WWD: Kazakhstan: Luxury's Next Golden Market

WWD | CATHERINE BLANCHARD Everyone seems to be headed to Kazakhstan.

The oil-rich country bordering the Caspian Sea and Russia is attracting a slew of designers and retailers eager to tap into its newly wealthy consumers. Saks Fifth Avenue will open a store there this fall, while brands such as Hermès, Louis Vuitton, Eskandar, Ralph Rucci, De Beers, Tiffany and Harry Winston are sold there or have their own stores. Even Children’s Place and Steve Madden have opened stores in the country, the world’s ninth largest in terms of area.

They all see Kazakhstan as a fertile market, up there with China and Brazil. A.T. Kearney’s 11th Global Retail Development Index earlier this year ranked the country as the 19th most attractive market for retail development which, while down from 14th the previous year, was still ahead of Russia at 26th.

“It’s probably what Russia represented to brands eight to 10 years ago,” said Robert Burke of Robert Burke Associates. “It will be a very good market for luxury brands.”

Burke said that only about 5 percent of the market for luxury in Kazakhstan is from tourists, meaning most of the sales are to residents. Consumers there travel a lot, so they are aware of luxury brands and are becoming increasingly sophisticated fashion consumers. “When I first went there four or five years ago, every major brand was represented — Alexander McQueen, Giambattista Valli and others weren’t so far off what you would see in a U.S. department store. Kiton probably had 250 to 300 sleeves hanging.”

n 2011, salaries grew 7.5 percent in real terms compared with 2010, reaching 77,464 tenge ($532), according to Kazakhstan State Statistics. Workers in the financial, insurance, scientific, technical and mining industries often earn more than twice the national average (from 158,600 tenge for financiers to 142,900 tenge for miners).

According to Dana Akhtayeva, a stylist based in Karaganda, the economic upswing is not the only reason Kazakhs are spending on fashion. “Along with economic growth, and despite the [economic] crisis, people in Kazakhstan have begun to understand the psychological aspects of self-image,” Akhtayeva said.

“Buyers, especially women, are active in learning about brands and trends. Still, often the brand name plays a crucial role.…Some want the brand names front and center, in the most visible spot on their bags, T-shirts, jeans, etc.”

Customers in cities around the country can find the names they crave at multibrand boutiques, but Almaty is still the fashion capital of Kazakhstan.

Almaty is the country’s largest city with a population of almost 2 million. It was Kazakhstan’s capital from 1929 to 1991, and is still considered the commercial and cultural heart. Current capital Astana is the second-largest city with a population of about 700,000. Almaty is to Astana what Istanbul is to Ankara in Turkey, according to local experts.

The country has numerous smaller cities where shoppers can find international brand names. Jack Geula, the owner of Muschel GmbH & Co. KG, which has more than two decades of experience representing European designers in the former Soviet Union, said, “If you compare Kazakhstan to any of the other countries in the region — Armenia, Georgia, Uzbekistan, Mongolia — business there only happens in the capital cities. Kazakhstan has been developing for the past 10 years easy and there is a wider structure available.

“Almaty is still the top,” added Geula. “Astana is catching up, and then there is a wider gap after that.”

Mining capital Shymkent, oil-rich Aktobe, and industrial center Pavlodar are just a few of the Kazakh cities where multibrand stores sell premium brands.

J Brand, which distributes through its showroom in Milan, now sells in cities including Almaty, Astana and Aktobe. Kazakhstan is the third-most important country in the Commonwealth of Independent States in terms of turnover for the American denim maker. Muschel distributes brands like Just Cavalli, Lagerfeld and Cerruti in many Kazakh cities.

Cerruti is one of the most popular brands at the Cosmo boutique in Pavlodar, according to owner Natalia Russkih. “Our customers buy those brands that advertise in magazines,” she said. “If there aren’t ads, then there isn’t much interest.”

Shoppers in Kazakhstan have different tastes than their Western counterparts. “While having the brand name visible might be poor form in Europe, when Kazakh customers buy something Cerruti they want the brand front and center,” she said. The majority of Cosmo’s customers are women aged between 25 and 40, who are fashionable and on trend. “Our men are still conservative, but women are stylish and look for fashion. If one color is trendy, they want that color.”

For men, tailored clothing is more important than it is in Russia and Europe, as the casualization of men’s wear has yet to take on. “In terms of men’s wear, suits and blazers are still a very important part of business,” said Guela.

For women, religion and culture play a role in dress length. At Cosmo, customers are not likely to buy floor-length dresses, but they stay away from short hemlines. “Dresses are very popular here, but rarely do women buy dresses above the knee. They prefer dresses to the knee, or maybe a bit under the knee,” said Russkih.

Designer brands including Rick Owens still find more success in Almaty than in smaller cities. Luca Ruggeri, the designer’s commercial director, said the company “tried to propose our products in Astana, but in that city the collection was less capturing” than in Almaty. Still, Owens views the market in Kazakhstan as “quite relevant, despite the fact that we basically have business relationships only with Rush and the soon-to-open Saks Fifth Avenue in Almaty.” 

Other brands that multibrand boutique Rush distributes include Comme des Garçons, Jean Paul Gaultier, Vivienne Westwood and Miu Miu.

The Saks Fifth Avenue that will open in the new Esentai Mall in Almaty in mid-October will be the retailer’s first in the former Soviet Union. The three-story, 87,615-square-foot store is a licensing partnership with Kazakh luxury distributor and retailer Viled Group. Viled, which is the largest retailer of jewelry and watches in Kazakhstan, also distributes brands including Cartier and Christian Dior in Almaty and Astana.

Developed by Capital Partners and designed by Skidmore, Owings and Merrill architects, Esentai provides a new shopping experience for the region. Capital Partners marketing director Sandrine Moreau said, “The mall is the first of its kind in Central Asia.” Esentai is unique in its fit out — black marble floors, the latest lighting technology — and the brands that it offers. The first floor is dedicated to luxury, with Fendi, Gucci, Lanvin, Dolce & Gabbana, Burberry, Hugo Boss and Louis Vuitton stores.

The Vuitton store, designed by Peter Marino, is the brand’s sixth in the CIS region — with four in Russia and one in Ukraine — and its first in Kazakhstan.

“We are bringing something very modern into the market, and some of the best customers are in Kazakhstan. While they are hungry for something new, they are also very, very attached to their country, to their land. It is an interesting challenge to try find the right balance,” Moreau said.

Esentai’s advertising campaign integrates Kazakh culture with luxury clothing and accessories. The billboards feature Kazakh models posing in front of some of Almaty’s most famous sights, as well as the country’s rolling steppes and scenic mountains.

For those brands looking to enter the market, Almaty is home to the region’s most important fashion trade show, Central Asia Fashion. The ninth CAF brought 105 exhibitors and 1,500 buyers together. Italian nonprofit Entre Moda Italia, or EMI, which promotes the country’s fashion around the world, participated in the show for the first time in March.

“The Central Asian economy is growing strongly and we thought that it was important to find a fashion fair that would help us to make the right contacts,” EMI president Antonio Gavazzeni said. The company had about 30 firms exhibiting at CAF compared to 330 brands at the equivalent show in Russia, Collection Premier Moscow.

Still, Gavazzeni views the markets as complementary, “Moscow is historically the hub of the distribution system for all the CIS countries. Most Italian companies are already well established there and the level of competition is growing....The level of competition in Kazakhstan is lower,” he said. “Companies who decide to go there are real pioneers.”

WWD: Brazil Emerging as Luxury Force

WWD | MARC KARIMZADEH During the Olympics’ Opening Ceremony, Charlotte Olympia shoe designer Charlotte Dellal tweeted a TV screen shot of Team Brazil just as it was entering the stadium. That she is such a fan of the country is no surprise: Her mother, the well-known model Andrea Dellal, is a Rio de Janeiro native, and, as a child, the younger Dellal lived in Brazil’s second-largest city for a few years. These days, Dellal, now based in London, frequently turns to her “home from home,” as she puts it, for design cues. Case in point, her resort collection. Called “Glamazon,” it includes ankle-strap shoes decorated with metallic swirls that mimic the Copacabana sidewalk, as well as platform sandals flaunting flamboyant heels—mini birdcages encasing painted metal parrots. “It’s such a vast country that you can get inspired from so many different things,” Dellal says. “The people are very inspiring. The music is fantastic, and Carnival is one of my favorite times of the year.”

Dellal is not alone in her love for all things Brazil. If the country is best known for Corcovado, “Girl From Ipanema” (cue the “tall and tan and young and lovely”) and Gisele Bündchen, a different kind of Brazil is now emerging. Fueled by a boom of both the financial and creative kinds, the country is making a real impact on the fashion and accessories worlds at multiple levels—from serving as a leading design and retail inspiration (even Macy’s held a spring promotion called “Brasil: A Magical Journey”) to becoming an emerging market for luxury brands. “Brazil is enjoying an incredible GDP growth rate,” says Patrizio di Marco, global president and chief executive officer of Gucci, which has plans to open five stores there by the end of the year. “You have a number of high-net-worth individuals—similar to Russia and more than India—which says a lot about how important the market is. I think we’ll have more opportunities there.” Gucci is among the luxury brands with outposts in the new JK Iguatemi mall in São Paulo, which opened in July; it unveiled a dedicated men’s store there, while the brand has two more stores offering men’s and women’s product in São Paulo, as well as one in Brasilia, with a Rio opening slated for later this year. Other brands at the JK Iguatemi include Van Cleef & Arpels, Lanvin, Miu Miu, Bulgari, Prada and Chanel.

ROBERT BURKE, of consultancy Robert Burke & Associates, cites the explosion of creativity as a significant reason why the industry is taking notice. “Brazil represents a lot of sophistication, which people had underestimated in the U.S. before,” he says. “What fundamentally changed there is that it was a country dominated by local brands because of trade tariffs, but with Brazil’s economy, the number of ultrarich has grown. They travel internationally, and their appetite for international brands also grew—and so has their ability to buy these brands locally.”

Just as international labels are hitting cities like Rio and São Paulo, Brazilian fashion brands, including Melissa, Schutz and Jack Vartanian, are making inroads in the U.S. São Paulo-based shoe designer Alexandre Birman, whose family owns Arezzo & Co., one of Brazil’s leading women’s shoe companies (as well as the Schutz division), isn’t surprised by the new momentum. “Brazil was the first country to really get out of the financial crisis of 2008,” Birman says. “Our recovery was the fastest in the world, and that drove the attention of many investors to Brazil, who, consequently, brought money here, allowing [local] companies to gain in scale and to have the possibility to invest more overseas.” Birman notes that Southern Brazil’s Vale dos Sinos region is the third-largest shoe-manufacturing area in the world, with a cluster of 20 cities that boast such centers, from tanneries to sole producers. “It was an area colonized by Italians and Germans and their families after the war, and they brought a lot of people that knew about shoe manufacturing to the area,” he says. Shoemaking aside, Birman cites three other main reasons why Brazil is having such a moment: the contemporary art scene, which is thriving with artists like Adriana Varejão, Beatriz Milhazes and Vik Muniz; the 2014 FIFA World Cup to be held across multiple Brazilian cities, and the 2016 Summer Olympics in Rio. “Brazil is a buzzword and buzz place,” says designer Monica Botkier, whose resort lineup was inspired by the idea of chic, exotic travel, and, naturally, Brazil. “There was always the notion of Brazil. Now the country is catching up to its own reputation,” she says. Judith Leiber’s creative director, Jana Matheson, also looked to the country for resort, most notably with her minaudières, some in the shapes of parrots and frogs, and others crystal-embellished to resemble palm trees. “We design holiday and resort in the middle of winter, and as I was working on the collection, I thought, If I were to go out of town, where would I go?” says Matheson. “If I were to hit a beach, I thought I’d be very happy to be in Brazil, and so I thought about hardware development and beach glass in these watery liquid tones.” Rafé designer Rafé Totengco, meanwhile, was dreaming of a trip to the Copacabana. His structured mother-of-pearl, resin and stainless-steel minaudières loosely reference the designs of Brazilian architect Oscar Niemeyer, while totes are worked in vibrant graphic motifs. “It’s this celebration of color, more than anything else,” Totengco says. And, he adds, who can’t use a little Brazil in their lives? “The girls from Ipanema, the boys on the beach, the Fasano [design hotel chain]…how could you not want to be there?” Totengco says. “It’s got rhythm.”

WWD: EBay Links With Designers for Holiday

WWD | DAVID MOIN

If Target and Neiman Marcus can do it, why can’t eBay?

Corralling designers for exclusive Christmas products has become a trend and now eBay has hooked up with Billy Reid, Chris Benz, Fallon, Jonathan Adler, Ruffian, Steven Alan and Tibi to create the eBay Holiday Collective, WWD has learned.

It will be a limited-edition gift collection of men’s and women’s apparel, jewelry, travel and electronics accessories and home decor, available on eBay for the 2012 holiday season. The Collective marks the first time eBay is collaborating with a group of leading designers to create an exclusive collection, though the giant online marketplace is not new to designer exclusives, having in the recent past worked with Derek Lam, Narciso Rodriguez, Alexander Wang and Rebecca Minkoff.

Last week, WWD had an exclusive report on an unprecedented collaboration between Neiman’s and Target, whereby they are teaming with 24 Council of Fashion Designers of America designers, including Carolina Herrera, Lam, Diane von Furstenberg, Jason Wu, Marc Jacobs, Oscar de la Renta and Tory Burch, to create The Target + Neiman Marcus Holiday Collection. It will be sold beginning Dec. 1 at Target and Neiman Marcus stores, as well as at target.com and neimanmarcus.com, and feature products priced from $7.99 to $499.99, with most items less than $60.

In a different designer spin on holiday, and on a smaller scale, Macy’s for Christmas 2011 partnered with designers Karl Lagerfeld, Kinder Aggugini, Matthew Williamson and Giambattista Valli on creating exclusive gift-oriented products. Earlier in the year, the very same designers did separate one-off collections for Macy’s Impulse contemporary departments.

Other Web sites and retailers, particularly those that pride themselves on selling differentiated product, could come out with announcements soon on designer collaborations for Christmas, particularly if they want to publicize the programs in fashion magazines with long lead times. Many retailers and brands, from J.C. Penney Co. Inc. to Josie Natori and Bergdorf Goodman, have already unveiled holiday 2012 collections. EBay will release specifics on products from its Collective later in the year.

“Designers realize that the retailers need unique product so they are much more open to doing that. Multitasking is something designers have gotten used to,” said Robert Burke, president and chief executive of the consulting firm bearing his name. “I suspect you will be hearing things in the next few weeks.”

“We are certainly thinking about exclusive products with designers on a lot of levels,” and not necessarily just for Christmas, said one top executive from a major fashion Web site.

Another source said Penney’s is keen on holiday tie-ins with designers, in addition to those the chain has going for fall such as with Betseyville by Betsey Johnson, Lulu Guinness and Vivienne Tam.

Price points are not a problem for most designers, since they will trade down to mass chains and department stores, or even luxury chains seeking holiday gifts that are more affordable than the usual offerings at other times of the year. However, sales people at upscale stores aren’t always so enthused about cheaper products because it means less commission.

The eBay Holiday Collective will include more than 40 gift items, priced from $50 to $100, in a wide range of categories. Each of the seven designers created at least five items.

The Collective will go online starting Nov. 12, a few weeks before The Target + Neiman Marcus Holiday Collection gets served up. The eBay collection will be available globally, via Fashion Vault, which is eBay’s destination for special events, limited-time sales and exclusives. Free shipping anywhere is part of the program. As with all of the merchandise that appears on the eBay marketplace, merchandise from the Collective will not be owned by eBay.

“The eBay Holiday Collective marks another milestone for eBay in the fashion category,” said Jeff Somers, the general manager of eBay Fashion. “Similar to the recently announced Neiman’s and Target and Nordstrom and Topshop collaborations, our partnerships are another sign of the retail revolution under way. As consumers seek seamless, multichannel, anytime-anywhere shopping, creative collaborations point to the future of commerce. Our focus is on enabling commerce, and we’re achieving that by serving as a partner to retailers of all sizes.”

Somers added that the seven designers were chosen based on “their genuine enthusiasm for eBay and because each brings originality and a distinct point of view, and embodies the entrepreneurial spirit of our marketplace.” The designers are also compiling wish lists and gift lists featuring their favorite finds from eBay. These gift guides will be accessible online and through eBay’s mobile app.

“I am an avid eBay shopper and often find great items for our home and our shops on eBay, so the collaboration was a natural fit,” said Reid.

“To have the opportunity to collaborate with eBay, in the company of such inspired designers, for the holidays, is such a treat for me,” said Benz.

“It has always been my goal that Fallon be an attainable collection for the fashion conscious,” said Dana Lorenz of Fallon.

“I am obsessed with eBay,” said Adler. “EBay has changed the way I shop, and, I’m afraid, distracted me from doing my work — but that’s another story.”

WWD: Women's Fashion Sales Face Challenges

WWD | DAVID MOIN

NEW YORK — As designers gather at tonight’s CFDA Awards at Lincoln Center, the women’s fashion business is at a crossroads and creativity has never been needed more.

The flagging women’s apparel business is primed for a jolt.

It’s accepted fact that shoes and bags have lit up the industry for several years now, and that’s not expected to change anytime soon. Too much stuff with too little imagination has women’s apparel pretty much adrift in a sea of sameness. Women’s wear sales have been dragging since well before the recession. Of equal concern is that there appears to be no easy answer to fixing the problem.

Even as retailers appear to be crawling back with improved profits and sales and growing cash reserves, women’s apparel has not been leading the way. Instead, accessories such as shoes and handbags are now the star performers — and are likely to remain so for the foreseeable future. And if the malaise in women’s apparel remains prolonged, it will have a huge impact on what and how much stores buy, the space they devote to apparel and the ability of new designers to break through into the spotlight.

“Fine apparel is particularly challenging right now,” Neiman Marcus president and chief executive officer Karen Katz told WWD last week, just after the luxury chain reported a 35 percent profit gain in the last quarter. “For us, this was really the first quarter where we experienced a change. It’s not a price issue.  There are lifestyle changes. Customers have been very discerning. They want something very unique, very fashionable, something lasting for her wardrobe.”

Designer labels that read a bit more casual are doing well, Katz  added. However, “We have to rethink how we edit the designer collections.”

“Certain areas of women’s apparel, contemporary, sexy and flirty are doing extremely well. Certain areas with classic brands aren’t doing as well,” Saks Fifth Avenue chairman and ceo Stephen I. Sadove said in an interview. “Overall, the women’s business is healthy, but it’s being driven more by fashion — where it’s more contemporary. Some brands are more suited. More formal may not be the way people are dressing. That is a change in taste.”

Even designers admit women are increasingly finding it tough to find clothing they want to wear, since they now are looking for clothes that can as easily go from work through dinner.

“It’s really important to realize that today, women have one wardrobe. Years ago, they would have a wardrobe for work and a wardrobe for weekend clothes,” said Gary Muto, president of Loft.

The bulk of the business — designer apparel, classic and traditional sportswear, suits and tailored looks, outerwear, basics, misses’ and juniors — has been in the doldrums for some time, although contemporary sportswear, dresses, knitwear, skinny jeans and colored denim experienced good gains. Statistically, there’s little question that women’s apparel overall lost ground, or had minimal growth in the past year. According to The NPD Group market research firm, women’s apparel in the U.S. rose just 2.9 percent to $80.16 billion last year, a figure that includes inflation, which distorts real growth, and is low compared with mid-to-high-single-digit gains retailers posted for their entire businesses.

In 2011, dresses rose 17 percent to $10.9 billion, though suits were down 17.9 percent to $1.02 billion; jackets slipped 0.1 percent to about $1.7 billion; pants dropped 0.6 percent to $2.97 billion; jeans declined almost 3.3 percent to $7.79 billion, and coats fell 3.4 percent to $2.07 billion. Women’s accessories did better, rising 3 percent to $34.92 billion and sweaters rose 5.6 percent to $11.05 billion. Women’s footwear was up just 0.5 percent to $25.04 billion.

“The volume areas for business in women’s apparel are failing in relationship to other areas,” said Marshal Cohen, chief industry analyst for NPD Group. “Women have dramatically changed how they perceive the importance of sportswear. They’re buying across a much wider range of products. The fashion industry has been out-fashioned by every single other industry where consumers spend money. There’s more fashion in food than apparel.”

For several seasons, Nordstrom Inc. has been unhappy with its women’s apparel business. Pete Nordstrom, president of merchandising, said this spring some “pockets” in women’s performed better than others and cited the modern and casual sides and “good growth” in activewear and lingerie, which in many cases are getting increased space on Nordstrom’s selling floors. He also said by the next conference call the company will have hired a new general merchandise manager in women’s to succeed Loretta Soffe, who quietly left in January, reflecting the difficulties.

Moderate chains are also challenged, like J.C. Penney Co. Inc., which is reinventing and has been plagued by basics that don’t sell. Gap Inc., which has been enduring multiyear turnaround efforts, showed some life this spring by capitalizing on the bright color trend but needs to find a new identity. Sears Holdings Corp. remains prosaic and requires a fashion overhaul. The Bon-Ton Stores Inc. is trying to find the right balance between updated and traditional. Wal-Mart Stores Inc. perennially has problems selling anything but basics in apparel. The Talbots Inc., which was just sold to private equity firm Sycamore Partners, thereby escaping a potential bankruptcy, needs to find a contemporary look to reclaim its mature clients that defected to Chico’s FAS and elsewhere. Amongst the younger set, Urban Outfitters Inc. and the nation’s slew of youth chains seem to be cannibalizing each other.

Retailers, consultants and designers queried over the past year said the apparel industry is beset by too much inventory, insufficient innovation, sameness and a failure to keep up with the changing lifestyles of women. Most apparel, they said, lacks the right stuff, which boils down to value, quality that lasts, and versatility, meaning looks that are equally suitable for work or dinner afterward, or as wearable for weekday or weekend occasions. It helps when products are tied to social, environmental or health awareness causes.

“There’s an enormous amount of distribution. Everyone is carrying apparel, including sporting goods chains and drugstores,” observed Janet Grove, who was chairman and ceo of Macy’s Merchandising Group from 1999 to 2009. “With the resurgence in dresses, sportswear gets diminished.  The biggest thing that affects the success of sportswear is to react quickly to selling. It’s the Zara model. The more structured careerwear has kind of gone away. All these things go through cycles.”

Fashion experts also said money once spent by consumers on ready-to-wear and sportswear is shifting to accessories and shoes, two categories increasingly associated with fashion, status and innovation. Dresses, too, for the last four years have been on a run because they’re simpler and easier to put on than suits or sportswear outfits, and it’s a look that can be easily enhanced with cardigans, status handbags and shoes. But last fall, over lunch at the start of New York Fashion Week, a veteran fashion director lamented the women’s fashion business, summing up what seems to be an industry malaise. Shopping the women’s market, said the fashion director, “is just not so much fun anymore. There’s not that much creativity.”

Allen Questrom, the stylish former chairman and ceo of Penney’s, Federated Department Stores Inc. and Barneys New York, echoed the sentiment. “I don’t see much out there that’s new and different. There’s a lot of stuff. If something is new and different, people will buy it. When the iPod came out, nobody asked about the price. They lined up to buy it.”

“I shopped all the major stores in New York last week. There was a ton of merchandise and it was singularly unimpressive,” said Gregor   Simmons, a New York-based buying consultant for retailers. “Contemporary apparel really drives the women’s business. It takes inspiration from designer, gives you fashion, and it’s not a luxury price point.” Otherwise, “a big chunk” of women’s apparel is in the doldrums. “There’s an overassortment of labels that tend to copy each other.”

“I think the preoccupation by many manufacturers and designers to cost-engineer to make up for big price increases in raw materials and labor has resulted in a reduction in innovation and creative product development,” observed Arnold Aronson, managing director of retail strategy at Kurt Salmon Associates. Sucking costs out of apparel production, more often the case in moderate merchandise rather than high-end apparel, leads to less detail, like fewer buttons, and less interest from consumers, Aronson said.

Some see women trading down by shopping stores like Forever 21, Uniqlo and Zara that provide alternatives and could be taking sales away from traditional department stores and older specialty chains. However, Express ceo Michael Weiss said, “I don’t believe women trade down in quality but do want to spend less. They might buy fewer Christian Louboutin shoes but will still buy them.”

In terms of square footage, women’s remains the most important category occupying more square footage than any other, though stores have been adding square footage in accessories and shoes. “There’s been a real shift to accessories for many women shoppers. They realize they can update a wardrobe through shoes and handbags. Shoes are becoming more and more distinctive in design and style,” said consultant Robert Burke.

“I still believe the only way to be successful in apparel is to be successful in women’s wear,” said Lisa Schultz, executive vice president of apparel design at Sears, taking a somewhat different take.

In an era of cross-shopping, with consumers not particularly loyal to one retail tier, the price spectrum of brands that continue to do well shows the challenge faced by department and specialty stores. At one end are labels like Balenciaga, Prada, Oscar de la Renta, Versace Collection, Armani Collezione and Akris Punto, while Milly, Lafayette 148, J. Crew, Diane von Furstenberg, Tory Burch, Valentino Red, Helmut Lang, Moschino Cheap & Chic, BluGirl Bluemarine and Eileen Fisher are among those doing well in contemporary. Then there are the standouts among the mass or casualwear end, including Lululemon, Land’s End, and Joe Fresh. The private-label business is growing, with stores like Macy’s, Belk and Saks increasing the presence of in-house brands.

“The customer is voting on newness,” said Kathy Bradley-Riley, senior vice president and general merchandise manager at Doneger Group. “Merchandise that is close to something she owns or is reminiscent of last year, she chooses to pass on.” But there are definitely bright spots, Bradley-Riley noted, citing printed sheer tops, dresses that are increasingly visible amid sportswear collections, shapes that seem new such as uneven hemlines and lace and crochet trims. “She is reacting to anything that is feminine, and buying a lot of modern fashion-right product. Traditional, classic has been more challenging.” Regardless of the shopper’s age, “she is definitely thinking younger.”

“The business in women’s rtw is more uneven than accessories, jewelry, men’s and home,” acknowledged William Taubman, chief operating officer of Taubman Centers Inc. “There are entire theories revolving around why this is happening, but I would say customers are reaching an age where they’re buying less clothing and lifestyles are changing.” For many retail tenants in the malls, core sku’s have been declining because of lifestyle changes, Taubman noted. “The suit used to be a basic, and when women were wearing suits, the handbag took a backseat. If you take the suit away and don’t have to wear it, the handbag can be more of a statement.

“It’s been really difficult for some operations to restructure their core offerings.”

WWD: Fendi's Baguette Takes Center Stage

WWD | MILES SOCHA

PARIS — It’s baaack — the original “It” bag, that is.

Fendi’s Baguette — the shoulder jewel that helped ignite the luxury handbag craze and propelled a bidding war for the Roman house — is back in the spotlight. Next month will see the launch of a 345-page Rizzoli tome chronicling the Baguette’s history, and limited editions of six of the bag’s most famous iterations are slated to arrive in Fendi boutiques worldwide, followed by a series of in-store events.

The initiatives, marking the bag’s 15th birthday, also signal a strategic thrust for the company, where new chairman and chief executive officer Pietro Beccari is putting Fendi’s iconic products at the forefront of development. The move echoes some of the work he did in his previous role as executive vice president at Louis Vuitton, where a Core Values ad campaign lit a flame under Vuitton’s historic monogram leather goods.

“In this time of a quick-changing, fast-paced world, it is important to remain close to one’s roots and values. The Baguette represents the perfect expression of this and of Fendi’s DNA,” Beccari told WWD in an exclusive interview, his first since joining Fendi in February. “It’s probably true that the Baguette was the bag that invented a fashion for bags and probably initiated the so-called ‘It’ bag phenomenon. But thanks to its unique shape that embodies the whole history of a maison, the Baguette has evolved into a timeless piece.”

Although Beccari declined to talk numbers, market sources estimate Fendi has already sold close to a million units of the slim-lined purse, small enough to tuck under the arm like a loaf of French bread. Fendi Baguette bags retail from about $1,000 up to $3,000 and more.

“It was very spontaneous. There was no marketing plan around this bag,” Silvia Venturini Fendi recalled about her 1997 invention, characterizing it as a reaction to minimalism. At the time, she recalled that handbags were mainly functional objects, frequently black and often “boring.”

“They were treated like accessories and very separate from fashion. You didn’t see many bags on the runway, only in the showrooms,” she said.

In 1999, LVMH Moët Hennessy Louis Vuitton and Prada teamed at the height of the luxury acquisitions boom to take a 51 percent stake in Fendi, valuing the company at $950 million. In 2001, LVMH bought Prada’s 25.5 percent holding for about $260 million and has subsequently bought out all minority shareholders.

Beccari noted that Fendi never stopped selling the Baguette, and has since turned out more than 1,000 versions of the style, in materials ranging from fur and sequins to crocodile skin. The reeditions include a denim style embroidered with flowers, and another pavéd in colorful embroideries and small mirrors. He credits the handbag’s diversity for its longevity.

“The fashion world is right now saturated and bombarded by real or presumed ‘It’ bags,” he said. “But for a long time, the Baguette has abolished the ‘fashionable’ handbag convention, the one that provided the same handbag for everyone, a coveted object to be flaunted in its uniformity.”

To be sure, the “It” bag phenomenon — exemplified by the Baguette — has waned in recent years, industry observers agreed.

Pamela Golbin, chief fashion curator of fashion and textiles at Les Arts Décoratifs in Paris, said the trend was a reaction to the minimalist fashions pioneered by Belgian designers and Austrian Helmut Lang as the millennium approached. “There was no decorative embellishment. It was the perfect time for accessories to become the central part of the wardrobe,” she explained.

Today, “there’s more of a balance between accessories and clothes,” she stressed, characterizing the handbag as a “very desirable object,” but without the hysteria that once engulfed it.

According to Robert Burke, president and ceo of consultancy Robert Burke Associates in New York, shoes supplanted handbags as an obsessional focus in recent years, possibly because they are less expensive amidst ongoing economic turmoil. In handbags, consumers have been gravitating toward quieter styles “with a little more longevity,” Burke said, noting that, “Hermès hasn’t suffered during the economic crisis.”

Burke stressed that there are pitfalls to “It” bags, principally the risk of demand withering once the market becomes saturated.

“When an ‘It’ runs out, it can come to a screeching halt.…Growing strategic businesses in prudent ways is probably where brands are leaning more today,” he said. “I would rather have a brand with a strong category of business rather than an ‘It.’”

Burke cited Celine, Givenchy and Valentino among European brands that have done a good job building a solid accessories business, and placing limits on distribution.

According to sources, top luxury players like Chanel tightly control quantities of their most in-demand handbags so as to not  endanger their coveted status.

For his part, Beccari stressed that, “Fendi wants to go for a less compulsive and feverish consumption.”

Venturini Fendi recalled that she approached the Baguette bag like the Roman house does its furs: with an eye to high craftsmanship, surprising techniques and being “a bit subversive.”

She attributes the success of the Baguette to multiple factors. Its short strap and diminutive size were counterintuitive to the functional, even ergonomic approach of what was on the market in the Nineties. The fact that it came with a multitude of embellishments was a welcome reprieve from the monotony and uniform nature of fashion then. “We were all dressed like black spiders,” Venturini Fendi recalled.

Scarcity helped, too.

“Fendi was small at the time. You couldn’t find the bag so easily and that made it precious. It started to become like a fever,” Venturini Fendi explained. “I always say: It was the right bag at the right moment.’”

The Baguette also foreshadowed the use of celebrities as marketing vehicles for leather goods, although Venturini Fendi insisted all of its famous devotees came calling, not the other way around. Among the first was Madonna, snapping up several Baguettes at the Rome shop. Then came a call from Patricia Field, who asked if she could borrow some for Sarah Jessica Parker’s new series, “Sex and the City.”

“It’s like a marketing case study, but really it wasn’t,” Venturini Fendi marveled.

Parker, among contributors to the Rizzoli tome, notes that Fendi was the first big design house to loan the show items for her character. “It really opened the floodgates and influenced the story line — especially Carrie’s habit of spending more on fashion than her home,” she writes. “Once Fendi loaned us items, everyone was more willing to do so, which helped us dramatically in conveying Carrie’s decadence.”

Asked if the “It” bag phenomenon still persists, Venturini Fendi said she detects an almost opposite trend.

“We have seen so many bags, so many companies that weren’t leather goods specialists making bags,” she said in an interview. “I think everyone was trying —sometimes too hard — to do ‘It’ bags.”

The consequence? “We want real bags again. We’re going back to leather,” said Venturini Fendi, noting this impulse yielded the Peekaboo bag, a discreet framed handbag she likes best in hand-stitched Selleria leather. “I think we are in a moment where we want simple or very, very high design…the most exquisite leather…or something surprising, colorful, crazy and different.”

To that end, Fendi in 2008 mounted a design competition in Asia called “Design Your Dream Baguette” and commissioned one-off versions from famous artists, including Jeff Koons, Damien Hirst and Richard Prince, that were auctioned off for charity.

“I’m not so obsessed by the next ‘It’ bag,” said Venturini Fendi. “I just want to follow the same path: doing things with freedom, and experimenting a lot. It’s the only good recipe.”

WWD: Bridget Foley's Diary: A New Day for Robert Lee Morris

WWD | BRIDGET FOLEY

Question: How did you find the Artwear artists, did they come to you?

Six-hundred-fifty uninterrupted words later, Robert Lee Morris has discussed judging talent; artistic patronage; rule-breaking; fearlessness; CFDA awards; the “artist mentality, breaking the rules, changing the way things are”; agents of change; Virginia Wolfe; “the Occupy Wall Street people, the Marc Jacobses, the Pamela Loves”; wayseers.org founder Garret John LoPorto; Bob Dylan; Albert Einstein, and “things [that] can happen in your relationship with the universe that says, ‘You can rest now, if you want to rest [or] take another stab at it from a different angle. Hey, how about we try making a real brand out of you, like a brand that would be a world brand?’”

The gift certain creative types have for articulating large truths as they perceive them and bringing them back to the merch is just one more thing to love about fashion, particularly when you buy into the genuineness of message, if not necessarily the message itself, in full.

Morris is genuine, and, some might say, out-there. The founder at the age of 23 of an artistic commune in Wisconsin, where he began developing the sculptural, sensual metalwork that would become his signature and make him a fashion-world sensation, speaks softly as he delivers heady thoughts. Spirituality, ancient influences, the natural world and futuristic musings shape both the person and his work, while dominating his conversation — even as he embarks on a new and critical phase of his brilliant, if up-and-down career, now in its fifth decade.

Before Alexis Bittar, before Eddie Borgo, Lisa Jenks, Pamela Love and even Tom Binns, Morris forged a major fashion path for jewelry while insisting on its core artistry; those who followed are indebted. Before the CFDA Incubator — for that matter, before the CFDA cared enough about young designers to incubate — Morris conceived, assembled and nurtured the artisinal jewelry gallery Artwear.

He is a true trailblazer whose renown and influence far exceed the scale of his business. Though never technically out of business, turnover has been tiny for years, including through the transition between owners; last July, Haskell Jewels bought the company from Clover II.

Today, market officially opens on a major relaunch, and Morris couldn’t be happier. He discussed his new situation recently at his new base, a compact three rooms situated in the Haskell headquarters at the end of a long corridor, past the showrooms for the company’s other jewelry brands — Miriam Haskell, M. Haskell, Betsey Johnson, Kenneth Cole and Simply Vera for Kohl’s. Though he moved in only last month, it looks and feels like a space long-occupied, filled with the treasures, results, books, tools and some of what some of us might call junk, of a lifetime of acquiring, scavaging and creating. When Morris packed up his longtime studio downtown, he originally wanted to take only the essentials and send the rest home, but the process proved overwhelming. Except for a serious edit of the books, it all came uptown, where it makes for daily rediscoveries.

Artifacts range from the childhood treasures of an Air Force brat to a small statue that was his father’s — Hercules wrestling an unidentified king, the latter, Morris points out, “yanking his…” Ancient-looking metalwork — a primary inspiration — is everywhere. Morris found the piece of a cow’s skeleton on his property in Sante Fe, N.M., and a sculpture of a boat was crafted years ago by a beloved professor-mentor. One room seems too visually overloaded to lend itself to the stated purpose of meditation room; a seating area was, he says, “made into this Zen garden place for me.” The most visually calm part of Morris’ fiefdom, the showroom, couldn’t belong to anyone else. On view: multiple CFDA and other awards sharing counter space with demonstrative display pieces including vertical metal tubing and signature female torso sculptures (“How can you get tired of the human body?” Morris muses), all foils for the kind of bold metal collars, cuffs and rings on which he built his reputation. These include versions of archival pieces as well as new designs. It all looks impressive and of the moment.

Morris’ assessment: “Perfect. My experience with contractors is that it takes a lot of back and forth before they get it, and the work [first] comes in lighter or crappy. This came in better than I could ever imagine. Look at this cuff! To me, it was like the universe [took me to] the right spot. Finally.”

That right spot is total ownership by Haskell, which bought all the company’s assets, including trademarks; SoHo store; department store and QVC businesses; archives, and any future new categories into which Morris might forge. That’s fine by Morris, who has not been the master of his own business destiny since 1998, when he sold his company to M. Fabrikant & Sons, which partnered with Clover Corp. but subsequently sold that firm in 2006. The purchaser of Clover Corp. then formed Clover II. The situation never panned out at the high end, though the QVC business has fared well. “We were not growing, we were shrinking, and my potential and my vision was bigger than that, and I stood really strong,” Morris says. “When I got here, I had a fire under my butt.”

Haskell principal Frank Fialkoff views Morris as a shining presence within his stable. “We feel we acquired a real, true American icon designer,” he says. The two go way back. In the mid-Seventies, Morris consulted on the Pierre Cardin collection at Swank and, later, on Karl Lagerfeld at Victoria Creations. In both situations, Fialkoff was president. He became interested in buying Robert Lee Morris after learning of its availability from his accountant. “It came to me, it was the opportunity I’d really been waiting for,” Fialkoff says. “To have a vehicle with a true designer, something I owned top to bottom so I could control it — distribution, licensing, everything, and really build a business.”

Under Haskell, the brand features an “iconic core” and three fashion collections per year. Much of the former is comprised of Morris’ highly recognizable classics; the latter, of themed groups. Prices have been adjusted downward, now $150 to $1,000 for most pieces, though there will be some more expensive one-offs. Morris attributes this adjustment to the fact that he will no longer work in through-the-roof silver but in plated brass finished with various patinas. “I’m giving away a secret,” he says, anticipating others to pick up on the color idea. “You can plate in green and in copper and in all these colors — warm bronze, tobacco, shades of black and steel — so you have a symphony of colors. They have weight and they’re flexible.” Of the launch fashion groups, French Cuff, based on overlapping points, was designed for Donna Karan when Morris rejoined her for a runway season a few years back and the collection was never produced. Galactic is an exploration of spheres and “the whole idea of futuristic mechanisms — futuristic armor,” he says.

Morris’ story is well-known, though one chapter gets the lion’s share of the attention. Most people think first of his now-legendary collaboration with Karan; his arresting, powerful metal jewelry and other hardware were as integral to her early aesthetic as the jersey “easy pieces.” Their relationship started at Anne Klein. When Karan went out on her own, she asked Morris to work with her. “So many people have said to me, ‘I was the first one to ever discover you when you and Donna did that collection [in 1985],” he recalls. “I always want to say, ‘I guess you missed the first 10 years or so.’” By the time he started with Karan, he’d won the Coty Award and worked with Calvin Klein, Geoffrey Beene and Kansai Yamamoto.

Morris calls his time with Donna Karan and other collaborations “euphoria.” (Calvin, he muses, was “a party.”) “Whenever you’re working with a group in a harmonious way, creating something all together is euphoric. So being with Donna for all those years was euphoric. Being with Lagerfeld for a brief period of time was euphoric. When it all works together in the end and you have to skin yourself alive to get there, it’s worth it.”

In the nine years with Karan, he recalls, “we made a very strong impact and statement in fashion and jewelry.” The mood changed in the early Nineties, as the company grew and the pressures of doing two collections increased. Morris was about to move to New Mexico and become a shaman — by that point, he’d studied shamanism for 13 years — but then met his wife, who had no interest in the Southwest, and they stayed put in New York. But more had changed than the pressure to produce; fashion jewelry became virtually nonexistent on the runways as heroin chic ruled. It was, Morris says, a dismal time. He credits Tom Ford with forcing its comeback during his Gucci heyday: “He showed Halston-esque, Perreti-esque, Donna Karan-esque, Robert Lee Morris-esque stuff, and suddenly there was this huge explosion. FIT came calling for a retrospective.”

A decade-plus later, in 2007, came the CFDA’s first Geoffrey Beene Lifetime Achievement Award and, the following year, Ashley and Mary-Kate Olsen asked him to do a collaboration for their Elizabeth and James line. The Olsen connection, he says, “exploded my name to a whole new group of people who didn’t have a clue who I was. I found myself getting reinvented over and over again.”

Morris clearly appreciates being appreciated. He points out that the Olsens credited him as a mentor in their 2007 book; similarly, Kris Ruhs, a former Artwear artist, cited Morris in his tome.

Through Artwear, Morris was in on the transformation of SoHo from its pre-gentrification condition of edgy-industrial grit to, first, a thriving artistic community and, then, a tourist-centric retail mecca. He opened the store on Madison in 1977 but moved it to lower Broadway, “a magical space,” the following year. There he spent Sunday mornings from 9 to 12 looking at the work of jewelry makers — even today, he insists he’s not a jewelry designer but an artist who makes jewelry — giving thumbs up or down as he saw fit, and supporting the best of the former, even when the jewelry didn’t sell. He notes that point of departure between traditional retail and genuine patronage, and the thought triggers his long commentary on what it means to be an agent of change. “It’s dawned on me in a very simple sense, what I’m doing all this time is that I’ve been an agent of change, and I’m attracted to other people who are agents of change, and they are the ones who are leading the country right now.”

That said, his most immediate anticipated change concerns serious growth of the business. Industry sources say volume could grow from next to nothing to $10 million within two years, after which, assuming strong design and proper nurturing, growth could skyrocket. “We’re reintroducing Robert,” Fialkoff says. “We’re giving him all the resources he needs: the manufacturing, the sourcing, the advertising, any help he might need in design, and to relaunch the jewelry in the finer stores globally. And then we’ll follow up with other products that make sense.” He mentions watches, possibly next year. Morris says there could eventually be handbags, eyewear, a fragrance.

The firm enlisted Robert Burke as a consultant for the launch and beyond, and is close to signing with a major advertising agency.

Morris feels confident the universe had taken him to the right place. “I’m a very big part of the fashion world,” he says. “But on the other side of me, I’m wild, free, antiestablishment. I have the passion of a kid still. I don’t want to spend time in another board meeting, because I’ve got work to do and I’ve got things in my head that want to come out in material form. I don’t want to waste my time going to too many trunk shows, because I’d rather be back here making.

“I know,” Morris continues, “this launch is going to be huge.”

WWD: Fashion's Big Issue: Succession Planning

WWD | MILES SOCHA

PARIS — Crafting succession plans for its creative departments is no doubt a smart strategy for any large fashion firm.

But the scale of today’s most powerful brands is increasingly insulating them from turbulence when designers depart — whether from death, retirement, flameout, poaching or otherwise.

Christian Dior — one of the hottest topics of this European fashion season — is a case in point.

The search for a successor to disgraced designer John Galliano has now clicked into its second year — a delay which so far has not proven an impediment to the French firm’s business momentum. Operating profits more than doubled last year as sales in Dior’s own stores advanced 28 percent.

Dior has remained mum on its intentions, insisting it will take all the time it needs to find the right designer.

RELATED STORY: Christian Dior RTW Fall 2012 >>

The house is believed to be mulling continuing with a team approach, possibly adding some young, up-and-coming talents. The studio is currently headed by longtime Galliano collaborator Bill Gaytten, who has earned encouraging reviews — and traction at retail — for subdued collections faithful to Dior’s iconic, Fifties-flavored glamour.

As reported in these columns, Dior has also conducted talks with hot young Parisian design Maxime Simoens, who made his debut Monday as the creative director at Leonard. Sources indicated Leonard and Simoens are likely to reveal a separation by mutual agreement.

While far less known and accomplished than other contenders for the Dior job — who have ranged from Marc Jacobs to Alber Elbaz — Simoens’ story is a compelling one with echoes of Yves Saint Laurent, who famously succeeded Christian Dior following the founder’s death in 1957.

Aside from a physical resemblance — a reed-thin physique and prominent eyeglasses — Simoens, 27, is a French wunderkind. The bio on his Web site notes that he became the first designer ever to be accepted as a member of the French Fashion Federation before having shown any of his collections.

Simoens has repeatedly denied to WWD that he has had any contact with Dior. 

Dior officials had no comment on Monday.

Observers agreed that decisions today about creative leadership are tied to the brand-related considerations, rather than a designer’s vision or personality.

“The overused term of brand building has become paramount,” said Robert Burke, president and chief executive officer of the consultancy Robert Burke Associates in New York. “The brands today more than ever are attuned to how to run a business.…No longer is it a one-man show — not with so much business at stake.”

“When a designer has managed to turn his/her company into a brand — with product pillars, codes and strong identity, combined with very efficient management — then succession remains a big issue, but at least there is less pressure on timing,” agreed Floriane de Saint Pierre, who runs an executive search and consulting firm in Paris. Besides the Galliano drama, the industry has been shaken by other unexpected designer shifts.

In 2010, there was the suicide at age 40 of Lee Alexander McQueen, and the sudden exit of Christophe Decarnin from Balmain following stress-induced health issues. Designer underlings succeeded both men: Sarah Burton and Olivier Rousteing, respectively.

More recently, the Jil Sander company persuaded the house founder to return once again, dislodging Raf Simons as creative director, despite almost universal acclaim during his seven-year stint.

Also, amid robust growth in sales and profitability last year at Yves Saint Laurent, Hedi Slimane is expected to succeed Stefano Pilati, who staged his swan-song show on Monday.

Succession is also a timely and highly sensitive subject given that a good number of major designers — including Giorgio Armani, Oscar de la Renta, Karl Lagerfeld, Krizia’s Mariuccia Mandelli, Vivienne Westwood and Ralph Lauren — continue working into their 70s.

It’s widely known in the industry that the “S” word is verboten at companies including Armani and Chanel. “And look what happened to Alber Elbaz and Jean-Paul Knott when they dared enter the Krizia lair,” said one European source, referring to short-lived stints by the Israeli-born and French designer, respectively, at the Milan-based house.

Executive search and other experts agreed that a visionary creative leader adds vital verve to a fashion brand, making succession planning crucial, while cautioning that transitioning to new design talent is a murky enterprise fraught with complications.

“We’ve all seen what’s happened when it’s the wrong designer,” Burke pointed out. “But that tends to happen when there’s less clarity about the direction of the brand or the label.”

He cited Valentino as an example. The Rome-based house endured a few turbulent years following the retirement of its founder in 2008, and before the current designers, Maria Grazia Chiuri and Pierpaolo Piccoli, found their footing. The duo, who had been in charge of accessories under the house founder, have been faithful to the founder’s vision and the brand’s values, treated with a lighter, fresher hand.

“It took not just designers. It took the ceo and all the people in the organization to take it in the right direction,” Burke said.

“I think it’s terribly dangerous to not have a succession plan,” stressed Vanessa Denza, the founder and owner of Denza, a London-based fashion recruitment agency.

She lamented that few designers deliberately cultivate and retain their eventual successors. In her view, Graeme Black was a “natural” to eventually take over from Armani. However, the Scottish-born designer exited Armani in 2001 after seven years, and has since done stints at Ferragamo, his own brand, and Boss Black women’s.

Denza applauded Diane von Furstenberg for last year recruiting Yvan Mispelaere, a seasoned talent with experience at Prada, Gucci, Louis Féraud and Chloé, to be her creative director. “She’s the president of the CFDA. She is a pragmatic woman,” Denza commented.

Observers agreed that securing design talent today is increasingly challenging for a multitude of reasons, including such contractual obligations as non-compete clauses that limit mobility.

Concetta Lanciaux, who runs a luxury advisory company based in Switzerland, noted that finding successors is more difficult today because senior “high-talent” designers prefer to continue working with the brands they have relaunched. Examples of this profile would include Elbaz at Lanvin and Nicolas Ghesquière at Balenciaga.

What’s more, the promising “next-generation” talents — including Christopher Kane, Alexander Wang and Damir Doma — have succeeded in building successful, sizable companies, making moonlighting for another brand a less urgent priority, and a less sought-after career path, Lanciaux said.

A pioneer who introduced management succession planning as the longtime head of human resources and synergies at LVMH Moët Hennessy Louis Vuitton until 2007, Lanciaux noted that the vagaries of creativity make it more challenging to anticipate what to do when a brand requires new design leadership.

“Designers, you have to leave them free to develop their creativity,” Lanciaux explained. “There is this affinity to the brand — this is paramount in creative functions, while management is transversal.”

Design studios can yield high-talent successors.

“Nobody could anticipate that Tom Ford would emerge at Gucci, or that Sarah Burton would emerge to the extent she has today,” Lanciaux said.

Yet she cautioned that not all second-in-command designers can rise to the challenge. “Next to these successful examples there are many unsuccessful ones,” she said. “Being a No. 2 for too long may freeze a designer in that profile.”

De Saint Pierre noted that France is the first country with a strong fashion industry to have dealt with major successions: Dior in the late Fifties, Chanel back in the Seventies, in addition to Givenchy and Yves Saint Laurent more recently.

Multiple observers noted also that once-strong houses can recede from prominence, with Emanuel Ungaro and Claude Montana frequently cited as examples of ill-handled successions.

According to de Saint Pierre, there is no rule for finding a suitable successor. “It just depends on talent and personality. One needs to be creative, to deal with an extremely high level of work and pressure, to have a modern inclusive management style and to fit with the brand,” she said. “Creative directors with true creative vision and true capacity to understand the newness of the 21st century are key to driving luxury global brands. “

Echoing other observers, Mary Gallagher, Paris-based associate for New York search firm Martens & Heads, noted that Dior is still performing very well even without a star designer.

Still, “I do think a figurehead helps sell the dream, especially a rare talent like Galliano,” she said. “I think the customer, unless it’s a die-hard fashionista like Daphne Guinness, does not need to have Lee [Alexander McQueen] or John [Galliano] actually sketch and drape her dress. The customer buys into the quality, design, cachet and reflected glory of a fashion house. And in most cases, it’s the studio that is proposing to the creative director, who then approves the sketch or collection.”

Observers noted that brands also require an up-front designer because the press, especially, often demands a name — and in some cases, a hero — to engender their ongoing interest.

Joelle de Montgolfier, director of Bain’s luxury group for EMEA (Europe, the Middle East and Africa), noted that human resources departments are typically engulfed in the immediate needs of business, and “not systematically forward looking.” Where succession planning exists, it rarely goes beyond management and the ceo position.

“It’s the common bottleneck: People are absorbed in daily execution,” de Montgolfier said, noting that’s especially the case during times of economic downturn and at a time when the “speed of change” in business life is accelerating.

What’s driving growth in luxury goods is the expansion of directly operated store networks and emerging markets, and creative concerns are rarely top of mind, she said. Still, “we are absolutely advocates of advance planning for future growth, and talent would be part of that,” she added.

De Montgolfier noted that many luxury brands have been around for generations, meaning they have survived the passing of their founders.

“Look at Hermès. They don’t have that famous designer in place and no one’s worrying about how they’re faring,” de Montgolfier said. “The weight of power is a bit more balanced with the rest of the organization. People have come to realize that the thrust of the company and its ability to grow goes beyond the creative talent,” she continued, mentioning the example of Ford, whose 2003 exit as creative director at Gucci Group did not impede its global advance.

Brands can become so significant in the marketplace that they live a “life of their own,” de Montgolfier said.

“It’s become a global industry and a very professional one,” she said. “It’s not about a person making an impression. It’s about a brand meant to survive across decades.”

WWD: L Capital to Shop for Mid-Market European Brands

WWD | ALEX WYNNE

PARIS — L Capital Management is going shopping. The LVMH Moët Hennessy Louis Vuitton-backed investment vehicle said Friday it had closed its third round of funding, with commitments in excess of 400 million euros, or $533 million at current exchange.

The firm, whose previous investments include the contemporary brand stable of Sandro, Maje and Claudie Pierlot, plans to buy into between 10 and 15 European midmarket lifestyle and retail brands, it said.

“They are already looking at two or three companies in Europe,” a spokesman for L Capital said, without revealing details.

There is speculation that L Capital has kicked the tires of U.K.-based retail jeweler Aurum, owner of the Mappin & Webb, Watches of Switzerland and Goldsmiths chains. Aurum was put up for sale by Landsbanki Islands hf, an Icelandic bank, last year.

The economic climate in Europe is likely to see certain family or designer-owned brands thinking twice before rejecting financing, where in the past they may have held on tight to their independence.

“European brands are particularly interesting right now, because of the financial situation. It’s not as easy for them to get funding from banks as it has been in the past,” said John Mitchell, president of retail and luxury goods consultancy Robert Burke Associates.

There are several high-end European brands that may be in the market for investment. Market sources cited Charvet, Christian Louboutin and Kiton as potential targets for investors.

But L Capital has made a habit of investing in midrange firms that have a strong retail footprint already, including Gant, Pepe Jeans and Hackett Group.

“L Capital invests in brands that are too small or do not have enough of a luxury positioning for LVMH,” HSBC analyst Antoine Belge commented.

“They are the champions of retail, and there are not many specialist retail [investment firms] out there,” noted Karine Ohana, owner of boutique M&A firm Ohana & Co.

In the midmarket segment, companies that may be seeking investors include French dancewear and shoemaker Repetto, lingerie maker La Perla and high-end linen brand Frette, according to sources. The latter two are owned by San Francisco-based JH Partners, which may be looking to make an exit.

L Capital is also likely to target brands that have strong international expansion potential, especially in emerging markets.

“Changing demographics, consumer behavior and emerging new market segments in mature economies in Europe and the U.S., an increasing wealthy middle class and emergence of important, powerful economies in China, India, South East Asia and South America create significant demand for lifestyle brands,” L Capital Management chairman Daniel Piette stated.

The investment firm’s sister fund, L Capital Asia, made two acquisitions in February. The first was a minority stake in Chinese contemporary clothing firm Trendy International Group, which owns the Ochirly brand, one of China’s leading domestic labels in the fast-fashion segment, as reported. The second is an 8 percent stake in Indian ethnicwear retailer Fabindia, which has a total of 148 stores in five markets.

WWD: Rebound for Glory

WWD | DAVID LIPKE

This year has been pivotal in the young life of the Michael Bastian business.

After ending his license relationship in November with the backer that first launched his line in 2006, Bastian took the fall 2011 season off to regroup and is now reintroducing the collection for spring. The aim of the transition is to lower prices in order to become more competitive at retail while growing the label into a bigger independent brand.

In an ironic—and well-timed—twist, Bastian took home the CFDA award for Menswear Designer of the Year in June, despite skipping the runway shows in February since he had no collection to show for fall. It had been the fifth consecutive CFDA nomination for the designer, who lost out the four previous times—once for the Swarovski Award for emerging men’s talent and three times for Menswear Designer of the Year.

“I had no expectations. I didn’t even get a new tuxedo for the night—I already had four summer tuxedos from before,” recalls Bastian, who edged out Simon Spurr and Patrik Ervell for the prize. “I didn’t write a speech. When I got up there, that was genuine shock.”

The win came at a fortuitous moment for Bastian, as the designer, by that time, was gearing up to begin selling his spring line to retailers, the first collection produced entirely by his newly independent company. Previously, the collection was manufactured and distributed under license by Solomeo, Italy-based Brunello Cucinelli, known for its luxurious cashmere knits and tailored clothing.

“We got the award and immediately flew to Milan to open up the new collection,” says Bastian. “I think it really helped put us on people’s radars again. We had appointments with accounts that hadn’t seen us before.”

For spring, Bastian has almost doubled sales from a year ago, with all of his old retail partners like Bergdorf Goodman, Barneys New York and Saks Fifth Avenue restocking the label and a number of new accounts picking up the line for the first time. “We’ve gotten a bunch of new stores from Europe and particularly Korea,” says Bastian. “Korea has really come to life—it feels like the new Japan.” Among those new accounts are Tomorrowland in Tokyo, Boon in Seoul, Beyman in Istanbul, Matches in London and Duchatel in Biarritz, France.

Bastian’s main goal in taking his business in-house was to reduce prices by 10 to 20 percent, to get them more in line with other brands in the designer space at retail. For the new spring ’12 season, the average retail price for a blazer is $1,769, shirts are $405, jeans are $413, shorts are $388 and outerwear is $1,534. By comparison, last spring blazers averaged $2,039, shirts were $475, jeans were $465, shorts were $438 and outerwear was $1,756.

However, not all prices came down this first season. For example, last spring dress pants averaged $461 and for this spring they are up to $545. Bastian will continue to work on finding ways to bring those prices down. His high prices previously kept distribution limited to just 20 high-end doors in the U.S. and 15 overseas.

“We’ve worked our way backwards on pricing and figured out where we need to be in each classification, even if we aren’t getting the margin you’d expect,” Bastian says.

The separation from Cucinelli was amicable—Bastian bought back the license for a fee and took back his patterns and sample archive—with the Italian company intent on concentrating on growth of its own signature brand. “In order for Michael to grow, he needs a partner that can invest all their time and energy into helping his brand really get to the next level,” said Brunello Cucinelli at the time. “Due to the increasing growth of Brunello Cucinelli in the past couple of years, I felt it was important for us to focus all our efforts nurturing our brand. I think Michael has a lot of potential going forward.”

While Bastian was growing up, that potential in the fashion industry was not immediately apparent. He was born in Lyons, N.Y., in 1965, to a homemaker mother and a father who was a high school history teacher. The first time he lived away from home was when he entered Babson College, where he majored in business with the goal of working on Wall Street. But as fate would have it, the first job offered to him was as an assistant buyer at the now-defunct Abraham & Strauss department store in Brooklyn. “I wasn’t very good at it, and was probably going to get fired. I started in junior knits and ended up in rugs and carpets, which was like God’s waiting room there. It was their way of telling me I needed to find a new job,” remembers Bastian, who scored a gig as an assistant at Avenue magazine in the nick of time.

After a short time in publishing, Bastian moved on to the marketing and public relations department of Sotheby’s for nine years. Later, he transitioned to Tiffany & Co., where he worked with celebrities like Susan Lucci and Phylicia Rashad to create tabletop installations for the flagship store.

Bastian went on to work in creative services at Polo Ralph Lauren before being recruited by a former colleague, Robert Burke, who had gone to Bergdorf Goodman as fashion director. Burke tapped Bastian as men’s fashion director at Bergdorf’s, even though Bastian had no previous direct experience in men’s. “Robert told me it was more about my eye, so I decided to give it a shot,” says Bastian.

At Bergdorf’s, Bastian helped remake the men’s store from a stuffy emporium for older shoppers to one with a hipper, more eclectic vision, while staying true to the store’s reputation for luxury and exclusivity. Among the brands he worked closely with was Cucinelli. When Bastian began conceiving the idea of starting his own line after five years at Bergdorf’s, Burke—a close mentor to Bastian who now runs his own consulting firm—suggested Cucinelli as an ideal partner.

Bastian, Burke and Cucinelli met in a hotel room in Florence to discuss the idea and sealed the deal with a handshake. “When I told my mom I was leaving Bergdorf Goodman, there was a long silence. Then she said, ‘Well, you can always move home if it doesn’t work out,’ ” says Bastian, with a laugh. “I was like, ‘Thank you, but that’s not going to happen.’ ”

When Bastian and Cucinelli launched the Michael Bastian collection for fall 2006, it was immediately picked up by Bergdorf’s, Saks Fifth Avenue, Neiman Marcus and Holt Renfrew. Bastian’s design sensibility hews to casual, preppy basics—with some tailored clothing thrown in—but with carefully wrought details and high-end fabrics, trimming and construction. “There was this big void in between Gap and the suits you wore to work. I wanted to put as much care into your shorts and shirts as others put into your suits,” Bastian explains. “Really what I do is elevated sportswear.”

For his return this spring, Bastian created a collection inspired by James Dean and the blue jeans, oversize sweaters, chinos and glasses that are part of the screen star’s iconography. “I’ve been keeping this inspiration in my back pocket for when I really needed a good collection,” says the designer, who made sure to not take the theme too literally but instead modernized the fits and reinterpreted the looks to fit into his own aesthetic. “James Dean represented such a big chunk of classic American style. We have some Western stuff from Giant, and the cool jeans and T-shirts and knits from Rebel Without a Cause. We re-created his horn-rim glasses—he had really bad eyesight.”

One pair of chinos was inspired by a look from East of Eden, with a double set of belt loops. The collection also includes a singlet, in a nod to Dean’s high school days as a wrestler.

Producing the new collection was no small feat. Leaving the Cucinelli fold has meant Bastian and his employees—you can count them on one hand—have had to develop their own infrastructure for design, production, sales and deliveries. “It’s been a steep learning curve,” Bastian admits. “I had it very easy before, in a way. I would go to one factory with Brunello Cucinelli, and everything was very centralized and they made a very beautiful product. But the downside was that I had no control over pricing or distribution. We’re taking the necessary steps to turn this into a real business and not just make beautiful clothes nobody can afford.”

Instead of relying on that single factory in the Umbria region of Italy, Bastian now produces in 12 different plants throughout Italy and Portugal, which he had to seek out and visit. The designer opened a showroom in Milan to sell to European and Asian retailers and set up warehouse distribution in both Milan and Brewster, N.Y.

In Milan, Bastian works with Christine Ellis Associates to handle sales, while in New York he has set up his first office and showroom at 210 Eleventh Avenue, the same building in which Thom Browne, Simon Spurr and Adam Kimmel are located. Prior to opening his new headquarters in December—encompassing a cozy, inviting atelier and showroom—Bastian worked out of his West Village apartment. Samples were kept in the Union Square apartment of Eugenia Gonzalez Ruiz-Olloqui, who heads up Bastian’s public relations and serves as his constant sounding board and adviser in the business. “I don’t think people realized how bare-bones we were,” says Bastian.

Key to Bastian’s newfound independence and the establishment of his own company is the co-branded collection he designs for Gant, the Sweden-based sportswear brand that was originally founded in New Haven, Conn., in 1949. Launched in fall 2010, the Gant by Michael Bastian line brings in the lion’s share of company revenues for Bastian. The company expects to post total revenue this year of about $4 million, including sales of the Michael Bastian collection and fees from the Gant by Michael Bastian collaboration. “I put very little pressure on the designer line in terms of profitability and sales. Gant really takes a lot of financial pressure off,” Bastian explains. “The runway collection really drives the desire and communicates the point of view of the Michael Bastian brand—and I don’t want to crush that butterfly by strapping a financial weight to it.”

The Gant by Michael Bastian range is younger and markedly less expensive than the Michael Bastian collection, which uses more luxurious fabrics, is more minimal and involves fewer embellishments. A Michael Bastian shirt is highly engineered, for example, with vents in the back, darts to shape the silhouette and Neapolitan shoulders. A Gant by Michael Bastian shirt is a bit looser, shorter in length, with a classic pleat in the back.

The line is priced about 25 percent higher than regular Gant merchandise. It is sold in 30 countries, including more than 100 stores in the U.S. and 150 stores internationally. Retailers include Barneys New York, Bloomingdale’s, Saks Fifth Avenue, Neiman Marcus, Nordstrom, Ron Herman and Scoop, in addition to Gant’s own stores.

“We are growing the line at 20 to 30 percent per season,” says Ari Hoffman, chief executive officer of Gant USA, who was the architect of the deal in 2009. “We originally launched it as sort of a branding exercise, but it’s grown into a really nice business for us.”

Last year, Gant launched a women’s collection with Michael Bastian, which is sold in Gant stores only, and this year it introduced sunglasses and watches under the partnership.

Under his own flagship brand, Bastian launched an eyewear range earlier this year with his first licensee, Randolph Engineering, under the Michael Bastian x Randolph Engineering moniker. In February, Bastian became a finalist in the GQ Best New Designers in America competition and designed a khaki look for Dockers as part of the program. The designs are on sale at Bloomingdale’s in September and on Dockers.com as of October. Bastian has also designed flip-flops for Havaianas and, going forward, is seeking license partners for underwear, fragrance and perhaps even a diffusion label that would sit in between the designer collection and the Gant range.

Not bad for a former rug salesman in Brooklyn.

WWD: Can Small Men's Brands Build Big Businesses?

WWD | JOCELYN ANDERSON

When Rupert Sanderson decided to step outside his comfort zone of evening heels and make saddle shoes for women, he had no idea that would become his first men's style.

The British footwear designer viewed the 2009 debut of his Saddled O's as a sociological experiment: Give a free pair to 50 of the most influential women in the U.K. art world and monitor the result. He hoped to create a trend among a stylish group, but he got a lot more than that.

"Suddenly, all these women were wearing them at once," said Sanderson. "But one of the effects it had was that men wanted a pair as well. So we started making them in men's sizes."

While Sanderson turned to the men's market as more of a novelty, other high-end designers are following suit by offering small footwear collections for guys. United Nude, Yigal Azrouël, Shipley & Halmos and Bespoken have all launched men's shoes this year. Gianvito Rossi will debut two sneakers and a loafer for spring '12.

Renewed life in the men's footwear market provides fertile ground for such introductions. But what's the point of launching a new category in such small numbers? The reasons, Footwear News discovered, are as varied as the collections. But in all cases it's about more than money.

Sanderson said he is meeting a demand. Others said they are expressing themselves artistically, realizing a dream and carefully laying the groundwork for a larger offering.

"[We don't have] too many pieces since we're just testing the men's market," said Rem D. Koolhaas, creative director and co-founder of United Nude, which launched three men's styles for spring '11 but has increased each season, with six available for spring '12. "We make shoes that we would like to wear."

The category addition, however small, is also a way to expand a brand's identity, to be not just a men's apparel label or just a women's shoe company.

Shipley & Halmos, for example, primarily a men's clothing line that started in 2008, launched three men's shoe styles for fall '11 to complete its customers' wardrobes. A fuller accessories line is planned for spring '12.

"We wanted to keep [the shoes] focused so the production numbers were not 20 [styles] right off the bat," said Jeff Halmos, co-owner of the label. "I don't think we could have supported something like that from a production standpoint."

Similarly, men's apparel label Bespoken has expanded steadily since its founding in 2008. The owners had worked with Grenson for runway shows, but they felt a fall '11 line of three shoe styles would complement the brand's menswear, said co-owner Paul Goncalves. Bespoken turned to U.K.-based firm Kurt Geiger to develop the shoes and then landed footwear accounts with Harrods, Selfridges and Liberty. The brand is now seeking U.S. retailers.

But Goncalves recognizes such a small launch comes with a few issues.

"The challenge in footwear is that in a department store, it's going to sit separately from the [apparel]," said Goncalves. "And we're still in the midst of establishing ourselves and generating awareness for the brand."

Such trials are the same for any brand that chooses to start small, and indeed, experts said mini collections can be both helpful and harmful to building a brand's footwear profile. If designers have the "it" shoe of the season, ample choice won't matter. And when high-profile retailers pick up even just one style, there is a prestige factor that can be very beneficial. But if buyers want more options, that's a different story.

"If retailers want to edit at all, it can be challenging," said Robert Burke, president and CEO of luxury consulting firm Robert Burke Associates. "It becomes more difficult than if they have four or five styles and you can make an assortment with multiple colors. You can actually sink your teeth into it and start to have a business."

And, in general, persuading retailers to buy something new can be tough, especially with a small, expensive line in this economic climate. "At the end of the day, it's all about margin: high sell-throughs and low markdowns," said Monique Umeh from trend forecasting firm Stylesight. "A lot of retailers are afraid of the liability. That's really going to be the challenge with smaller groupings."

Celebrity stylist Maryam Malakpour, who makes Newbark shoes with her sister, Marjan, has learned a lot about placement in the two years since the line debuted. While a men's offering has always been part of the brand, the duo felt they could only successfully market and sell women's product from the outset.

"We had to really concentrate on one [category] first to get ourselves launched and understood," said Maryam Malakpour.

The brand's slipper-like line started with one slip-on style on Net-a-porter.com and is also sold at boutiques such as Blue & Cream. The designers have added a split-sole style for men and women, and a loafer and boot are now available for women. Malakpour said she would like to make those two styles for men next.

"Being a small company that is very artisan and handmade, we are taking the growth and movements very slowly so we can make sure we aren't overdoing it," she said. "The way we've been moving with [men's shoes] has been successful, but in a small way."

To be sure, measured success is often good enough as these brands get started with footwear. Credibility in the market and celebrity fans may be just as valuable as wide profit margins.

"We always take great pride in working with great mills — we don't go outside Europe for manufacturing — so it's not like we are dealing with significantly high profit margins," said Bespoken's Goncalves. "It's more about maintaining the integrity of the brand and building on the foundation we've created so far."

And experts said designers shouldn't expect that launching men's shoes in such small numbers will be very lucrative at first anyway. In fact, with many of the lines made in Italy, production costs are high, and sell-throughs aren't guaranteed.

"In the beginning, they know they are going to take a loss until they can start establishing the brand and eventually grow the brand," said Stylesight's Umeh. "But it is the right thing to start small."

That's especially true for men, said designers. Knowing that male and female customers shop differently, most designers said they don't believe men even need the level of choice offered in the women's category.

Gianvito Rossi took that into account when planning his men's launch for spring '12. Rossi, son of Sergio Rossi, bowed his namesake women's label for spring '07, but when it came to his men's collection, he decided less is more.

"It's only three styles because it's intended as a [classic selection]. And in men's, in the end, the styles are not so many," said Rossi. "We are much more restricted in our minds than women are with shoes."

Shipley & Halmos also focused on basics for its shoe line, which will grow to four styles for spring '12.

"We've got a few staples in our apparel collection that we've been running for several seasons in a row, and we want to try to build a couple of [staples] into the shoe category as well," said Halmos. "The oxford, [for instance], will carry over for spring."

Such a selling strategy takes some of the risk out of a tough retail environment. Burke said this is a model that could become more popular going forward — and that's a positive thing.

"It's good because it's allowing brands to experiment in new product categories, and it gives retailers something to buy. It diversifies the offering and gets the name out in a new and creative way," said Burke. "And it's good to see the men's shoe assortment not being dominated by the established designers and companies."

WWD: Robert Burke Associates Expands to London, L.A.

WWD | MARC KARIMZADEH

NEW YORK — Robert Burke Associates, founded in New York in 2006, is expanding.

In May, Robert Burke, president and chief executive officer of the consultancy, opened in London and Los Angeles to better serve emerging markets and the growing interest of entertainment personalities in fashion.

The London office will serve designers, brands, retailers, retail development groups and investment bankers in Europe and the Middle East. “We are seeing a lot of activity from private equity groups looking to invest in fashion brands there,” Burke said. “In London, a fair amount of brands also want to enter the U.S. market and we can help them with it.”

Florence Hampson Bellon, whom Burke worked with when she was in the London buying office for Neiman Marcus and Bergdorf Goodman and he was Bergdorf’s senior vice president of fashion and public relations, is running the London office.

The Los Angeles branch, led by Tracy Chow, who previously worked for Burke in New York, primarily focuses on celebrities and other personalities looking to translate their profile into brands. The office will help them develop brand concepts, product lines and brand extensions with collaborations and licensing agreements. Clients in that arena so far include Daphne Guinness, Andre 3000 and Carmindy.

“We are seeing so many personalities and celebrities who want to be a brand, and while that has been somewhat haphazard for many in the past, we are now available to put together a brand strategy for individuals,” Burke said.

He said international markets continue to gain in importance for luxury firms, citing countries from the former Soviet Union, including Kazakhstan, where the company is working with Saks Fifth Avenue on its first location in the region; Azerbaijan, and Poland as newer opportunities. The BRIC countries, he added, continued to represent many opportunities for fashion houses, but each comes with its own set of nuances that needs to be addressed.

“The business has changed over the past five-and-a-half years with the growth of emerging markets,” Burke said. “Some people think that with the BRIC countries, you enter and make $100 million instantly, but each one is different. In China, the luxury consumer is still being educated, and the importance of marketing and a brand presence is critical there. What works in the U.S. does not mean it automatically works in China. Brazil has its own specific challenges because of taxes and duties, but that consumer is becoming much more global. Brazil has an emerging middle class that didn’t exist as such before.”