his industry with an MBE in 2009.

He also conceptualised Burberry’s identity as the ultimate British brand, enlisting young talent from singers to actors to models for the advertising campaigns. He drove the move from multiple London offices to the seven-storey Westminster headquarters, arguing that it needed to be united in an environment that communicated its mission “to protect, to explore, to inspire”. With Ms Ahrendts, he was the architect of the digital strategy; the brand is now routinely called the “most connected in luxury”. Ironically, criticism of the company in recent years has centred on the lack of fashion-forward product on the runway rather than any corporate decisions.

“People are always saying his collections are quite commercial, as if that’s a bad thing,” says Mr Cooke, pointing out that for someone running a global business, this may be the crucial job qualification.

Yet no matter how thoroughly Mr Bailey has shaped the brand so far, formally adding Ms Ahrendts’ responsibilities to his own creates an entirely different set of expectations.

“It could be the best possible decision they have all made, or the worst,” says Mr Burke. ‘The only thing we know for sure at this point is: everyone is watching.”

FT: Chain bags are big this season

FINANCIAL TIMES | ELISA ANNISS

I know women. Give them chains. Women adore chains,” said Gabrielle “Coco” Bonheur Chanel, of the 2.55 bag, featuring a brass chain and leather strap, that she created in 1955. Chains have been associated with Chanel ever since – from the “timeless classic” bag, reimagined by Karl Lagerfeld in the 1980s, to the newer “Boy” bag, launched September 2011 – but recently they have also been used by other labels.

This season chains feature on bags in the collections of many labels, including Stella McCartney, Saint Laurent, Lanvin, Louis Vuitton, Victoria Beckham, Reed Krakoff, Céline, Asprey, and newcomer Julien David, indicating that Coco’s observations are as prescient as ever.

The chain bag has been a key look for Stella McCartney’s own accessories line since 2009, when she designed her Falabella style, with its slouchy silhouette and all-round braided chain strap fashioned from brass and anthracite aluminium. “This bag is presented every season with a new twist added to the fabric, colour and texture of the Falabella,” says Pam Brady of Browns, adding that this season’s must-have comes in check-print mohair.

Elizabeth Kanfer, senior accessories fashion director at department store Saks Fifth Avenue, says: “As handbags have become more minimalist, so chain straps have become more important as they add an element of shine or polish to an otherwise pared-down handbag.” She says Christian Louboutin, Alexander McQueen, Gucci, and Dolce & Gabbana also feature bags with chain handles in their collections and that mini bags, in particular look great worn across the body with a chain strap. “Chains also have a nice weight to them, they feel great in the hand and they often feel expensive,” she adds.

New York-based luxury retail consultant Robert Burke says chains provide an important “cool”, “tough” detail and have gathered momentum since the trend first took hold for autumn/winter 2012: “In reality, women are not drawn to über-minimal bags, which is one reason why we are currently seeing chains being used as a design element. It fits in with the punk/grunge trend, redolent of the 1990s.”

The Betty bag, a black suede version with a gold chain, was the only bag worn in Hedi Slimane’s debut Saint Laurent catwalk show last October. It first hit stores in January 2013 and has become a permanent piece in the collection, available this season in mini and medium sizes and colours that include ice blue, blush, chalk and red leather.

Accessories designer Katie Hillier was appointed as a consultant at Asprey in April 2012, and one of her many standout designs has been the £7,000 Ritz bag complete with a sterling silver chain. Hilary Lewis, Asprey’s leathergoods and accessories director, who works closely with Hillier, says: “It is very much a jeweller’s type of chain, which emulates a necklace, rather than an accessory-type chain.”

Also launching this season is the quilted lambskin “pillow” bag by French-born designer Julien David. He says that after he won the Andam fashion award in 2012, luxury group LVMH helped put him in touch with a “fantastic” bagmaker in France. “For me bags are all about the craftsmanship, so to find the right people to work with was crucial,” he says, adding that he uses a large, compact, solid chain that comes silver plated or in vintage brass “because it gives the bag strength”.

BLOOMBERG: Jimmy Choo Co-Founder Tamara Mellon Puts On Her Revenge Boots

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.”

FT: Swarovski steps into world of film-making

FINANCIAL TIMES | VANESSA FRIEDMAN

When the lights dim and the credits roll on the cinematic premiere of the “21st century re-imagining” of Shakespeare’s Romeo and Juliet next month, the list of names will read much like any high-profile independent movie – written by Julian Fellowes of Downton Abbey fame; directed by Italy’s Carlo Carlei; and starring Hailee Steinfeld, Oscar nominee for True Grit. But there is one difference.

Along with Amber Entertainment, the film has been co-produced by Swarovski Entertainment, the new production arm of the family-owned Austrian company that is far better known for its little crystal animals and work with young designers than its cinematic credentials.

With the launch of Romeo and Juliet, Swarovski has become the first luxury brand to fully step into the world of film-making – not simply as a supplier of products but as a financial and creative partner.

Nadja Swarovski, chairman of Swarovski Entertainment, said: “We see it as a natural extension of our work with emerging fashion talent, and a way to express our philosophy, ideas and values, and achieve a greater reach for the brand.”

The division was set up in 2011 with the aim of funding two films or documentaries a year at an average cost of $10m-$20m a film, as well as becoming involved in the casting, location and other production choices. “It is a very substantial investment for us, but not an extraordinary one,” said Ms Swarovski of the costs of creating the entertainment division. Romeo and Juliet has been sold in 12 territories, including the US, the UK, China, the Middle East and Russia.A Romeo and Juliet collection is to be sold in 200 Swarovski stores worldwide and there are plans to sponsor the premiere.

Fashion has become increasingly involved with the film industry, moving from dressing celebrities for the red carpet to product placement such as designer Catherine Martin’s collaboration with PradaTiffany and Brooks Brothers on The Great Gatsby. The brands contributed to the movie and displayed costumes or jewellery from it in their stores.

Gucci is a partner of Martin Scorsese’s Film Foundation, which is dedicated to restoring cinema classics, and in 2011 the brand inaugurated its Women in Film prize at the Venice film festival.

Many brands such as Christian Dior, Lanvin, and Miu Miu also finance short films related to advertising campaigns that they then post on their websites and YouTube. And Tom Ford directed a feature, A Single Man, before starting his eponymous brand.

Robert Burke, a consultant to the luxury industry, said fashion groups were attracted by the “endless marketing opportunities” of film. But until now brands had been afraid of the risk of eroding brand equity – more than simply losing their initial investment – by being associated with a badly reviewed movie or one that dealt with risqué subject matter, he said.

“As creative as fashion brands are, they are also wildly conservative,” Mr Burke added.

Stefano Sassi, chief executive of Valentino, cautioned: “A brand would have to be very sure the film expressed its core values. I think it’s a stretch.”

Ms Swarovski acknowledged the dangers, saying the company chose its subject matter very carefully, and it would never be involved with a film about “violence, witchcraft, black magic, perversion”.

“I think it’s an incredible business opportunity,” she said.

Ms Swarovski said the move had been welcomed by the film industry. The entertainment division is already developing its second property, to be scripted by David Seidler, who wrote The King’s Speech.

BofF: Fashion Inflation: Why Are Prices Rising So Fast?

BUSINESS OF FASHION | LAUREN SHERMAN

NEW YORK, United States — It’s easy to find a nice-looking pair of shoes for $40 these days, and even easier to find a trendy $40 dress. But while “fast fashion” prices are so light on the wallet they almost feel as though they’re going to disappear altogether, the cost of luxury goods continues to rise and rise, with no end in sight.

Currently on luxury e-tailer Net-a-Porter, there are more than 100 pairs of shoes priced over $1,000. (Two pairs of sparkly Christian Louboutins exceed $6,000.) And the price of Chanel’s famous 2.55 bag now rivals that of an Hermès Kelly. That is, an Hermès Kelly a decade ago. In the US market, the famous bag, which in the year 2000 started at $4,800, now starts at $7,600.

A nearly 60 percent price increase may seem excessive — especially when compared to the US Consumer Price Index (a measure of the price level of consumer goods, published by the US Bureau of Labor Statistics), which has increased by 27 percent over the past decade — but it’s typical in the luxury fashion category.

Indeed, in recent years, prices of luxury fashion products have grown at more than twice the rate of general inflation. In 2003, Carrie Bradshaw’s famous Manolo Blahniks cost $485. Exactly ten years later, the same style is $755, a 56 percent increase. (And several pairs of current season Manolos cost well above $1,000.) Ready-to-wear-dresses in the $10,000 and up range barely existed 10 years ago. Now they’re commonplace. In fact, popular luxury fashion e-commerce site Luisa Via Roma is currently selling a Fausto Puglisi embroidered tartan skirt for over $10,000 and a leather-and-bouclé Fendi dress for more than $13,000.

So what’s driving up the prices and how far can they go?

First, let’s consider the rough costs of producing a luxury product. Gross margins for luxury companies typically hover around 65 percent — that sounds like a lot, but it’s what shareholders now expect. It also means that a $3,500 bag costs roughly $1,225 to produce and bring to market, all the way from materials to sale. There are many steps along the way that contribute to the final price. There are the costs of raw materials, design, manufacturing and fulfillment. Then, at retail, there’s the cost of prime real estate and sales staff. And finally, there’s marketing: those glossy fashion adverts cost a pretty penny to produce, let alone to place. Over the past 10 years — and particularly since the end of the recession — many of these costs have increased dramatically.

Raw materials are more expensive and more scarce than ever before. Cattle prices (which are relevant to leather goods) will rise in the US by 7.3 percent in 2013, according to market research firm Allendale. And in the years since the global financial crisis, cotton prices have risen to previously unheard of levels, with demand from China pushing them even further in 2013 — to $93.08 in June 2013, a 13 percent increase year-on-year. Both Louis Vuitton and Hermès have recently invested in Australian crocodile farms to ensure their supply of the expensive skin, while Kering, in March, acquired Normandy-based crocodile tannery France Croco for the same reasons.

Rising labour costs are a factor, too. The wages of private-sector workers in China (where many brands manufacture) increased by 14 percent in 2012, according to China’s National Bureau of Statistics. Over the past 10 years, monthly average wages almost doubled in Asia, with an 18 percent increase in Africa, and 15 percent in Latin America and the Caribbean (also important manufacturing centres) according to a report released by the UN’s International Labour Organisation. And it’s not just emerging markets. In France, labour costs will, this year, reach their highest levels ever, according to the OECD.

Perception and desirability play a huge role in the pricing game, too. The more expensive something is, the more exclusive and, therefore, desirable it becomes. Burberry, for instance, said as recently as March that it would raise prices to increase its appeal to the upper end of its customer base and attract new, wealthier customers.

For some brands, the anticipation of markdowns is another factor. “Brands’ biggest fear is having to mark things down,” says New York retail consultant Robert Burke.

Though a few luxury brands, like Hermès and Louis Vuitton, do not discount, it’s typical for most fashion retailers to mark down at least a portion of their product in order to efficiently clear inventory. One need look no further than the department stores and monobrand boutiques currently offering discounts of more than 70 percent on Spring product to see that customers can, with the requisite strategy and patience, easily buy a pair of $1,400 stilettos for a much more palatable $300. “People who are on the really cutting edge of fashion might buy pre-season [at full price] but many folks wait for the discounts,” says journalist Ellen Ruppel Shell, author of Cheap: The High Cost of Discount Culture.

“Designer brands repeatedly going on sale may eventually be forced to artificially inflate prices to counter the margin pressure,” notes Matthew Walker, Creatures of the Wind chief executive, who served as president of The Row from 2008 to 2011. Though this could “lead to price resistance and eventually impact brand loyalty,” he cautions.

But perhaps the most powerful driver of fast-rising luxury fashion prices is the fact that there are simply more people who are able to pay up. The number of high-net-worth individuals (HNWIs) in the world increased by 9.2 percent in 2012 to 12 million people, with combined total assets of $46.2 trillion, according to a report by Capgemini, a management consultancy. North America still hosts the largest number of HNWIs (3.73 million people, up 11.5 percent year-over-year, with $12.7 trillion in assets, up 11.7 percent year-over-year), but the number of HNWIs in the Asia-Pacific region increased by 9.4 percent, during the same period, to 3.68 million, with total assets up 12.2 percent to $12 trillion.

Yes, the rich are getting richer. But is there a limit to what a sane person — billionaire or not — is willing to pay for a pair of shoes? “The question is, how high is high?” Burke asks. “These are people who have their jets outfitted in Hermès leather and Loro Piana vicuna. If demand is there, brands will continue to move up.”

 

 

FT:Coty shares slip takes gloss off IPO

FINANCIAL TIMES | ELIZABETH PATON AND ARASH MASSOUDI

Coty slipped on its stock market debut on Thursday, after raising $1bn from what was the largest consumer products initial public offering on the US market for more than a decade.

Shares fell by as much as 3.5 per cent in early trading on the New York Stock Exchange before slightly rebounding, after the fragrance and beauty group sold 57.1m shares at an offering price of $17.50.

Coty, which makes perfumes for luxury labels such as Marc Jacobs and Calvin Klein and owns nail polish brands including OPI and Sally Hansen, finished 0.8 per cent lower giving it a market value of $6.6bn.

The first-day jitters reflected investors’ concerns over whether Coty was priced at a multiple that was only slightly cheaper to its publicly traded competitors. Investors also pointed to Coty’s flat revenue growth in its most recent year as potential source of weakness.

“Everyone is looking to Coty and pondering its growth potential,” says Gilbert Harrison, chairman of Financo, a New York-based investment banking firm.

He added: “Recent luxury IPOs may have gone extremely well but that doesn’t necessitate a warm reception from the markets. Investors will be looking for clear signs that the company is able to continue sustainable growth in all aspects of its business.”

The New York-based company will not receive any proceeds from the 19 per cent float. Joh A Benckiser, Coty’s controlling shareholder and the holding company for Germany’s billionaire Reimann family, is drawing down its stake in the company while retaining voting control.

Minority shareholders Berkshire Partners, the Boston-based private equity group, and Rhône Group, the private equity firm, have also used the IPO to reduce their holdings.

Coty’s owners have been seeking to capitalise on booming global demand for cosmetics and fragrances, particularly from growing middle classes in developing markets.

Research from Goldman Sachs estimates that the prestige cosmetics market is worth $46.4bn, which constitutes around 15 per cent of all luxury sales.

Beauty purchases by middle-class customers – particularly those in emerging economies who are becoming increasingly sophisticated and concerned with personal care – are considered a gateway to higher spending and the largest future influencer on luxury shopping.

“The industry is seeing a seismic shift not unlike the one witnessed within the apparel sector several years ago,” says Robert Burke, a New York-based luxury retail consultant.

“The aspirational consumer is increasingly looking for a seamless lifestyle experience from a beauty brand; any company able to harness that is likely to see considerable return on its investments.”

The company’s public offering is the largest in the personal consumer products industry since the Carolina Group raised $1.1bn from an IPO in January 2002, according to Dealogic.

BLOOMBERG: Coach Chasing Python Pump Lovers Risks 73% Profit Margin

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.”

NEW YORK TIMES: Pattern, the Subtle Way to Brand

NEW YORK TIMES | ELISE ANNISS

Where it once was mostly about logos and iconic hardware, these days luxury labels — accessories, in particular — are increasingly enveloping their pieces in house checks, patterns and prints that gently signify, rather than shout, their origins.

It is a shift that Robert Burke, head of the New York-based luxury consulting firm Robert Burke Associates, believes is at least partly due to the developing sophistication of consumers in the BRIC market — Brazil, Russia, India and China.

“In China and in Russia, customers are starting to mature and don’t want to be known as the people that carry around bags with logos on them anymore,” Mr. Burke explains. “In my experience, as the consumer becomes more sophisticated and educated, the less they are interested in overt logos.

“Patterns or prints are a bit of an insiders’ club, but if you are part of that ‘club,’ then the print as signifier is more than enough.”

Proenza Schouler, the label behind the design duo of Jack McCollough and Lazaro Hernandez, has one of the newest examples.

A repeating two-toned triangle pattern in primary color combinations, like black/white, red/black and electric blue/black, appeared on scarves, bags and shoes in the label’s spring 2013 collection.

The design, which started out as an architectural motif on the gate and back wall of the Madison Avenue flagship store that opened in July 2012, is going to be the lining pattern for all Proenza Schouler handbags. It also appeared on Precollection Winter 2013 items like small leather goods and ballet flats.

All but echoing Mr. Burke’s observations, the label’s chief executive, Shirley Cook, said, “The Proenza Schouler branding is quite subtle and discreet. But our signatures are recognizable to those who know them.”

In a brand’s early days, recognizable products can trigger brand awareness, says Jacques-Franck Dossin, former head of luxury goods research at Goldman Sachs and now the principal at Dossin Advisory.

As an alternative, a pattern “does not stick out of the product but instead is embedded in it,” he says, adding that it actually may retain the customers who would be lost to a more blatant effort.

A number of French luxury labels have turned to such less obvious branding.

Pierre Hardy is a case in point. Since using a cube motif to introduce small leather goods in 2010, the pattern has been used on man bags and high-heeled espadrilles and is echoed in jewelry, including a gold-plated cuff.

“The response has been very balanced in all our global markets and from both women’s and men’s retailers,” Mr. Hardy says, adding that he never set out to look for a pattern. “If we were to highlight a couple markets that enthusiastically embraced the print from the first season, it would be Europe, particularly France, Italy and England, and with our clients in Asian capitals such as Hong Kong, Seoul and Tokyo.”

Today, his best-selling piece is Pouch L in a classic black and white cube print with a black leather trim that retails for €170, or $223.

Even houses whose prints helped make them famous are revisiting, reworking and celebrating their patterns.

Take Louis Vuitton, whose women’s spring 2013 collection was influenced by the conceptual artist Daniel Buren and the house’s heritage Damier print, first created in 1888.

Interestingly, it was not Marc Jacobs but Kim Jones, Louis Vuitton’s men’s style director, who first turned to Damier, for the spring 2012 collection. “It is easy and perfect to work with,” Mr. Jones says, “a universal language that could be used in so many ways on ready-to-wear, leather goods, shoes or textiles.”

At Roger Vivier, there is Prismick, a pattern based on a prism with its edges deftly stitched together. It was introduced in spring 2012 and can now be seen on a collection of handbags, shoes, accessories and jewelry.

“I never stop doing new designs with this pattern,” enthuses Bruno Frisoni, the brand’s creative director, explaining how Prismick grew out of a single couture 3-D clutch, called Navette, which first appeared in 2008. “Every season there was a reinterpretation, so we realized that there was something here that could become a signature.”

The latest Prismick incarnations are from the limited edition Rendez-Vous collection: a vivid pink mink bag (€3,900) with matching shoes sporting the brand’s comma heel (€3,500) that is to arrive in stores by September 2013.

The French heritage brand Goyard is known for its handcrafted Goyard canvas, a repeated chevron pattern with a hand-painted quality. Its Saint Louis tote now is available in 11 colors — but the house’s owner, Jean-Michel Signoles, says that increasing the canvas’s color range was driven by a desire to celebrate Goyard’s handcraft, not an exercise in branding.

“When I bought Goyard in 1998, I wished to resuscitate this iconic canvas,” he says, noting that its production had ceased shortly after World War II.

“But it wasn’t my agenda at all to try and capitalize upon a trend, or come up with an easily identifiable signature,” he continues. “I simply wished to be faithful to Goyard’s history and identity, recapture its glorious past and ensure its continuity.”

BLOOMBERG: Bringing Fashion Week From Runway to Retail

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."  

WSJ: Fashion Industry Watches Michelle Obama at Inauguration

WALL STREET JOURNAL | CHRISTINA BINKLEY

When Michelle Obama steps out at Monday night's inaugural galas, life will change for at least one person who is unlikely to be in the room: her gown's designer. Accolades will flow, if the past is any guide, and morning television shows will race for the first interview. The designer's current collection should quickly sell out.

Despite a strict policy against commenting on her clothes, Mrs. Obama has become her generation's most impactful fashion muse. Already, the fashion industry is trying to horn in on the spotlight she will generate next week.

Retailer White House | Black Market this month introduced a limited-edition "inaugural-inspired" dress collection of nine beaded gowns and cocktail-length numbers—priced accessibly between $250 and $300. Aiming to grab some publicity from Mrs. Obama's jewel choices, the Gemological Institute of America speculated that she would wear emeralds at the inauguration because color experts Pantone declared emerald to be Color of the Year for 2013.

The fashion world is abuzz with gossip about which designers Mrs. Obama will wear on Monday. Naeem Kahn is being mentioned as a contender for her gown. Jimmy Choo is considered a shoe-in for her heels.

Consumers paid little attention to Laura Bush's steady diet of Oscar de la Renta suits, and few emulated Hillary Clinton's tailored-pantsuit wardrobe. Those choices fit the women's roles as Washington, D.C., figures and were priced beyond reach for most people.

But Mrs. Obama wore a Gap sweater to lunch with Nancy Reagan and also introduced the world to Jason Wu's $1,500 dresses, influencing the way women dress at work. Her risk-taking has led many women to incorporate more feminine dresses and blouses into their power wardrobes and to don soft cardigans in place of traditional suit jackets at the office.

Most first ladies "fall into the trap of dressing to fit in," says Kate Betts, a fashion editor who wrote one of a bevy of books on Mrs. Obama's fashions, titled "Everyday Icon: Michelle Obama and the Power of Style." "She took the opposite tack: She dressed to stand out."

Entire brands—such as J. Crew, which Mrs. Obama wore on David Letterman's show—have soared on the draft from her patronage. "She's almost to the point of launching collections," says fashion-industry investment consultant Robert Burke, noting that what Mrs. Obama wears sells out, even if it isn't widely available for weeks or months later.

Political kerfuffles have broken out over some of her fashion decisions, often because she breaks with traditional symbolism. Many people were outraged at her decision to wear a non-American label—the British Alexander McQueen's full red gown—to a state dinner for the Chinese president in early 2011. And she made headlines by wearing a cardigan to meet Queen Elizabeth II. Though the cardigan was by Paris couturier Azzedine Alaia, many deemed the choice too casual for a royal moment.

Amid her frequent donning of down-to-earth Gap and J. Crew clothes, critics found fault when Mrs. Obama once wore Lanvin sneakers—priced at an estimated $540—to a food bank.

Mrs. Obama supersedes even A-list celebrities and the future queen of England in her fashion impact, Mr. Burke says. "Kate Middleton has global influence, but she's not as fashionable," he says. And because Mrs. Obama cultivates an every-woman persona, he says, "Unlike Lady Gaga, women can relate to her."

Fashion executives have taken to including photos of Mrs. Obama wearing their brands' clothing when they prepare investment packages for bankers and private-equity investors, Mr. Burke says.

The first lady's patronage doesn't necessarily lead to stardom. Chicago designer Maria Pinto went out of business despite a long association with Mrs. Obama. Isabel Toledo, who designed Mrs. Obama's yellow coat and dress for the last inaugural swearing-in, isn't much more famous now than she was before January 2009.

But if you know who Mr. Wu is, it is probably because Mrs. Obama chose his one-shouldered white gown to wear on inaugural night in 2009. Mr. Wu's business savvy helped him capitalize on the attention, making him a go-to designer. He is now so closely associated with the first lady that he is seeking to branch out.

"There has been so much press on him dressing the first lady," said his spokeswoman, Anne Fahey, in a polite refusal to discuss Mrs. Obama's fashion, "and we would like to try to keep the focus on what he is currently doing."

This inauguration heralds another four years of Prabal Gurung, Thakoon, Loree Rodkin jewelry and other fashion brand sightings in Mrs. Obama's public appearances. But the first lady's actual influence may last even longer because her approach has crept muselike into the way designers think.

"She's in my head all the time," says New York designer Sophie Theallet, whose clothes Mrs. Obama has favored. "She represents the women I am dressing."

BLOOMBERG: Personalized Panties Seen Aiding Nordstrom Discounts War

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.”

WASHINGTON POST: The agony and ecstasy of creating inaugural gowns

WASHINGTON POST | ROBIN GIVHAN

Winning an inaugural gown commission is the fashion industry’s equivalent of hitting the lottery. Attracting global interest and awash in historical resonance, the first lady’s evening dress is patriotism and politics, hope and pride expressed in a few yards of silk and lace. The dress serves as a reflection of the times and a link to tradition — a symbol of both change and continuity. And for the rarefied designers who have had their work worn by a first lady — and then watched as their creation was installed in the National Museum of American History — the experience is both jolting and validating. For a single night, the eyes of the world bear witness to their talent. Oh the joy, the glory, the fame!

But again and again, in the months following that magical night of optimistic music and sweetly clumsy dancing, fashion’s highflying Icaruses have plummeted to earth, scorched by the white-hot light of celebrity and expectation. An overwhelmed business closes. Savings are lost. New collections go unseen. Fade to black. Curses!

“Designing the inaugural gown doesn’t guarantee anything but exposure,” says New York retail and brand consultant Robert Burke. “It doesn’t guarantee success.” At least not the household-name, big-brand, big-money kind.

For the past 20 years, the designers of the Smithsonian-destined inaugural gowns — only first-term dresses receive that honor — have been little-known men and one woman who had yet to be tested on the national stage. In the aftermath of the hoopla, they were dealt some bruising blows. Hillary Rodham Clinton turned to Sarah Phillips, a 37-year-old New York designer whose company was then only about three years old. After creating Clinton’s violet mousseline gown, Phillips went out of business. Laura Bush relied on her loyal Dallas-based dressmaker Michael Faircloth for her inaugural gown. Afterward, with the attention of the entire fashion industry on him, Faircloth crafted a ready-to-wear collection for the New York runway. But fate had different plans, and he never made it to the big city.

Designers who contributed one-of-a-kind day dresses and suits to the inaugural trousseau haven’t fared much better business-wise. Isabel Toledo, who created the lemongrass-yellow dress and coat Michelle Obama wore to her husband’s 2009 swearing-in, continues as an independent designer — but one still keeping close watch on how to make ends meet. Narciso Rodriguez is just now finding some financial footing after skidding close to bankruptcy even as his clothes were splashed on the front pages of newspapers around the globe. And Maria Pinto, who many fashion observers thought was a shoo-in for the inaugural gown because the Chicago-based designer had furnished Obama with a steady supply of boldly colored sheath dresses during the 2008 campaign, has since shuttered her business.

Wu: ‘I’m a dressmaker’

But then there is Jason Wu — the outlier. The one who beat the odds. He createdObama’s ethereal, ivory, silk gown with its dusting of Swarovski crystals.

Wu is a slight young man — born in Taiwan, raised in Vancouver and living in New York. With an oval face, peach-fuzz hair and a serious but genial mien, he was known among fashion editors and high-end retailers but had no profile outside that insular world. He wasn’t quite a fashion yearling, but close. He’d left Parsons TheNew School for Design in his senior year and had been in business for two years. He was 26 when Ikram Goldman, the owner of the eponymous Chicago boutique who was serving as the facilitator of the inaugural wardrobe, asked him to craft a special gown for a special client. Wu made the dress in his tiny New York workroom and flew with it to the Windy City.

He didn’t know Obama had chosen his gown until she stepped in front of the cameras at the Neighborhood Inaugural Ball.

“I was being pulled every which way in a matter of seconds. The next morning I was sitting next to Meredith Vieira [on ‘Today’],” Wu recalls. “The toughest question I’d ever been asked was ‘What was your inspiration?’ I had no media training. Suddenly people expected me to have something to say. It was crazy."

The experience was a lot like that for Phillips, and for Faircloth as well: the excitement, the interviews, the attention. But when it was all over, they didn’t have ready-to-wear, shoes and accessories being sold by Bergdorf Goodman and Saks Fifth Avenue. They were not expanding into new products, dressing celebrities and slowly solidifying a place in the popular consciousness. Only Wu has been able to make something out of the dizzy, fizzy froth of inauguration.

“Life hands you luck, but what you do with it is up to you,” Wu says. “At the end of the day, I’m a dressmaker. I never forgot that. That’s what kept me focused.”

But make no mistake; Wu is also a businessman.

“I always ran my company like a company. I wanted people to recognize my work and I wanted to sell clothes,” Wu says. “It’s such a silly and obvious thing, but so many designers with lots of press don’t sell clothes. My goal has always been to make exceptionally beautiful clothes that women want to own.”

Four years ago, Wu headed a five-person operation with about $1 million in sales. Now the privately held company has estimated sales of $15 million and a staff of 35, including a communications director who once served in a similar capacity for Chanel. Wu created a limited-edition collection for Target — and art-directed and starred in the advertisements for it. This month, he launched a secondary line, Miss Wu. (Obama wore a dress from the collection in October.) He even designs a line of high-end faucets for Brizio, which sponsors his runway shows as a way of connecting its brand to fashion’s contemporary aura of youth and glamour.

“Jason was a very quick study. He quickly realized there had to be a strategy to the growth of his business,” says Burke, a former Bergdorf Goodman executive, who informally advised Wu on such topics has how to price the collection. “He understood the dangers of over-promising and under-delivering. He understood the needs of retailers today.”

Wu has no outside investors; his company continues to be 100 percent self-financed. And although he has been tempted to take on partners whose cash injection would allow him to open his own stores, he has resisted, choosing slower growth and more control. “I’ve always grown based on whatever I can afford,” Wu says. “I know what I’m spending. It’s my money. It’s kept me quite realistic in what I can do.”

That philosophy will ultimately make his company more attractive to any future moneymen. “We advise a lot of investors, and the longer a young designer remains independent, the greater the value,” Burke says. “The longer they can last and be self-sustaining and continue to grow, the better.”

Wu also has an admirable aesthetic eye. If there is any distinguishing characteristic of Obama’s gown, it’s that it was the dress Wu wanted to make. Unlike his predecessors, he’d had no contact with his client. The idea had not been watered down, tweaked or compromised. It was a fanciful frock by a young man who had spent his adolescence enjoying a part-time career creating fancy clothes for collectible dolls. “Jason was well-represented by that dress,” Burke says. “Whether he had dressed Mrs. Obama or not, Jason would be successful.”

Phillips: ‘It can trip you up’

Sarah Phillips also studied at Parsons, and left before graduation to work at Ralph Lauren and Yves Saint Laurent before opening her own business. Clinton discovered her frocks at Barbara Jean Ltd., a small women’s boutique in Little Rock. The future first lady wore one of Phillips’s suits to the Democratic National Convention, and afterward a buyer from the store invited the designer to submit sketches for the inaugural gown. Phillips was a modernist with a sculptural sensibility. Her clothes tended to be free of fussy embellishments — austere in shape but aglow with lively colors. “I didn’t really do evening gowns,” Phillips recalls. “I was thinking of what she would like and I made some suggestions. Some of the cleaner designs I had, she didn’t want.” Ultimately, Phillips created a dress that was wholly outside her aesthetic vernacular.

But no matter, it was for the inauguration. And once Clinton stepped into the spotlight, Phillips was thrust there, too.

“All the press took me away from the business. It completely blindsided me,” she says. “It got in the way of my business. People were asking me, ‘What do you want to do? Do you want to write a book?’ No, I just wanted to design.

“It was like I was mid-stride and this was thrown at me,” she says. “It can trip you up.”

Within months of the inauguration, Phillips’s business was in trouble. She had heightened interest in her work from retailers but no money to take advantage of the opportunities. Stores do not pay designers in advance for their wares; designers must bear the cost of producing a collection and wait to be paid.

Phillips searched for financing, but in the early 1990s, the fashion industry was mostly a collection of mom-and-pop companies. It had not evolved into an industry of publicly traded lifestyle brands that could reap riches for investors. There were no opportunities with mass merchants such as Target and H&M to create a one-time collection for a tidy paycheck. The Council of Fashion Designers of America and Vogue hadn’t gotten together to establish the Fashion Fund, which offers financial support and business mentoring to young designers. Phillips never found the influx of cash.

Her company closed not long after her famous gown was installed in the Smithsonian. She was there for the ceremony but has not been back since.

A cloud of disappointment, a son struggling in school and the death of her father took her away from the fashion industry. A garrulous, tawny-haired woman, Phillips lives in Connecticut with her husband, an artist. Two decades later, she’s relaunching her brand. She has a Web site and a publicist. And she’s planning to focus mostly on private clients. “It took me 20 years to figure it out,” Phillips says. Creating the inaugural gown “was bittersweet. It was wonderful in many respects. And it was really difficult.” And if she had it to do all over again, she is not quite sure that she would.

Faircloth: ‘I lost all the money’

There was little doubt about who would create Laura Bush’s first inaugural gown. She had long been a client of Dallas designer Faircloth, and when the messy 2000 election was finally settled, she told him to get to work. At the time, Faircloth was set up at the Lily Dodson boutique — known for its bold fashions and its cameo in the Richard Gere film “Dr. T and the Women.” In the days before the inauguration, Faircloth spoke easily about Bush’s personal style and how he would try to broker a compromise between her desires, the public’s expectations and his instincts as a designer. “I’m taking into consideration the likes and dislikes of the American people, because she represents the American people,” Faircloth said in 2001. “I have to compromise. It’s half my dress and half Mrs. Bush’s dress.” The result was a scoop-neck, floor-length dress in red Chantilly lace.

Faircloth, a dark-haired, square-jawed native Texan, expected that the inaugural commission would fuel a transformation of his local, private-client business into a national company. After all, he was attracting new customers from as far away as Switzerland and Germany. He separated from Lily Dodson and opened his own studio. He had a heightened swagger. Creating the inaugural gown “gives a little more confidence to a designer,” he says now. “It gave me a sense that what I did was good and is good.”

He decided to invest his money — thousands of dollars — in a ready-to-wear collection. He produced samples, loaded them into trunks and boarded a New York-bound plane for fashion week in Bryant Park. It was Sept. 11, 2001. “We landed in North Carolina,” he recalls. “We had to drive back to Dallas. I lost all the money.”

Faircloth has since made peace with New York’s catwalk. He had other opportunities to expand, he says, “but I had to trust my gut and make slow progress. I didn’t want to venture too far away from what I knew.”

After 29 years in business, he now designs for the daughters and granddaughters of his original clients. And he continues to work with Bush.

Unrealistic expectations

Was Wu a smarter businessman and a more dazzling designer than his predecessors? Perhaps. Was he lucky to have dressed a historic first lady whose fashion sense captured the public imagination? Absolutely. But the culture surrounding fashion has changed, too — particularly for young designers.

In 2000, Tim Gunn — now the “Project Runway” mentor — arrived at Parsons to run its fashion program. The curriculum had not been updated much since the 1950s, when Parsons was “educating designers to be assistants to great brands or work behind a titular designer head,” Gunn says. “But that wasn’t how the industry worked anymore.” Under his guidance, the program began to focus on educating “young, entrepreneurial-thinking designers.” Among the first of that lot were Lazaro Hernandez and Jack McCollough, whose senior collection in 2002 was bought by Barneys New York, and their Proenza Schouler brand was launched.

“It was a turning point for the way the industry perceived young designers,” Gunn says.

Indeed, the fashion industry — and its attendant groupies — now sees young designers as lucrative investment opportunities. The higher their public profile, the faster they are propped up, supported and dubbed successful. And there are endless opportunities for raising their profile, from “Project Runway” to Twitter.

“I think it’s a good time to be a young designer. The difficult part is you have all that support, but people have expectations that are sometime unrealistic,” Wu says. “You’re expected to make an impact, open stores and do four collections a year. You’re expected to do what it took others before you 15 or 20 years to accomplish. In that way, it’s not good. It’s a double-edged sword.”

Audiences come to Wu’s shows expecting to see a fully formed designer. When he presented his fall 2012 collection in New York, his backstage had all the telltale signs of the establishment: a flock of the most sought-after, birdlike models with their hair slicked into impeccable ponytails, editors trolling for snippets of quotable fashion chatter, a CNN crew awaiting the designer’s attention.

Wu’s sensibility has moved away from the spun sugar of the inaugural gown. The fall collection was a deeply personal one. He’d gone back to Taiwan with his father for the first time in a decade and created a collection imbued with traditional Chinese imagery, Hollywood glamour and Wu’s own understanding of his multicultural heritage. “I feel like it’s my aesthetic but channeled through this personal biography,” he said after the presentation.

For spring, his aesthetic has taken yet another turn — going dark and aggressive. “As I’ve matured as a designer, the ladylike clothes have met with a little subversion. They’re a little sexier,” says Wu, 30. “Four years ago, my collection was inspired by fairy tales. For spring, it was inspired by Helmut Newton.” Which could serve as the starting point for an especially interesting second-term inaugural gown.

 

WSJ: The Fixer in the House of Narciso

WALL STREET JOURNAL | RAY A. SMITH

It takes more than a visionary eye for style to turn a fashion designer into a blockbuster brand. It takes a combination of right-brain creativity and left-brain execution.

For women's fashion designer Narciso Rodriguez, it has meant hiring left-brain fashion-industry veteran Robert J. Wichser in May. The label tapped him to be chief executive and resident "suit" at the 15-year-old label. Mr. Wichser's mission is to help the Narciso Rodriguez label regain the business mojo that has eluded it in recent years.

The 51-year-old Mr. Rodriguez became famous overnight as designer of the sleek silk-crepe sheath Carolyn Bessette wore to marry John F. Kennedy Jr. in September 1996. Soon after, he launched his own women's fashion line and went on to be named the Council of Fashion Designers of America's Womenswear Designer of the Year twice, in 2002 and 2003.

Mr. Wichser (pronounced "wisher"), 62, is known as a Garment District fixer, an executive who can help a creative genius get his business act together. His recent projects include stints at Sean Combs's Sean John line and at the John Varvatos label, where Mr. Wichser helped evaluate prospective partners and position the label for a sale to private investors in April.

The suit, or businessman, is recognized as indispensable to a fashion designer's survival ever since the 1960s and '70s, when Yves Saint Laurent was a pioneer of the concept of an international fashion superbrand, in large part because of guidance from his left-brain partner, Pierre Bergé. More recently, Marc Jacobs, Mr. Rodriguez's generational peer, has achieved international sales and acclaim with his own left-brain business partner, Robert Duffy.

An exacting designer, Mr. Rodriguez is known for body-conscious dresses and blouses that skim the figure with the seductive ease of a negligee. But his label has floundered in recent years, stuck in narrow distribution because it has lacked the resources and breadth of offerings that help a designer achieve fast growth at retail.

"You see the success of other designers who have the good fortune to have a solid partner on the business side. It's what I've always desired," Mr. Rodriguez said in a recent interview at his New York studio. "I needed a person to build the brand, someone to grow the company."

Accessories are the name of the game in fashion today, whether it's shoes, bags, housewares or all of the above. And high-low collaborations with retailers, like the one between Target stores and Missoni last year are also increasingly a must. Narciso Rodriguez has had very few of either.

The designer has attempted to expand, and his 2003 fragrance launch was considered a success. But partnerships with two major financial backers, AeffeSpA AEF.MI 0.00% and the former Liz Claiborne Inc., collapsed in 2006 and in 2008, respectively, over disagreements on the brand's direction.

Kathy Kalesti, currently a consultant to small designer labels, was Mr. Rodriguez's 13-year business associate, vice president of merchandising, distribution and sales and then president when she left amicably, according to both sides, about a year after the Liz Claiborne connection ended.

Mr. Rodriguez "really needed someone to objectively come in and figure out how to move the company forward," Ms. Kalesti says. "I couldn't be that and be involved in the product and the wholesale and all of that. It's too big a nut without the right infrastructure."

"It all fell on Narciso's shoulders and there wasn't an infrastructure in place to support the growth of the business," Mr. Wichser says. "There wasn't that expertise within the company."

Mr. Rodriguez tried running the business on his own and concluded he was in over his head. He reached out to Mr. Wichser, hiring him for a three-month consulting stint. The two hit it off, and Mr. Wichser's three-month engagement turned into a year. He left Narciso Rodriguez for the John Varvatos gig, but returned in May as chief executive.

Since then, Mr. Rodriguez has launched shoe and handbag lines, an e-commerce store and, in November, a lower-priced collection with Kohl's stores. Mr. Rodriguez also has signed an agreement with Gap's GPS +0.08% Banana Republic to be a fashion adviser to the chain. His third women's fragrance is expected next year.

Robert Burke, a luxury-goods consultant, said Mr. Rodriguez was wise to get into fragrances back when he did, but his label still "has to make up for lost time" by expanding.

This is a difficult time to enter the competitive accessories market, which is crowded with established brands constantly looking to broaden their price ranges and audiences, as well as younger designers who have started pumping out accessories earlier in their careers. "I hope Bob is the person to do it," Mr. Burke says.

Mr. Rodriguez says he sees Mr. Wichser as more than a suit. "I had a wealth of sketches and ideas we were showing, and they were never being brought to market," Mr. Rodriguez says. "Bob helped pull together teams to help me make those accessories a business and identify the appropriate partners to make the product."

Some of Mr. Wichser's changes met with culture shock. He instituted weekly meetings with all departments, with Mr. Rodriguez's blessing. "Design needs to be in touch with production and sales," the designer says.

At the meetings, Mr. Wichser and Mr. Rodriguez articulated their vision for the company. Previously, Mr. Rodriguez said employees had a sense of the vision, but "Bob made it crystal clear to everyone."

The designer and the CEO met with retailers to get feedback, visited factories and sat in on sales meetings. They introduced fixed deadlines and schedules for everything, including the design process, so products would arrive on retail sales floors at the start of a shipping cycle rather than weeks after it had begun. This way, more merchandise can be sold at full price, with less discounting. "That had a major impact initially on improving the business," Mr. Wichser says.

Deliveries now arrive earlier, says Daniella Vitale, chief operating officer of Barneys New York. "You can see the changes in supply-chain management."

Mr. Wichser said he made the decision to launch the shoes and handbags with Barneys, which has long carried the ready-to-wear collection, rather than a group of retailers buying small amounts here and there. He says he wanted one high-end retailer to make a significant commitment to the label in all product categories, with marketing and "real estate" on the sales floor. Barneys was willing.

Ms. Vitale says price points for the shoes "were a little higher than we would have liked," but overall Barneys has been pleased with sales of the accessories.

Narciso Rodriguez's Spring 2013 collection, shown at New York fashion week this fall, received the kind of raves the label was getting in its earliest days. But this time, the designer can't afford not to capitalize on the buzz.

Mr. Wichser said he aims to make Narciso Rodriguez "a major player in shoes and handbags," with accessories expected to become a bigger business for the label than ready-to-wear clothing. The company is looking at expanding into new areas, like eyewear, intimates, home merchandise and its own retail stores, Mr. Wichser says.

Mr. Rodriguez says he is happy so much has been accomplished in so little time. "It's great when you have someone who listens to what your vision is and makes it happen," the designer says. "There's a new energy at this company."

NEW YORK TIMES: An American in Paris, Again

NEW YORK TIMES | ERIC WILSON

ALEXANDER WANG may be the savviest designer of his generation.

At 28, he is the rising star who built a global multimillion-dollar business in less than a decade, opened his own stores in New York and Beijing and, last week, landed a plum job at a prestigious label in Paris, when he was named the creative director of Balenciaga. Some see Mr. Wang’s appointment as symbolic of the triumph of youth; others see the demise of fashion.

“It was a coup for Alex, and a coup for American fashion,” said Diane von Furstenberg. But, she added, “he’s going to need some mentoring in Paris.”

In a way, it is fitting that Mr. Wang should become the first American designer to take on a big, historic European design house since Marc Jacobs, Michael Kors and Narciso Rodriguez went to Paris in the late 1990s. (Only Mr. Jacobs, with his role at Louis Vuitton, remains there.) While other young designers have occasionally been proposed for such lofty jobs, it is Mr. Wang who most perfectly represents his generation’s more accessible and business-minded approach to fashion. He also reflects the growing prominence of designers of Asian descent who are making their mark on the global stage.

He is young, energetic, engaged, streetwise and generally adorable. And like all great (meaning successful) designers, he recognized a crucial shift in the market well before its impact had been fully realized, in this case how the democratization of fashion would also lead to a gradual devaluation of the concept of luxury. He created a business with estimated sales of more than $60 million by making contemporary T-shirts, sweatshirts and shorts that look remarkably like high fashion. (His company does not release numbers.) Early in his career, when critics said he was too commercial, Mr. Wang said: “I don’t see that as a negative thing. It is something I actually enjoy.”

But it is for the same reasons that his appointment at Balenciaga — nearly a century-old fashion house that was thoroughly modernized over the last 15 years under the considered eye of Nicolas Ghesquière — bothers so many people, or at least the fashion purists. Some established designers, grumbling privately because they did not want to be seen as meanies, see the change as symbolic of a broader watering-down of creativity in fashion.

“They’re not fashion designers,” one New York designer said. “They’re fashion curators. They’re sitting at a computer copying other peoples’ ideas.” Even on Balenciaga’s Facebook page, alongside the many positive comments about Mr. Wang, one fan sniped, with Ghesquière gone, “who will Wang rip-off now?”

Their fear is that PPR, the luxury group that owns Balenciaga, as well as Gucci, Saint Laurent and Bottega Veneta, plans to take the label in a more commercial direction, or that the choice of Mr. Wang, as an Asian-American, was somehow an opportunistic play for the emerging luxury market in China.

Mr. Wang’s command of the Chinese market and his fluency in Mandarin were not overlooked by executives at Balenciaga, but François-Henri Pinault, the chief executive of PPR, said that they were not considered criteria for his recruitment. He nevertheless described Mr. Wang’s heritage as “an extra value,” noting that he will bring more exposure to the brand worldwide.

Responding to the question of handing the keys to one of the most famous names in fashion to a designer so young, Mr. Pinault argued that, when Mr. Ghesquière began designing Balenciaga in the mid-1990s, “he was designing uniforms for Air France, and who would have said that Nicolas would become such a great talent?”

Anna Wintour, the editor of Vogue, who championed Mr. Wang for the job, also scoffed at concerns about his age.

“Oh, please, come on,” she said. “How great is it to be young? That is when designers are at their most fearless. That is when you do your most creative work.”

When Mr. Ghesquière was named chief designer there, in 1997, he was just 25.

ON Nov. 5, in a major surprise, Balenciaga announced that Mr. Ghesquière was leaving. His vision for the house, combining a reverence for the archives of Cristóbal Balenciaga with high-tech fabric treatments and elements inspired by science fiction, was so transformative that Style.com/Print recently described it as “the standard by which other big house revivals are judged.” The business grew to include 62 stores and, Mr. Pinault said, sales have expanded substantially since it was acquired by Gucci Group (as PPR was formerly known) in 2001. But Balenciaga is an expensive business to operate.

There were demands for more commercial styles and reissues of his earlier designs, leading to what retailers described as a confusing assortment in the stores, and, according to several colleagues of Mr. Ghesquière, the designer’s frustration.

Isabelle Guichot, the chief executive of Balenciaga since 2007, said in a telephone interview on Thursday that the role of a designer in today’s industry demands a quality that she called “creative realism.”

Last month, when the company began a search for its next designer, there was a short list of candidates. Christopher Kane, the young English designer who recently consulted on Versace’s Versus collection, was reportedly one of them. Mr. Wang, Ms. Guichot said, was the “top choice.” Mr. Pinault, who makes the final decision on the hiring of designers, approved.

“We’re not asking him to be an entrepreneur,” Ms. Guichot said. “But luxury fashion is a business with some rules, and he understood that very early in his career, without ever compromising the creativity.”

Among the observations made on the hiring of Mr. Wang, who has a strong accessories business, having astutely positioned his handbags at the lowest end of the luxury category, is that PPR was looking for its own version of what Mr. Jacobs brought to Louis Vuitton.

“There were some feelings after what happened with John Galliano at Dior that the brands were promoting the individual designers too much,” the veteran consultant Robert Burke said. “Now they’re thinking, what is it going to take to keep a brand relevant and alive?”

Linda Fargo, the fashion director for Bergdorf Goodman, said there are real “design chops” in Mr. Wang’s collections. Asked about the complaints that he copies, she said: “I hands-down do not agree with that. I think he’s incredibly original.”

MR. WANG grew up in California. His parents, who had emigrated from China, had a successful plastics manufacturing business that they later moved to Shanghai. Among his classmates at Drew in San Francisco was Victoria Traina, who now works in fashion in New York and was a big influence on Mr. Wang’s look, often described as “off-duty model” for its slouchy ease and street-wear feeling. Beginning in 2002, he attended Parsons the New School for Design for two years, while working as an intern at Vogue and for the designer Derek Lam.

Then, like many now-famous designers have done, he dropped out to start his own fashion label. With his sister-in-law, Aimie Wang, he started a line of sweaters: six pieces that were sold on consignment. The reaction was so strong that Mr. Wang had a full ready-to-wear collection by 2007, when he became one of the hottest names on the New York fashion calendar. His family remains involved in the privately controlled business, which now has about 140 employees. He will continue to design his own label.

And there was never really any question that it would be that way. Ms. Wintour recalled Mr. Wang’s appeal for the CFDA/Vogue Fashion Fund award (a prize he won in 2008). “He was so articulate,” she said. “He said he wants to dress the girls of his age and his generation. That’s what you see in everything he does. He lives and breathes the Alex brand.”

Ms. von Furstenberg, who was assigned to mentor Mr. Wang after the competition, recalled walking into his showroom for the first time. “There wasn’t very much there, but it was all very clear,” she said. “His clarity is part of his talent. He knows who he is.”

Part of Mr. Wang’s appeal is his connection to the street. He associates with the cool photographers and provocative musicians, and despite showing at the beginning of each season, has his radar attuned to the models of the moment. These qualities were also attractive to Balenciaga. Mr. Ghesquière is one of the best designers at adapting the reality of the everyday life with a strong vision for modernity, and Mr. Pinault said he expects Mr. Wang to build upon that legacy.

Making it profitable will also be important. Tapping into emerging markets like China, India and Brazil will be crucial. In New York last week, while not going so far as to say Mr. Wang was hired because of his heritage, Mr. Pinault gave the impression that it was an advantage.

Increasing profits in countries where luxury is a mature business is very tough, Mr. Pinault said. But in China, where the potential is so strong that economic growth of 5 to 7 percent is seen as a bad year, the possibilities are endless. Making a profit there, he said, “is an easy job.”