Latest from Business of Fashion
Business of Fashion
5 hours ago
- Business
- Business of Fashion
Hoka-Parent Deckers Beats Quarterly Estimates Boosted by Demand in Europe, China
Deckers Outdoor topped estimates for first-quarter results on Thursday, fuelled by robust demand in international markets such as Europe and China for its Hoka and UGG brands, sending shares of the footwear maker up about 9 percent in extended trading. Deckers has been rapidly expanding its international presence, in an effort to counter choppy US demand after several years of strong growth. Similar to rivals such as Nike and Skechers, Deckers relies heavily on Vietnam as a key manufacturing hub. Deckers now expects a $185 million rise in costs of goods sold in fiscal 2026, up from $150 million it forecast in May, taking into account a 20 percent tariff on Vietnam, company executives said on a post-earnings call. It plans to mitigate some costs through strategic product price increases over the remainder of the year, after taking some price hikes earlier this month. The company had scrapped its annual forecast in May in response to macroeconomic uncertainties. Its stock has lost 48 percent of its value this year. International net sales surged 49.7 percent in the quarter, more than offsetting a 2.8 percent dip in domestic sales. 'There's a big opportunity outside of US since Hoka and UGG are underpenetrated compared to Nike, Adidas, and others. This is one of the big opportunities for Hoka to expand its market,' Morningstar analyst David Swartz said. Deckers expects second-quarter net sales in the range of $1.38 billion to $1.42 billion, the mid-point of which is in line with analysts' estimate of $1.40 billion, according to data compiled by LSEG. Earnings per share is expected to be in the range of $1.50 to $1.55 in the quarter, while analysts were expecting a profit of $1.55 per share. First-quarter net sales rose 16.9 percent to $964.5 million, beating analysts' average estimate of $901.1 million. It logged earnings per share of 93 cents, surpassing estimates of 68 cents. By Savyata Mishra; Editor: Alan Barona Learn more: Exclusive: Inside Hoka's Fashion Ambitions In a new collaboration with Marni, the running brand known for its chunky, cushioned midsoles is looking to catch the eye of a new fashion audience — without compromising the performance DNA that's made it an emerging sneaker powerhouse.
Business of Fashion
10 hours ago
- Business
- Business of Fashion
Luxury's Gulf Between Winners and Losers Is Widening
For Europe's luxury stocks, this earnings season will hammer home the widening gulf between the winners and the losers. The industry got off to a promising start with robust earnings from British trenchcoat maker Burberry Group Plc that sent its stock up as much as 9 percent and better-than-expected sales at Cartier owner Richemont. But upcoming reports from LVMH Moët Hennessy Louis Vuitton SE, Kering SA and Salvatore Ferragamo SpA look less promising. If sales at these companies undershoot already weak forecasts, the shares may extend this year's drop that has wiped out market value of as much as €175 billion ($205 billion). While the outlook for luxury shares is crucial for Europe's stalled equity market rally given the weight of these companies, investors have to be more selective about the stocks they pick. This gap has been widening as a web of ailing China demand, varying brand perception, a weaker dollar and high valuations impacts these companies differently. The season will be critical to determining the outperformers and laggards, with analysts expecting very wide revenue growth outcomes. 'It's not going to be one-tide-lifts-all-boats for the sector,' said Stefan-Guenter Bauknecht, a senior portfolio manager at DWS. 'It really depends on the category and how the brand is perceived in the category. And the VIP certainly helps.' One striking example of the sector's divide is LVMH versus French peer Hermès International SCA. Sales at LVMH's key Fashion & Leather Goods division are expected to have dropped 7.8 percent in the second quarter, according to analyst estimates. The company reports after the bell on Thursday. Hermes, which has been an example of how companies can thrive on selling the highest-end items, is expected to report revenue growth of 12 percent at its leather goods division. Its results are due on July 30. In the case of the Louis Vuitton and Tiffany & Co. owner, the stock has lost roughly half of its value over the past two years, losing its crown of Europe's biggest stock, with investors increasingly worried about an unprecedented demand slump in China. Hermes shares, on the other hand, are weathering the broader industry pullback. After a 160 percent jump since the end of 2020, the stock is little changed this year versus a 7 percent drop in Goldman Sachs Group Inc.'s basket of luxury shares. In the current economic context, pricing power is critical, said Helen Jewell, Europe, Middle East and Africa chief investment officer at BlackRock Fundamental Equities. 'The challenge for investors has been some of the names that we thought had greater brand strength, and it turned out they actually didn't,' she said, adding that there could be some buying opportunities after the selloff in the sector 'but you do need to be selective.' For the sector as a whole, the difference is stark between now and the 2021 to 2023 boom times, when investors were rushing to snap up any European luxury shares as they reaped the profits from shoppers on a post-pandemic spending spree. But with China's sluggish economy putting a dent into demand for pricey handbags and watches, investors are buying shares in the brands that can captivate consumers and selling the ones that can't. Among this year's winners, shares in Burberry have surged more than 30 percent. The UK fashion brand is gaining traction with its turnaround plan and winning new customers through its outwear push. To some investors, luxury valuations are still too high overall even after this year's plunge in a number of stocks. The industry has an average forward price-earnings ratio of 27, according to data compiled by Bloomberg. That's a near 85 percent premium to the broader market and above the long-term premium from the past 10 years. 'This is a sector that is fully exposed to tariffs and fully exposed to the weaker dollar,' said Roland Kaloyan, head of European equity strategy at Societe Generale SA. 'It's going to be quite difficult, so I stick to my underweight.' By Sagarika Jaisinghani, Michael Msika, Julien Ponthus Learn more: Opinion: When Will Luxury's Perfect Storm Pass? The luxury sector is probably closer to the end of the storm than the beginning, but many valuations are pricing in the worst, writes Andrea Felsted.
Business of Fashion
a day ago
- Business
- Business of Fashion
The Executive Briefing: Reading the Tariff Tea Leaves
Tariffs Have Retailers Bracing for a Potentially Grim Year The story: Major US retailers including Macy's, Victoria's Secret, Abercrombie & Fitch and Lululemon reported strong holiday sales. But they also said the year was off to a weak start. As they contemplate whether to pass on the cost of tariffs to consumers, many downgraded their outlook for the remainder of 2025, sparking a selloff in retail stocks. It's not all in their heads: Consumer sentiment has also nosedived, with the Conference Board's closely watched index hitting a 12-year low last week. Tariffs are largely to blame, fuelling renewed inflation fears (even though few brands have actually raised prices, predictions of hikes to come from CEOs, economists and investors are percolating into consumers' consciousness). Not everyone agrees: 'We have to distinguish between feelings and reality,' said BMO Capital Markets analyst Simeon Siegel. 'It's not to say one can't turn into the other, but it hasn't yet. The idea that consumer sentiment is a survey and doesn't always align with retail sales.' Indeed, a similarly grim outlook this time last year turned out to mostly be a false alarm. Pain now, gains later: In our executive memo on tariffs, experts recommend keeping inventory 'lean and mean,' eating the extra cost – for a little while at least – and investing in high-quality products and experiences that help brands stand out at any price point. Materials and product features can be tinkered with to reduce duties at the border. In other words, the only way to win a tariff-induced price war is not to play. ADVERTISEMENT AI Marketing Campaigns Are Here. Not Everyone Is Happy About It The story: Brands have quietly been inserting AI models and art into their ads, social accounts and websites for a couple years now. But this month, that practice broke out into the open. The Estée Lauder Companies is partnering with Adobe to use its AI platform, Firefly, to create and edit imagery. H&M will use digital twins of its models in generated photoshoots that appear indistinguishable from the real thing. And Sybille de Saint Louvent's fake AI-generated campaigns are starting to get attention from the luxury brands she's mimicking. Heading off criticism: The business case for AI is obvious: why send a model to Fiji when you can insert their digital likeness into a generated image of an island paradise? However, it's telling that both Estée Lauder and H&M emphasised that they took great pains to incorporate AI in a way they believe will minimise potential harm. Estée Lauder is only using AI to generate images of objects, not people. Models will own the rights to their AI doppelgangers created by H&M. Good luck with that: It's still a tough sell. BoF's Instagram post on Sybille de Saint Louvent received over 1,000 comments, the vast majority negative. In 2023, Levi's quickly backed off plans to use AI models. Makeup artists, stylists and others who work on photoshoots were quick to point out that H&M's plan will do little to help them if AI puts them out of work. Maybe it's inevitable: The industry isn't exactly ignoring all those Instagram comments, but it clearly sees itself moving towards a world where AI and human models co-exist. Fast fashion is well on its way to embracing its generative future; perhaps then real humans shot by real photographers will become another luxury signifier. Succeeding in China Is Harder in 2025, but Not Impossible The story: BoF's latest case study goes deep on how Western brands succeed in China today. The old days of rapidly expanding demand and even middling American brands enjoying a certain cachet with Chinese consumers are long gone. Who's Winning: At first glance it's hard to draw links between Lemaire's quiet luxury, Lululemon's yoga pants, Hermès' craftsmanship and, well, Crocs. Flood the zone: Instead of diving in with Tmall, the most successful brands in China are often establishing a presence through Xiaohongshu and Douyin first. But establishing real world storefronts alongside digital ones is proving a key differentiator. That's true for big brands like Ralph Lauren, but smaller labels like France's American Vintage have found success with their own stores too. Second-tier cities, historically ignored by many Western brands, are particularly promising. Don't coast on reputation: Brands can no longer count on selling the same products in Shanghai that they do in Paris or New York (or worse, using China as a dumping ground for whatever fails to move in their home market). More than one-third of Luluemon's assortment in China is modified in some way to specifically appeal to shoppers there, including plenty of items made exclusively for the Chinese market. The same is true behind the scenes: Crocs struggled in China for years with a traditional strategy built around joint ventures with retailers. Once it built its own team on the ground, armed with the same data and insights used in other markets, sales took off. ADVERTISEMENT Jolting Luxury Out of Its Creative and Commercial Rut The story: This year may feature more designer debuts at major brands than any in the history of modern luxury. Why? Because the sector is in crisis, and it's not just a macroeconomic issue. With prices sky-high, many believe big luxury's value proposition is broken and key players are betting on new creative energy to boost desirability and kickstart growth cycles. More than musical chairs: Speculating about who will land where has been fun. But now that most of the big jobs are taken, industry watchers are wondering, when global luxury sales fell 2 percent last year, and consumers seem simultaneously overwhelmed by the amount of noise brands emit, and underwhelmed by what they sell, how much any one designer can do. Veblen goods no more: The term refers to items that become more desirable the higher their price. Most luxury brands flattered themselves that they fell in that category as they doubled or even tripled prices on their most coveted products. But in doing so they turned an aspirational dream into an impossible one for most consumers. Higher prices and the ubiquity of the biggest brands have also given some teeth to the gripe that luxury goods aren't worth the money. Shoppers get less of a thrill owning a $5,000 bag if they know it was mass produced, and potentially in a sweatshop. The Loewe method: It's no coincidence Jonathan Anderson is headed to one of fashion's biggest brands. His method of building buzz around Loewe – one tomato-scented candle and Luca Guadagnino film at a time – is widely seen as a template for the industry to escape its current treadmill of cookie-cutter runway shows and ad campaigns. It's an example of turning a luxury brand into a 'cultural brand,' a badge that says you have currency because you've navigated a cultural maze, and not just that you're rich enough to afford the clothes. Fashion's Innovators The Story: In a sea of sameness, designers who dare to try something different can still make a splash – even if what they're creating is as simple as a sweatshirt. In a series of stories this month, BoF took a look at how designers and brands are rethinking three categories that haven't seen much innovation of late: handbags, dress shirts and, yes, sweatshirts. Innovation with purpose: In the high stakes game of handbags, which drive the lion's share of profits at plenty of luxury brands, finding the balance between trying something new and staying true to a brand's codes is key. That's why the Alaïa Teckel became a sensation last year, its elongated shape standing out amid all the totes and helping establish Pieter Mulier's ultra-femme, yet modern vision for the brand. A style evolution: It's no coincidence that dress shirts are making a comeback just as companies are forcing more workers back to the office. But like so many other things, the white collar uniform was changed by the pandemic. Dress shirts now prioritise comfort, coming in oversize fits that appeal to Gen Z, or taking a page from the activewear boom's obsession with fabric innovation. About those sweatshirts: Speaking of Gen Z, they're setting alarms and lining up outside pop-ups to snag limited edition sweatshirts. The phenomenon is almost entirely a creation of TikTok, where popular creators have launched their own brands, which they flog ceaselessly to followers. Here the innovation is mostly marketing. If they want staying power they'll need to find ways to differentiate their product. Otherwise they may end up like the countless luggage brands struggling to sell slickly branded hardshell suitcases even amid an unprecedented travel boom.
Business of Fashion
2 days ago
- Business
- Business of Fashion
Opinion: The Big Luxury Simulation Is Over
In 'Simulacra and Simulation' (1981), the late French philosopher Jean Baudrillard posited that we no longer live in a directly experienced reality, but in a 'hyperreality': a world so heavily mediated by images that they are more powerful in shaping the way we live our daily lives than the real world. Four decades later, anyone on Instagram understands this intuitively. Our decisions — from what we buy to who we befriend — are shaped by imagery. In the luxury industry, an object's symbolic value was always more important than its material value. But the age of the hyperreal pushed this logic to an extreme. Whereas luxury once meant beautifully crafted objects, it became about storytelling. Instead of luxury goods, brands retooled to deliver luxury narratives. And as long as their products signalled luxury, they realised they could cut corners on quality to boost margins and meet growing demand without alienating shoppers. This strategy has proved stunningly successful, especially with people who grew up in a world of simulacra, conditioned to consume markers of goods more than the goods themselves. As Dana Thomas noted in 'Deluxe: How Luxury Lost Its Luster' (2007), 'Consumers don't buy luxury branded items for what they are, but for what they represent.' On social media as in the street, what mattered were symbols of luxury. But fast-forward to the present and it appears this logic has its limits. That the post-Covid luxury boom has given way to a sharp downturn in demand is not simply a reflection of macroeconomic pressures. A combination of soaring prices and declining quality has left many consumers feeling their intelligence is being insulted, which suggests symbols of luxury still need to be anchored in tangible value to command steep sums. Last year, when Dior was taken to task for the use of a sweatshop labour in its supply chain, Italian prosecutors alleged the brand paid little more than €50 euros a piece for bags which retailed for more than €2500 each. Now LVMH stablemate Loro Piana has been pulled up by the same probe. Such stories make the luxury industry look like a scam selling empty signifiers to suckers. It's no surprise that sales of superfakes — low-cost, high-fidelity replicas mostly made in China and sold directly to customers via WhatsApp groups and social media — have rocketed, driven by a new attitude to counterfeits. Whereas owning a fake once came with a sense of shame, now it's seen as a savvy move. Why risk feeling stupid for buying subpar, overpriced goods, when you can game the system? It's not that people no longer want the symbols of luxury. But those symbols have to be grounded in great product to be believable. And if the entire luxury industry has become a simulacrum, where the symbol is hollow, there is little difference between the real and its copy. It's well known what one gets when one buys a superfake. It's more interesting to consider what one doesn't get: provenance. But if few customers seem to care, it's because luxury's narratives of origin and superior craftsmanship no longer seem credible. We have reached the last stop on the simulacrum express. Can the industry find its way back to the land of the real? Making actual luxury goods and not just telling stories about making luxury goods would be a good place to start. The views expressed in Opinion pieces are those of the author and do not necessarily reflect the views of The Business of Fashion. How to submit an Opinion piece: The Business of Fashion accepts opinion articles on a wide range of topics. The suggested length is 700-1000 words, but submissions of any length within reason will be considered. All submissions must be original and exclusive to BoF. Submissions may be sent to opinion@ Please include 'Opinion |' in the subject line and be sure to substantiate all assertions. Given the volume of submissions we receive, we regret that we are unable to respond in the event that an article is not selected for publication.
Business of Fashion
3 days ago
- Business
- Business of Fashion
TSG Consumer Partners Acquires Phlur
On Tuesday, private equity firm TSG Consumer Partners announced a definitive agreement to acquire indie fragrance label Phlur, The Business of Beauty can exclusively confirm. A value for the deal was not disclosed; the brand is expected to generate over $150 million in retail sales this year, according to chief executive Elizabeth Ashmun. The masstige line was relaunched in February 2022 by brand accelerator The Center, founded by Ben Bennett, and influencer Chriselle Lim. It has become known for mood-centered scents like the best-selling Missing Person, which was inspired by Lim's divorce and a longing for an ex lover. 'I was in a very broken place at the time, and I couldn't find any inspiration outside of my deep pain … it was different from the typical fragrance, where they put everything on a silver platter and they make everything beautiful,' said Lim. 'What we were able to offer with Phlur was really something different that hasn't been done in fragrance, which was rawness and vulnerability and transparency.' Phlur's evocative fragrances and marketing has resonated not only with scent-obsessed Gen-Z and Millennial customers but also choosy shoppers looking for elevated products. Ashmun, who joined the brand in 2024, said that 50 percent of its customers are net new to the category. Phlur is reportedly the number two growth brand at Sephora US and Canada, and jumped from the top 20 fine fragrances to top 10 in the last year. At Space NK, it has broken into the retailer's top 10 overall lines and has seen triple-digit growth. With the acquisition, TSG Consumer pushes further into the influencer-founded space, a tricky but recently lucrative sector of the beauty industry. Last year, it invested in skincare and makeup line Summer Fridays, founded by influencers Marianna Hewitt and Lauren Ireland. It previously held a stake in Huda Kattan's Huda Beauty. Prior TSG beauty investments have included megabrands E.l.f. Beauty and It Cosmetics. In a challenging M&A market, which includes a slew of cosmetic brands in holding patterns, a select few celebrity- and influencer-fronted brands have broken through. The most notable example as of late is Hailey Bieber's Rhode, acquired by E.l.f. in May for an eye-watering $1 billion. Mona Kattan's Kayali was purchased by private equity firm General Atlantic and Kattan from TSG in February, and Susan Yara's Naturium, also developed by The Center, was acquired by E.l.f. Beauty in 2023. Phlur, which only began its sale process this year, was 'aggressively pursued' by TSG Consumer, said Hadley Mullin, senior managing director, and became the obvious partner for the brand early on. 'It was coming up time and time again as a standout,' said Mullin, adding that the firm chooses to work with beauty brands that have been productive in existing retail, with wider untapped distribution. 'The most important voice in the room when we're evaluating which brand to invest in is the consumer, followed by the retailer,' she said. Phlur founder Chriselle Lim (left) and chief executive Elizabeth Ashmun. (Phlur) A Non-Traditional Approach Phlur's origin story is unusual in today's cut-throat beauty landscape. Originally launched in 2015 as a digital-first, 'clean' fragrance proposition by entrepreneurs Cynthia and Eric Korman in Austin Texas, Phlur was purchased Bennett in 2021. Lim joined as co-owner and creative director that same year. Lim was also an unexpected partner for Phlur. For starters, the 40-year-old influencer was better known for her fashion sensibility than her taste in perfumes. Lim was part of the original wave of bloggers-turned-influencers, launching 'The Chriselle Factor' on YouTube in 2011. While beauty partnerships factored into her content, it was only as a byproduct of her style focus. She previously told The Business of Beauty she 'never ever thought I would own a fragrance company or even be a part of anything related to fragrance.' Lim will stay on with TSG Consumer as creative director along with Ashmun and Phlur's roughly 20-person team. As product and marketing have become interchangeable in beauty, Lim's creative lens and personal touch has made Phlur a hit. The line's first scent after its relaunch, Missing Person, recalled the feeling of longing, so the brand sent out press and influencer gifting with oversized men's t-shirts drenched in the fragrance. She also spoke candidly on social media about her divorce and subsequent depression. Lim credits the success of Phlur not only to timing, but also due to its aesthetic. The brand's three best-sellers, or Phlur 'icons', are 'Missing Person,' 'Vanilla Skin' and 'Father Figure'; body mists include a scent dubbed 'Heavy Cream.' More recently, Lim has stepped back from campaign imagery to let the line stand on its own, something buyers need proof of when looking to invest, with the hope of building a forever label. 'Phlur is a brand; it's not just Chriselle's fragrance line,' said Mullin. The Smell of Success Since the pandemic, fragrance has remained beauty's fastest-growing category. According to BoF's The State of Fashion: Beauty report with McKinsey & Co, the sector is expected to grow by 6 percent by 2030, outpacing skincare and makeup. Buoyed by a younger customer base, cheaper prices and new formats, a fresh guard of challengers has upended the previously dominant designer playbook. While scents like Dior Sauvage, Creed Aventus and Chanel's Coco Mademoiselle remain top sellers, customers are ditching the idea of a signature scent in favour of scent layering. Accessible prices make that kind of outfitting much easier; a Phlur 50 ml fragrance is $99 versus $143 for Coco Mademoiselle. 'The model's elegant price architecture allows the brand to be profitable from a corporate standpoint while providing an accessible price point for trial,' said Colin Welch, managing director and head of New York, at TSG Consumer Partners. Phlur reported that sales are split roughly 50 percent between retail and e-commerce. Sales are expected to grow 65 percent year-on-year in 2026. Bodycare brand Sol de Janeiro became a breakout success on the strength of its next-gen fragrances, and since the label's acquisition by L'Occitane in 2021, buyers have been on the hunt for the next indie powerhouse. Many have tried to fill that void, including Glossier, which remains focussed on the category versus its once-core skincare and makeup, and Dedcool, which offers fragrances in an array of formats including detergent. Phlur moved from eau de parfums into body mists and ancillary products like deodorant and body oils in 2023. It has ditched the traditional fragrance flanker approach of staying true to a core scent, launching two original EDPs and up to seven extensions each year. Ashmun said that new formats, a push towards men and a broader global footprint are top of mind for the brand as it transitions to new ownership. (50 percent of Lim's followers are based in Europe.) While the relevance of famous founders ebbs and flows, Lim said those with longevity are 'more intentional' with how they speak to their audiences. She cites her evolving career as proof. 'Storytelling is one of my superpowers,' Lim said. 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