selling seduction · paris — l’oréal on thursday bucked the trend in beauty by reporting a 1.5...
Post on 06-Jun-2020
0 Views
Preview:
TRANSCRIPT
AGENT PROVOCATEUR OWNER 3I BEGINS EYEING OPTIONS FOR THE LUXE INNERWEAR BRAND AS IT UNVEILS ITS LATEST AD CAMPAIGNS. PAGE 4
Flower Song
WWD
PHOTO BY KYLE ERICKSEN
By JENNIFER WEIL
PARIS — L’Oréal on Thursday bucked the trend in beauty by reporting a 1.5 percent increase in first-half profits despite missing analysts’ expectations for second-quarter sales growth due to weakness in North America.
The world’s largest beauty company reported net profi ts of 1.73 billion euros, or $2.35 billion, for the fi rst half ended June 30, compared with profi ts of 1.71 bil-lion euros, or $2.32 billion, in the corresponding period a year earlier. L’Oréal only reports profi ts twice a year.
Sales fell 1.5 percent to 11.17 billion euros, or $15.32 billion, from 11.34 billion euros, or $15.42 bil-lion. On a like-for-like basis, they grew 3.8 percent.
Second-quarter sales picked up against the first quarter, but remained dampened by business in North America. The world’s largest beauty maker said that its revenues dipped 0.7 percent to 5.54 billion euros, or $7.59 billion, in the three months ended June 30. On a like-for-like basis, however, company sales advanced 4.1 percent, versus the previous quarter’s 3.5 percent uptick.
Despite the sales decline in the second quarter and fi rst half, L’Oréal continues to outperform many of its peers. Also on Thursday, Avon Products Inc. re-ported a profi t decline for the second quarter, while Shiseido registered a loss for its fi rst quarter.
“While partly driven by a slightly easier [compari-son], L’Oréal’s performance stands out in the string of top-line misses within [health and personal care] thus far this earnings season,” wrote Consumer Edge
By DAVID MOIN
TAKING ON one of retailing’s most challenging as-signments, Kathryn Bufano will join The Bon-Ton Stores Inc. as president and chief executive officer on Aug. 25, succeeding Brendan Hoffman, who previ-ously decided not to renew his three-year contract.
Succeeding Bufano as Belk Inc.’s president and chief merchandising offi cer is David Zant, who steps up from executive vice president and general mer-chandising manager of men’s, home and kids. He now reports to Tim Belk, chairman and ceo.
On some levels, Bufano’s move comes as a sur-prise considering she has had a good working re-lationship with the Belk family and has been in-strumental in strengthening the 299-unit chain’s merchandising and reputation for “modern Southern style” and expanding the business to ad-ditional locations in the South. The $4 billion busi-ness is on solid footing and continues to grow its revenues, though big investments in technology and lower margins pushed net income down last year.
On the other hand, the $2.8 billion Bon-Ton, while also a regional department store chain, is struggling. Bufano will be tested to come up with a new strategy to turn around the operation, though she’s got extensive experience at department stores, holding top merchant jobs at Lord & Taylor, Macy’s, Sears as well as Belk. She’s also held top jobs at Dress Barn and Vanity Shops.
“She has the bandwidth,” said another retail ceo. “She’s very unassuming but she gets results and is tenacious.”
Tim Grumbacher, Bon-Ton’s chairman and chief strategic offi cer, stated, “We are excited to have an executive with Kathryn’s talents and background. Her years of experience in the department store in-dustry will allow her to refi ne and drive the strategic growth initiatives we have put in place over the last several years.” SEE PAGE 9
A BIG CHALLENGE
Belk’s Bufano NamedCEO of Bon-Ton Stores
L’Oréal Profits Inch UpAs Rival Firms Falter
SEE PAGE 7
Drew Barrymore is expanding her beauty empire with the launch of three scents — Cherish, Radiant and Sultry — all positioned on emotions felt during certain times of day. The trio will be unveiled at Wal-Mart in October as part of Barrymore’s Flower beauty brand. For more, see page 6.
SELLING SEDUCTION
FRIDAY, AUGUST 1, 2014 ■ $3.00 ■ WOMEN’S WEAR DAILY
BIG SPENDERGIORGIO ARMANI RELEASES ITS 2013 ANNUAL REPORT,
WHICH DETAILS A BIG JUMP IN INVESTMENTS IN ITS OWN RETAIL OPERATIONS. PAGE 4
COSTUME PARTYCOSTUME PARTYDIANE VON
FURSTENBERG UNVEILS COSTUME
JEWELRY IN COLLABORATION WITH
HASKELL JEWELS. PAGE 5
Flower Song
WWD
PHOTO BY KYLE ERICKSEN
Drew Barrymore is expanding her beauty empire with the launch of three Flower SongDrew Barrymore is expanding her beauty empire with the launch of three Flower Songscents — Cherish, Radiant and Sultry — all positioned on emotions felt during certain times of day. The trio will be unveiled at Wal-Mart in October as part of Barrymore’s Flower beauty brand. For more, see page 6.
FRIDAY, AUGUST 1, 2014 ■ $3.00 ■ WOMEN’S WEAR DAILY
WWD.COMWWD FRIDAY, AUGUST 1, 20142
TO E-MAIL REPORTERS AND EDITORS AT WWD, THE ADDRESS IS FIRSTNAME_LASTNAME@FAIRCHILDFASHION.COM, USING THE INDIVIDUAL’S NAME. WWD IS A REGISTERED TRADEMARK OF ADVANCE MAGAZINE PUBLISHERS INC. COPYRIGHT ©2014 FAIRCHILD FASHION MEDIA. ALL RIGHTS RESERVED. PRINTED IN THE U.S.A.VOLUME 208, NO. 23. FRIDAY, AUGUST 1, 2014. WWD (ISSN 0149–5380) is published daily (except Saturdays, Sundays and holidays, with one additional issue in March, April, May, June, August, October, November and December, and two additional issues in February and September) by Fairchild Fashion Media, which is a division of Advance Magazine Publishers Inc. PRINCIPAL OFFICE: 750 Third Avenue, New York, NY 10017. Shared Services provided by Condé Nast: S.I. Newhouse, Jr., Chairman; Charles H. Townsend, Chief Executive Officer; Robert A. Sauerberg Jr., President; John W. Bellando, Chief Operating Officer & Chief Financial Officer; Jill Bright, Chief Administrative Officer. Periodicals postage paid at New York, NY, and at additional mailing offices. Canada Post Publications Mail Agreement No. 40644503. Canadian Goods and Services Tax Registration No. 886549096-RT0001. Canada Post: return undeliverable Canadian addresses to P.O. Box 503, RPO West Beaver Cre, Rich-Hill, ON L4B 4R6. POSTMASTER: SEND ADDRESS CHANGES TO WOMEN’S WEAR DAILY, P.O. Box 6356, Harlan, IA 51593. FOR SUBSCRIPTION, ADDRESS CHANGES, ADJUSTMENTS, OR BACK ISSUE INQUIRIES: Please write to WWD, P.O. Box 6356, Harlan, IA 51593, call 866-401-7801, or email customer service at wwdPrint@cdsfulfillment.com. Please include both new and old addresses as printed on most recent label. For New York Hand Delivery Service address changes or inquiries, please contact Mitchell’s NY at 1-800-662-2275, option 7. Subscribers: If the Post Office alerts us that your magazine is undeliverable, we have no further obligation unless we receive a corrected address within one year. If during your subscription term or up to one year after the magazine becomes undeliverable, you are ever dissatisfied with your subscription, let us know. You will receive a full refund on all unmailed issues. First copy of new subscription will be mailed within four weeks after receipt of order. Address all editorial, business, and production correspondence to WOMEN’S WEAR DAILY, 750 Third Avenue, New York, NY 10017. For permissions requests, please call 212-630-5656 or fax the request to 212-630-5883. For reprints, please e-mail reprints@condenast.com or call Wright’s Media 877-652-5295. For reuse permissions, please e-mail contentlicensing@condenast.com or call 800-897-8666. Visit us online at www.wwd.com. To subscribe to other Fairchild Fashion Media magazines on the World Wide Web, visit www.wwd.com/subscriptions. Occasionally we make our subscriber list available to carefully screened companies that offer products and services that we believe would interest our readers. If you do not want to receive these offers and/or information, please advise us at P.O. Box 6356, Harlan, IA 51593 or call 866-401-7801. WOMEN’S WEAR DAILY IS NOT RESPONSIBLE FOR THE RETURN OR LOSS OF, OR FOR DAMAGE OR ANY OTHER INJURY TO, UNSOLICITED MANUSCRIPTS, UNSOLICITED ART WORK (INCLUDING, BUT NOT LIMITED TO, DRAWINGS, PHOTOGRAPHS, AND TRANSPARENCIES), OR ANY OTHER UNSOLICITED MATERIALS. THOSE SUBMITTING MANUSCRIPTS, PHOTOGRAPHS, ART WORK, OR OTHER MATERIALS FOR CONSIDERATION SHOULD NOT SEND ORIGINALS, UNLESS SPECIFICALLY REQUESTED TO DO SO BY WOMEN’S WEAR DAILY IN WRITING. MANUSCRIPTS, PHOTOGRAPHS, AND OTHER MATERIALS SUBMITTED MUST BE ACCOMPANIED BY A SELF-ADDRESSED STAMPED ENVELOPE.
Carrefour Operating Profit Rises 7.9%
Target Names CEO; Shares SlipBy SHARON EDELSON
TARGET CORP. may have a new chief executive of-ficer, but Wall Street’s reaction shows the amount of work ahead.
Target’s shares fell 2.9 percent Thursday to close at $59.59 on the New York Stock Exchange even as the retailer removed a major uncertainty by tapping Brian Cornell, former ceo of PepsiCo Americas Foods, as chairman and ceo, effective Aug. 12. While Cornell has solid retail experience with stints at Sam’s Club and Michael’s, and has fast-moving consumer goods covered through the PepsiCo job, retail experts said he might lack the digital experience needed to create Target 2.0. Nonetheless, the retailer said Cornell’s top priorities will be accelerating the company’s perfor-mance and advancing Target’s omnichannel evolution. Target’s profit has fallen for six consecutive quarters.
The appointment of Cornell, the first ceo to be hired from outside the company, caps a fraught four-month search for a new leader after embattled ceo Gregg Steinhafel left in May. John Mulligan, the retailer’s chief financial officer, has been the interim ceo.
“Brian Cornell feels somewhat safe,” said Carol Spieckerman, president of Newmarketbuilders. “I wouldn’t call Brian Cornell an old-school choice. This hiring from CPG [consumer packaged goods] companies has been at work for a while at retail. It’s very quickly going to become yesterday’s model.”
“He is a very experienced executive sitting on both sides of the manufacturer and retailer equa-tion,” said Amy Koo, a senior analyst at Kantar. “There’s a lot of focus on supply chain and making sure things are in stock. Getting somebody so focused on execution and operations will be good for Target, not only for the food business and the consumables business, but in general. It’s not clear how much he understands about updating Target’s ‘Expect More, Pay Less’ brand message. How do you make Target exciting for Millennials and moms to shop? The top reason people go into the store is not to pick up con-sumable items, but to buy apparel and general mer-chandise. He needs to keep Target ‘Tarjay.’”
In terms of technology experience, Koo said Cornell has “done a few things here and there. It’s not the same level of transformative change that’s going to be necessary. There’s everything from supply-chain management to how to communicate with guests to using mobile to being able to sell and fulfill — it’s a massive amount of change, not just a one-off. He doesn’t seem to have that depth of experience. They
picked an outsider because they knew they needed an outsider’s perspective. He’s an insider outsider.”
Koo said Cornell is “an executor. For a company that relies on pizzazz and marketing and always looking to the next new exciting thing, this was not a revolutionary choice.”
Target’s regimented and rules-oriented culture with a top-to-down hierarchy is hard to understand and difficult to manage, said Koo. “Looking at ex-pansion into smaller stores and a more localized approach, you have to empower people at the local level to make decisions,” she said. “Target needs to look at its assortments for small boxes and localize and tailor them to the folks on the ground.”
“Cornell’s experience gives him the ability to take the Target business and hit the ground running,” said Ken Perkins, a retail analyst at Morningstar. “It’s understanding the motivation behind consumer trends and the overall value proposition for custom-ers, while assembling a team that can execute that strategy. In terms of setting the vision, he has enough knowledge to take the company in that direction.”
Canada will be a big challenge for Cornell. Target has lost about $1 billion since it ventured north. In the U.S., Target’s traffic decline is due in part to a massive data breach during the Christmas season; the retailer is still trying to win back consumers. Longer term, e-tailers such as Amazon pose a threat. “How do you keep customers? You need to have the right platforms and need to cultivate loyalty,” said Perkins.
Target’s Technology Innovation Center in San Francisco’s financial district has given the company a foothold in Silicon Valley. However, it pales in com-parison to @WalmartLabs, which makes frequent acquisitions and operates fairly autonomously from Wal-Mart’s corporate hierarchy. “You’re not hearing announcements coming directly out of that entity,” Spieckerman said of Target. “It doesn’t have the same autonomy and authority as @WalmartLabs. With Cornell’s hiring, will Target allow the California satellite to work in a more autonomous and authoritative way? It will be interesting to see if Target continues to be very headquarters focused.
“Target is at a bit of a crossroads,” Spieckerman said. “Have executives like Kathee Tesija [executive vice president of and chief merchandising and sup-ply chain officer] been given incentives to stay the course, or is this going to become a departure point for some of them who’ve been around for a while?” Tesija is said to have been a candidate for the ceo job. “We’re wondering if the president position was left open to potentially give to Kathee,” Koo said.
By JOELLE DIDERICH
PARIS — Shares in Carrefour SA fell Thursday de-spite a rise in operating profit in the first half as in-vestors questioned whether the French retailer can protect its profit margins against aggressive price competition in its core domestic market.
Carrefour closed down 4.8 percent to 25.83 euros, or $35.24 at current exchange, on the Paris Stock Exchange.
The world’s second-largest retailer behind Wal-Mart Stores Inc. said recurring operating income rose 7.9 percent in the first half to 833 million euros, or $1.14 billion, as profitability improved in Europe and Latin America, compensating for con-tinued softness in China.
This represented a rise of 13.8 percent at con-stant exchange rates.
Adjusted net profit rose 16.7 percent to 274 mil-lion euros, or $376 million, in the six months to June 30, Carrefour said on Thursday. Dollar rates are calculated at average exchange rates for the pe-riod in question.
Carrefour said organic sales, excluding pet-rol, rose 4.3 percent in the first half, their highest growth rate in five years.
Georges Plassat, chief executive officer of Carrefour, qualified the result as “acceptable” in a generally mo-rose macroeconomic context. He added that the group had entered into the second phase of its three-year transformation plan, launched in September 2012.
Under its wide-ranging turnaround plan, Carrefour has shed operations in countries where it does not have a leadership position or a reason-able prospect of achieving sizeable market share. In parallel, it has revamped activities in Europe by cutting prices, diversifying stores and streamlining internal operations.
In France, its operating margin rose to 3 per-cent in the first six months of the year from 2.8 percent in the same period in 2013, helped by im-
proved transportation and a reduction in lost or stolen products. Analysts questioned whether cost savings could compensate for investment in price going forward.
Plassat said France, which posted a 6.9 percent increase in recurring operating income in the first half, would benefit from the group’s decision to buy back Dia France, the French discount store chain operated by Distribuidora Internacional de Alimentación SA of Spain.
With 800 points of sale and annual revenues of 2.2 billion euros, or $3 billion, Dia will allow Carrefour to pursue its repositioning on city-center formats and to reinforce its market share in Paris and southeastern France, where it lags behind the competition, Plassat said.
The retailer is also counting on its purchase of 53 northern Italian supermarkets under the Billa banner to bolster its action plan in that strug-gling market, although Plassat cautioned that it would probably take another two years before Italy showed signs of improvement.
Nonetheless, profitability improved in the region overall. European countries, excluding France, re-corded a 19.1 percent rise in recurring operating profit in the first six months of the year.
In Latin America, operating profit rose 13.4 per-cent, driven by the good performance of Brazil and Argentina. The operating margin jumped 70 basis points to 3.8 percent.
Plassat said Argentina’s debt default would likely have a strong impact on the retailer’s recurring op-erating income, but the effect should be mitigated in local currency terms. Risks included a drop in consumption, in particular of nonfood items, a rise in price competition and a slowdown in financial services, he said.
“We are going to slow down our investment plan, which was not extremely copious, in order very clearly not to place ourselves at risk in terms of cash flow, and we are going to support them as best we can,” he said.
FOLLOW US ON SOCIAL MEDIA
@ WWD.com/social
DIGITAL BRIEFING BOXFOR MORE COVERAGE, FIND US ON WWD.COM, SOCIAL AND MOBILE.
Fine-Jewelry Trend: Case of the Blues — Tanzanite is the comeback stone of the season.
ON INSTAGRAM
Ultimate Fashion Statements: The best men’s accessories
from the spring season.
Most Liked on Facebook: An eye-catching tote by Bao Bao Issey Miyake.
ON FACEBOOK
ON WWD.COMJimmy Choo
Irene Neuwirth
Robert Procop
Simon G.
FOR MORE INFORMATION CONTACT: ELIZABETH_GHADIMI@FAIRCHILDFASHION.COM, 212.630.3778
THEHOT
ISSUEspotlighting the season’s
hottest topics, trends and retailers
CLOSE DATE: 8/15 ISSUE DATE: 9/5
BONUS DISTRIBUTION: NYFW, CEW NEWSMAKER FORUM, TFWA CANNES
4 WWD FRIDAY, AUGUST 1, 2014
By SAMANTHA CONTI
LONDON — Agent Provocateur has be-come one hot brand — and not only for a new fall ad featuring Penélope Cruz wear-ing a red leopard bra in the Nevada desert.
The luxury lingerie brand, which today will unveil the fall ad campaign for L’Agent by Agent Provocateur, a col-lection designed by Cruz and her sister Mónica Cruz Sánchez, is set to undergo a strategic review that could result in a sale. Private equity investor 3i, its owner, has been talking to banks in-cluding Goldman Sachs and Rothschild about conducting a review of the British brand that could see it sold for upward of 200 million pounds, or $340 million at current exchange, according to an in-dustry source.
The private equity firm has owned Agent Provocateur since 2007, and since then has overseen its rapid expan-sion into 14 new markets, as well as the launch of new products and collections.
No bank has been handed a mandate yet, and the source said 3i would con-sider all options — not just a sale — and nothing will happen until 2015 at the ear-liest. A second source said it is routine for 3i to be exploring its options after a seven-year investment, which is long by industry standards.
A spokeswoman for 3i declined to comment on Thursday.
Early next year, Agent Provocateur will cut the ribbon on the 100th store for its main collection, and this fall will open the first two stand-alone stores for L’Agent, on Melrose Avenue in Los Angeles and on Elizabeth Street in Manhattan’s NoLIta neighborhood.
Today, L’Agent will also reveal its relaunched Web site and unveil its first e-commerce platform. L’Agent has also added Saks Fifth Avenue to its list of wholesale clients.
Cruz directed last year’s short film for L’Agent, and this time she’s the writer, di-rector and model. The film shows a lonely,
parched explorer who comes across a lingerie-clad band of women dancing to a house beat in the middle of the des-ert. Cruz sits in the driver’s seat of an old Cadillac drinking a bottle of water while the buff Tracy Anderson dancers do their thing.
The actress worked with Anderson on the choreography — it’s a new routine
— while the dancers move to music by Cruz’s brother, Eduardo Cruz.
“Monica and I are really happy with our autumn-winter 2014 collection. It’s really vibrant, so I felt it was really im-portant to create a very sensual film that could also tell a little story, like the first one I did,” said Cruz, referring to last
year’s effort, where her husband, Javier Bardem, made a cameo appearance.
“I got the idea for the film while I was listening to the track from Optimist, ‘Single Dutch’ by Eduardo Cruz. His music always inspires me so much. Also, collaborating with Tracy on the choreog-raphy was the perfect fit, and brought a great dynamic to the set.”
The Agent Provocateur main collec-tion campaign, by contrast, is all about Seventies-style indulgence, glitter balls and louche private clubs. The campaign will launch on Monday and will appear on the brand’s Web site.
“We wanted it to be opulent, luxe and ladylike, and we were looking at Jerry Hall as our muse,” said Sarah Shotton, creative director of Agent Provocateur. “We came up with the idea of a wom-en’s-only club — where the women are in control.”
Christian Larsson shot Missy Rayder in the fall collection, which includes lace prints, Lurex embroideries and rib-bon flocking.
The company’s chief executive, Garry Hogarth, declined to comment Thursday on the strategic review, but said in an earlier interview that international ex-pansion is rolling ahead.
By March, there will be 110 Agent Provocateur main collection stores, with openings planned for Macau, Manhattan, Las Vegas, Berlin, Toronto, Saint Petersburg and Moscow. Regarding L’Agent, he said the brand will open in Moscow and at Holt Renfrew in Canada, while the company is looking for store space in London.
In the 2012-13 fiscal year, sales at Agent Provocateur shot up 24 percent to 39 million pounds, or $61.6 million, while earnings before interest, taxes, deprecia-tion and amortization rose 55 percent to 6.2 million pounds, or $9.8 million at av-erage exchange rates for the period.
Sales in the 2013-14 year climbed about 25 percent, while the earnings figure fol-lowed a similar trend. The brand’s biggest market is the U.S., followed by the U.K.
Earlier this year, Agent Provocateur launched a fifth fragrance called Fatale, its first under a new, 10-and-a-half-year partnership with Inter Parfums.
By LUISA ZARGANI
MILAN — Boosted by gains in all mar-kets, the Giorgio Armani Group contin-ued to grow revenues and margins in 2013, but its bottom line was significantly dented by a settlement with Italy’s in-ternal revenue service, according to the fashion firm’s annual report.
In the year ended Dec. 31, net profit fell to 23.9 million euros, or $31.5 mil-lion, from 194.2 million euros, or $248.5 million, in 2012. In 2013, the group paid taxes totaling 381.8 million euros, or $502.8 million, compared with 157.8 mil-lion euros, or $200.4 million, in 2012. Last year, taxes included a payment of 270.9 million euros, or $357.6 million, to the Agenzia delle Entrate, the country’s reve-nue service, following investigations ini-tiated in 2013 and concerning a number of companies controlled by the Armani group in the 2002 to 2009 period.
Although the group brought back the tax residency of these companies to Italy in 2009, the revenue office claimed that the group should have paid the income taxes in Italy, believing they should have been considered as fiscally resident in the country, said the report. While it has already paid the amount due, the group explained that it decided to do so “to avoid lengthy and costly controver-sies and to focus on its entrepreneurial activity.” However, it underscored that the “conclusions of the fiscal author-ity contrast with different and previous opinions expressed by the Agenzia delle Entrate, which, over the years, had af-firmed the correctness and effectiveness of the foreign structures.” The settlement was first reported in April.
In 2013, group earnings before inter-est, taxes, depreciation and amortization rose 15.2 percent to 479.8 million euros, or $633.3 million, compared with 416.4 million euros, or $533 million.
As reported in May, in 2013, the Italian fashion company’s operating profit to-taled 401 million euros, or $529.3 mil-lion, up 18.2 percent compared with 339 million euros, or $434 million, in 2012. Margins totaled 18.4 percent.
Revenues climbed 4.5 percent to 2.18 billion euros, or $2.87 billion, compared with 2.09 billion euros, or $2.68 billion, in the previous year. At constant exchange, sales would have risen 8.3 percent. Last year, group revenues, including licensed products at retail value, reached 7.75 bil-lion euros, or $10.23 billion, compared with 7.4 billion euros, or $9.47 billion, in 2012.
The report broke down sales by geo-graphic market. Europe and Italy repre-sented half of Armani’s total sales, reach-ing 1.09 billion euros, or $1.43 billion, up 15.1 percent compared with 2012.
North America was in line with the previous year, with sales of 355.3 million euros, or $469 million, accounting for 16.2 percent of the total and in line with the previous year. In the Far East, reve-nues amounted to 511.1 million euros, or $674.6 million, representing 23.4 percent of the total, in line with the previous year as the figures were impacted by the de-valuation of the Japanese yen. The rest of the world grew 12.2 percent to 227.6 million euros, or $300.4 million.
Dollar amounts were converted at av-erage exchange rates for the periods to which they refer.
In 2013, net working capital amount-ed to 699.4 million euros, or $923.2 mil-lion, compared with 564.8 million euros,
or $723 million, in 2012. The company’s net worth totaled 1.34 billion euros, or $1.76 million, compared with 1.48 billion euros, or $1.9 million, a decline mainly attributed to the payment of dividends for 110.1 million euros, or $145.3 million.
Investments were entirely self fi-nanced. They totaled 100.1 million euros, or $132.1 million, compared with 157.7 million euros, or $201.8 million, in 2012, and were mainly channeled to strength-en the group’s retail network. The group spent 75.1 million euros, or $99.1 million, on its own stores last year, compared with 128.6 million euros, or $164.6 mil-lion, in 2012.
Europe accounted for around 43 per-cent of total investments, with openings in cities including Paris, Cannes and Marseille, France; Antwerp, Belguim, and Rome, Milan, Bologna and Bari, Italy. The group continued to invest in the Far East — in Japan, China and Hong Kong — allocating 29 percent of its finan-cial resources to the region and opening three directly owned stores in Japan, and seven between China and Hong Kong.
Despite the ongoing uncertainties both in Italy and internationally, the group said it has continued to invest in the strength-ening and extension of its distribution network, “opting of a mid-long-term growth strategy,” balancing retail and wholesale, all brands and all markets.
Last year, the company opened 105 freestanding stores both in emerging and established markets, and continued to invest in travel retail in Italy, Hong Kong and the U.S., with plans to further strengthen the channel in 2014. The group counts a total of 2,473 stores and 6,722 employees.
The company also continues to build its own production capabilities, opening a new sportswear pole in Tuscany last year, for example, and to further develop its logistics, including a new semiauto-matic warehouse that will process 10
million pieces annually. Armani is trying to reach an agreement with Italian fash-ion and textile consortium SMI Sistema Moda Italia to define a standard techni-cal text for the production and distribu-tion of fabrics “that would most likely be-come a reference point for all the Italian pipeline,” said the report.
Although the first months of 2014 show a trend that “at a macroeconomic level is still quite weak,” and there are ongoing uncertainties in the euro area, the report said the company has seen “positive sig-nals” in the group’s performance in the first quarter. “In line with its strategy, in 2014 the group will continue with its pro-gram to further expand its distribution network in emerging and mature markets at the same time,” said the report.
The group’s brands include Giorgio Armani Privé, Giorgio Armani, Emporio Armani, Armani Collezioni, AJ Armani Jeans, Armani Junior and Armani Casa, in addition to A|X Armani Exchange. In May, Armani unveiled ambitious plans to turn the A|X Armani Exchange brand into “the first global Italian fast-fashion brand targeting a young customer whose DNA is strongly Armani,” as the designer revealed he had acquired the remain-ing 50 percent of A|X that he did not al-ready own from the Como Holdings Inc. venture called Presidio Holdings Ltd., with Christina Ong and her husband, Ong Beng Seng, Armani’s longtime business partners. The report stated that, as of Feb. 1, Presidio had sales of $494.3 mil-lion. Start-up costs totaled 75.7 million euros, or $99.9 million, upon the acquisi-tion of the shares.
Indirectly, the group also controls the Caffe 42 Croisette Sas in Cannes through Giorgio Armani Retail Srl. The company also still has a 1.5 percent stake in its former eyewear licensee, Safilo. The designer’s eyewear col-lections produced and distributed by Luxottica launched in March.
Tax Charge Dents Giorgio Armani Profits
Agent Provocateur Owner Looking to Sell
4.5%RISE IN REVENUES IN 2013 FOR
GIORGIO ARMANI GROUP.
Penélope Cruz films a scene for the L’Angent by Agent Provocateur film.
PHOT
O BY
DAV
ID G
ARCI
A
FOR MORE IMAGES, SEE
WWD.com/markets-news.
WWD.COM5WWD FRIDAY, AUGUST 1, 2014
By LAUREN MCCARTHY
NEW YORK — “Do you like jewelry?”The question, when posed by Diane von Furstenberg,
herself dripping in various baubles, is rhetorical.Von Furstenberg is returning to the fashion jewelry busi-
ness after a hiatus of 30-plus years. The collection, an ex-pansive offering of necklaces, earrings, rings and bracelets, is done in collaboration with Haskell Jewels. “We were in business together 30 years ago, and now we’re back,” von Furstenberg said, referring to Haskell chairman and chief executive officer Frank Fialkoff ’s stint overseeing von Furstenberg’s jewelry license for all major department stores back in the early Eighties.
Asked how the duo first met, Fialkoff began to describe the pair’s professional history before being interrupted by von Furstenberg. “Oh, we dated,” she said, moving on to the current topic at hand: the jewelry. “I still am doing fine jew-
elry, but people ask me for costume jewelry. They want to have the $300 necklace.”
Prices for the collection range from $68 to $628, far below those of von Furstenberg’s high-end collection, Diane von Furstenberg by H.Stern, which has pieces priced up to $100,000. Despite the difference in ticket price, the look is still very much DVF. “I really love jewelry that makes noise and makes a statement,” said von Furstenberg. “I also like fluidity in jewelry. It’s all treated like fabric.” Standouts of the collection are the Knitted Chain styles, in-spired by the movement of DVF’s jersey dresses. Each piece is hand made from diamond-cut brass chain and plated in gold, then manipulated to create dif-ferent chain styles. Other styles take on a more structured look, such as cuffs and bangles done in embossed leather. Colorful accents punctuate the line — pops of coral, turquoise and von Furstenberg’s signature hot pink. The collection will launch in DVF boutiques, as well as additional retail locations, be-ginning in February.
The endeavor has been “a long engage-ment,” according to Fialkoff, with a year alone spent on the design process. “The key to this line is that Diane touched every piece of it,” he added. “‘I like it, I don’t like it, I want it, make it blue, make it green.’ And that’s what makes it work.”
Von Furstenberg aimed to provide customers with a lower-
priced option that stands up next to its fine-jewelry coun-terparts. “This is $28,000, while this is $200,” she
said, comparing her own bracelet to a similar new style. “Gold has become so expensive. People see me with a lot of jewelry, and I need to be able to make jewelry that people can afford that doesn’t
compromise on the quality and design.” Fialkoff anticipates that von Furstenberg will bring new customers to Haskell Jewels. The com-pany’s existing licenses are Betsey Johnson, Kenneth Cole and Steve Madden. “From a real designer point of view, Diane, I feel, is one of the leading designers of today,” he
said. “We’re hoping to get all of the stores that she’s currently doing business with.”Von Furstenberg and Fialkoff declined to
provide sales projections. But speaking to the confidence Haskell Jewels has in its new license, the
company has opened a DVF-focused showroom within in its Midtown showroom, with a time line of von Furstenberg’s career emblazoned on the hot pink walls.
By JOELLE DIDERICH
PARIS — Adidas stock slid 15.4 percent in trading Thursday after the company low-ered its full-year guidance.
Shares closed at 59.41 euros, or $79.67 at current exchange.
The company said Thursday morning cur-rency fluctuations and high marketing costs linked to the FIFA World Cup dented its sec-ond-quarter sales.
Citing factors such as tensions in Russia and Ukraine, increasing marketing costs and the poor performance of the golf segment, Adidas said it now expects a mid- to high-single-digit increase in currency-neutral sales in 2014, after earlier predicting a high-single-digit rise.
In addition, it lowered its forecast for net profits to around 650 million euros, or $887 million, from a range of 830 million euros to 930 million euros, or $1.13 billion to $1.27 billion, previously. Adidas manage-ment postponed the delivery of its so-called Route 2015 targets at a meeting of the execu-tive board, it said.
Sales rose 2 percent in the second quar-ter to 3.46 billion euros, or $4.75 billion. Stripping out the effect of foreign exchange rate variations, revenues were up 10 per-cent. Net income attributable to sharehold-ers totaled 144 million, or $197 million, dur-ing the period.
Herbert Hainer, chief executive officer of the Herzogenaurach, Germany-based sporting goods firm, said it plans to clean up markets, focus on growth opportunities and revise its internal organization in a bid to re-turn to “a higher and more consistent level of earnings growth” in the mid to long term.
“Everything we announced today has one objective: to strengthen our brands, to drive consumer desire, and to set our group up for long-term success. As we gear up for our next five-year strategic plan, we will assert ourselves much more aggressively in the marketplace,” he said.
“While we have delivered notable achievements with our Route 2015 plan, we also accept that we have not executed to our high standards at all times or provided enough flexibility to react in adverse market conditions. This we now tackle head on. The strength of our winning performance at the 2014 FIFA World Cup shows exactly what we are capable of when we execute flaw-lessly,” Hainer added.
Adidas is scheduled to publish full finan-cial results for the first half on Aug. 7.
PARIS — Shares in Pandora A/S fell Thursday after a group of investors said it had sued the Danish jewelry company and its president and chief executive of-ficer Allan Leighton for compensation for losses suffered after the brand is-sued a profit warning in 2011.
Shares declined 3.1 percent to close Thursday at 382.40 Danish kroner, or $68.78 at current exchange, having at one point slid 5.3 percent to 373.3 Danish kro-ner, or $67.07, in early afternoon trading.
A statement issued by Belgian law firm Deminor, the legal representative of a group of 36 “mainly institutional” inves-tors, said “the regulatory commission of the Copenhagen Stock Exchange and the Danish Financial Supervisory Authority each concluded that Pandora should have communicated a profit warning at an earlier stage than 2 August 2011.”
The profit warning had downgraded the company’s 2011 sales projections, causing Pandora’s shares to plummet 65.4 percent in a single trading day which, according to the plaintiffs, re-sulted in the destruction of 12.5 billion Danish kroner, or $2.3 billion at average exchange, of the brand’s market value.
Erik Bomans, partner at Deminor, told WWD the amount of compensation the
law firm is seeking for its clients would be calculated once the exact period dur-ing which Pandora allegedly provided “misleading information” has been deter-mined by the Danish court that will exam-ine the case. The period in question could be anytime between October 2010, when the company went public, and Aug. 2, 2011.
According to Bomans, alarm bells should have rung when, in March 2011, the jewelry brand issued guidance for growth of 25 percent, below market ex-pectations, causing the stock to plunge. On April 18, the company said growth could reach 30 percent, although nega-tive customer reactions to price increas-es and slowing sales indicated other-wise, the lawyer said.
“That was reckless,” argued Bomans, who believes his clients have a strong case in light of the two regulatory bodies’ rulings against Pandora. “We can’t imagine losing this, even though Pandora denies all responsibility.”
The case is also being investigated by the Danish Public Prosecutor for Serious Economic Crimes.
A spokesman for Pandora confirmed the company had been subpoenaed, but would not comment further.
— PAULINA SZMYDKE
By MELISSA DRIER
BERLIN — Hugo Boss picked up the pace of its earnings and sales growth in the second quarter.
The German brand said net income gained 18 percent, earnings before inter-est and taxes rose 10 percent and sales increased 5 percent in the three-month period ended June 30. On a currency-adjusted basis, sales advanced 8 percent.
Hugo Boss reported net income hit 62.8 million euros, or $86.1 million, with EBIT reaching 82.9 million euros, or $113.7 million.
Group sales were 558.9 million, or $770.8 million, supported by 10 percent growth in Europe and an upturn in the Americas, where sales in local curren-cies rose 7 percent. On a nominal basis, sales in the Americas advanced 1 per-cent. In Asia, they slipped 5 percent but were up 2 percent when adjusted for currency effects.
Dollar figures are converted at aver-age exchange for the period to which they refer.
Hugo Boss’ own retail business con-tinued to make gains, with sales rising 14 percent to 353 million euros, or $484
million. In the first half, currency-ad-justed comparative store sales gained 5 percent, with the retail network expand-ing by 18 doors to 1,028 sites.
The group’s second-quarter whole-sale business, in contrast, slipped 6 percent. Boss said it was burdened by a challenging market environment, the takeover of selling spaces previously op-erated by wholesale partners and deliv-ery shifts to the third quarter.
Looking ahead, Boss confirmed its 2014 targets, with plans to achieve high-single-digit sales growth after adjust-ment for currency effects. This would represent stronger growth than in 2013, with all regions expected to contribute. Its own retail is expected to generate double-digit gains, with about 50 new store openings planned for the year.
On the basis of order intake, Boss also anticipates its wholesale business will improve in the second half. The company forecasts a high-single-digit increase in earnings before interest, taxes, depreciation and amortization before special items and a positive net financial position at the end of 2014 based on the expected increase in earnings and continued strong cash flow development.
Adidas Lowers2014 Guidance
Shareholders File Suit Against Pandora Sales, Earnings Up at Hugo Boss
Diane von Furstenberg Does Fashion Jewelry
’’
’’
I need to be able to make jewelry that people can afford that
doesn’t compromise on the quality and design.
— DIANE VON FURSTENBERG
Diane von Furstenberg
Items from the new line.
PHOT
OS B
Y JO
HN A
QUIN
O
6 WWD FRIDAY, AUGUST 1, 2014
By JAYME CYK
DREW BARRYMORE may seem like the quintessential California girl, but deep down she’s a true New Yorker. Case in point: She’s a devoted subway rider, de-lays be damned.
The beauty entrepreneur arrived for an interview 20 minutes late and snuck off to the bathroom before her photo shoot to quickly do her own makeup and put on the Topshop outfit she picked up the day before. Upon entry she apolo-gized for her tardiness, explaining that it was due to delays on the F train.
But for her, there is no alternative. “The subway is the only way,” she noted.
Even when the Hollywood megastar was attempting to plan a press tour for appearances at Wal-Mart stores across the country for her color cosmetics line Flower, she was looking at commercial tour buses, not private jets.
“It wasn’t easy,” admitted Barrymore of the logistics of entrepreneurship. “I was also pregnant and I’ve had two kids since I’ve launched this line.”
Now Barrymore is about to take her line, which is co-owned by design and manufacturing firm Maesa Group, a step further with the launch of three fragranc-es — Cherished, Radiant and Sultry.
“A singular celebrity fragrance — I was never interested,” said Barrymore. “Also, there was never really a time or venue to do it. I was told when I was seven, don’t promote everything, because after ‘E.T.’ there was so much stuff com-ing my way. A very wise person, who will remain nameless, once said, ‘Think about the longevity and your broad vision. Don’t take easily available right now.’ It scarred me and stuck with me in the best way. It kept me streamlined.”
Despite her low-key, wholesome life-style, Barrymore hasn’t been able to es-cape the camera’s glare entirely, such as when the media seized upon the death of her half sister, Jessica Barrymore, this week in California.
But during the earlier interview, Barrymore was all business, insisting that the new scents are not merely celeb-rity-endorsed products.
She asserted, “This collection of [Flower] fragrances is actually about a story and has an emotional association. The story really is about a woman who is multifaceted.”
The scents, which were developed by Givaudan’s Stephen Nilsen, each signify the emotions associated with a different time of day.
Cherished, which blends top notes of morning dew accord, sparkling cassis and Italian lemon accord atop a heart of iris petals, cabbage rose and springtime lily of the valley, with a drydown of Tahitian vanilla, clean cotton musk and creamy sandalwood, represents the morning and is rooted in the word nuzzle.
“We always use the word nuzzle,” said Barrymore. “The nuzzling nature of when a woman is with the thing that is most important to her and her family and in her home.”
The second scent, Radiant, opens with dewy green notes, sparkling Italian ber-gamot and watery calone, has a heart of cabbage rose, pink peony and magnolia, and a base of crystalline musks, pink amber and blond woods.
“Once [women] have to leave that home and support what [they’ve] created, women have to earn a living whatever that might be,” she said. “[Radiant] is something that will carry you. Feeling fresh throughout the day is a beautiful necessity.”
Sultry, the last scent, fuses purple plum, cranberry cocktail and pink pep-
per with midnotes of night blooming jas-mine, cashmeran and juicy blackberries and a base of patchouli, Madagascar va-nilla and sultry musks.
“By this time, it’s nighttime and there is hopefully romance in our life,” quipped Barrymore. “It is aspirational, it is the escape and it is the need to keep everything alive.”
Barrymore noted that all three fra-grances have similarities so they can be worn together.
“They’re a bit like a symphony where you have different movements and you can listen to each movement on its own,” said Nilsen. “Also, in the context of the whole symphony they all work together.”
Barrymore added, “I don’t know about other women, but I also don’t always love just one thing. I think one of our credos be-hind this is whatever your mood as well as an inspiration of an emotional time line.”
Eau de parfum sprays in two sizes — 30 ml. for $24.98 and 15 ml. for $19.98 — will be offered, as will a rollerball priced
at $9.98. Taken from Flower’s classic sig-nature compacts, the bottles are topped with a rose-shaped cap and are laser-etched in creamy white, rose gold and deep purple to represent the time of day.
Flower fragrances will launch in October in the U.S., in 3,100 Wal-Mart doors. In January, Wal-Mart added 1,000 doors to Flower’s distribution. The com-pany’s color cosmetics are now available in 2,560 stores of the mass-market chain. Flower color cosmetics and fragrance
will also make their way to Canada for the first time in October and will be sold in 400 Wal-Mart retail locations. Barrymore noted that the fragrances wouldn’t be merchandised with the celebrity brands, but with the designer brands.
“Hopefully, this can come out, stand the test of time, grow, evolve, change and not just be a one-off,” said Barrymore.
Flower fragrances will be housed in four linear feet of Wal-Mart stores ex-clusively and will also be sold online at walmart.com. Industry sources estimate
the trio will generate $30 million in first-year retail sales in the U.S.
“We believe our customers are look-ing for the quality and the packaging and the designs that are offered in the prestige market,” said Jody Pinson, vice president of merchandising at Wal-Mart. “That’s why we’re launching the fragrance under that same platform. We believe that we continue to have momen-tum in the [Flower] business, which is why we’re continuing to work with them in other [categories]. Right now, we’re pretty happy with the performance of it.”
Pinson added, “We’re going to contin-ue to get behind the brand and grow it in the marketplace, and I think fragrance is a great segue into that.”
The timing of Flower’s fragrance launch couldn’t be better, said Maesa executives.
“Because Flower is so unique, our repeat sales are through the roof,” said Petra Tucker-Moss, senior director of marketing and product development at Maesa. “[Also], we’re finding that we’re helping [Wal-Mart’s] beauty aisle become a destination in beauty, which they’ve never had before.”
To market the scents, Wal-Mart will provide in-store visuals and testers, which, according to Tucker-Moss, is something very unusual at the mass-market chain. Additionally, Flower will utilize all of its social channels.
“Right now, we’re very loyal and ex-clusive with Wal-Mart,” said Barrymore. “We’re about building within them and we really consider it a great partnership even though it’s not a proprietary brand.”
While Barrymore will appear in Flower’s initial ad campaigns, she is open to recruiting Flower girls and would like Flower to become a multigen-erational company.
“I’m starstruck when I see Terry de Gunzberg [the makeup artist and en-trepreneur] or those Clarins girls in [WWD],” said Barrymore. “Those are my starstruck moments now.”
To that end, for Barrymore, a career as a beauty entrepreneur is the perfect fit.
“[This career] is very tangible [for me],” she said. “I always loved film-making, it was my first love and I did it as a kid, but what really drove me was starting my own company and building Flower Films. Flower is a word that I’ve had as a banner for 20-something years. In some ways [being a beauty entrepre-neur is] very similar to filmmaking, it’s about creativity, but it’s all about busi-ness. The business needs the creative and there are rules and guidelines as to what money can allow you to do.”
She added, “I love directing and I have directed a film and I would love to again at some point, but I would not be able to direct a film right now. It’s two years of your life and I would miss taking my kids to school.”
However, when it comes to guidance with Flower, she seeks advice from her father-in-law, Arie Kopelman.
“I come to him with everything, I real-ly do,” she said. “[He’s] honest and sharp and a really wonderful driver to always do my best. I get great, wonderful, some-times harsh, smart advice from him. And I make decisions based on certain con-versations we’ve had.”
Although Barrymore has put acting, filmmaking and her newfound hobby of cooking on hold, the mother of two is planning to transport her family to Italy in the fall while she takes cooking classes.
“I totally had to stop cooking for a sec-ond and start losing this baby weight,” said Barrymore, adding that she recently baked a cornmeal, blackberry butternut biscuit and topped it with a scoop of vanil-la ice cream. “I refuse to diet, but I like to cook nothing but carbs with cream sauce.”
Barrymore Enters Fragrance With Three Scents
’’’’
beauty
It wasn’t easy. I was also pregnant and I’ve had two kids since I’ve launched this line.
— DREW BARRYMORE
Radiant, Cherished and Sultry.
Drew Barrymore and Petra Tucker-Moss
BARR
YMOR
E PH
OTO
BY K
YLE
ERIC
KSEN
; BOT
TLES
BY
JOHN
AQU
INO
WWD.COM7WWD FRIDAY, AUGUST 1, 2014
Research analyst Javier Escalante in a note.
“The miss on the top line [consensus of 4.3 percent and Sanford C. Bernstein & Co.’s estimate of 4.4 percent] might take some headlines, but it was only a marginal miss and was a slight improvement over Q1,” wrote Andrew Wood, a senior analyst at the research and brokerage firm. “Most [L’Oréal] businesses were in-line with expectations….New Markets were a little light [at plus 7 percent], but Luxe was good [at plus 7.5 percent].”
Although company reve-nues in North America were in negative territory — down
3.3 percent in reported terms — on a like-for-like basis they were on the up, advancing 2.4 percent versus a 0.6 percent dip in the first quarter.
“The performance in North America was ahead of our expectations, driven by Professional Products, Active Cosmetics and with L’Oréal Luxe gaining share,” wrote Wood.
The company noted on-going “strong” performanc-es in the first half in its Luxe and Active Cosmetics Divisions. There was a “gradual improvement” of the Professional Products Division, while a “sluggish” U.S. market and a slow-down — to a certain extent — in New Markets held back the Consumer Products Division, which is L’Oréal’s largest branch.
L’Oréal posted operating profits of 2.03 billion euros, or $2.78 billion, a 0.2 rise percent versus the same
prior-year period. Operating profitability was 18.2 percent of sales, a 30 basis-point in-crease versus first-half 2013.
Dollar figures are convert-ed at average exchange for the period to which they refer.
“L’Oréal delivered a solid [first half],” said Céline Pannuti, an analyst at J.P. Morgan Cazenove. “Like-for-like [results] came in a bit softer than expected, al-though the rebound in North America [which was up 0.9 percent] and the positive delivery in Western Europe [where sales advanced 2.8 percent] are encouraging. Despite the low visibility in the marketplace, [first-half]
numbers reassured with balanced regional perfor-mance [and] a solid margin delivery….The closing of the transaction with Nestlé backs our expectations for best-in-class [earnings-per-share] growth of 13 percent in full-year 2015.”
Pannuti was referring to the deal finalized on July 8 in which L’Oréal acquired 48.5 million of its own shares from Nestlé and completed the dis-posal of its 50 percent owner-ship in Galderma to the Swiss multinational. L’Oréal said the shares it acquired were immediately canceled and will be more than 5 percent accretive on a full-year basis.
Jean-Paul Agon, company chairman and chief executive officer, reiterated the compa-ny’s ability to outperform the world’s cosmetics market in 2014 and to post another year of like-for-like sales growth, improved profitability and increased net EPS.
Avon Sees Gains Despite 40% Drop
Shiseido Registers $17 Million Loss
L’Oréal Edges AheadOf the Beauty Pack
’’’’
L’Oréal’s performance stands out in the string of top-line misses
within [health and personal care] thus far this earnings season.
— JAVIER ESCALANTE, CONSUMER EDGE RESEARCH
{Continued from page one}
By KELLY WETHERILLE
TOKYO — Shiseido Co. Ltd. said Thursday that it posted a first-quarter loss of 1.78 billion yen, or $17.43 million at average ex-change rates, on increased tax and personnel expenses.
The company’s operating prof-it plummeted 80.2 percent to 1.36 billion yen, or $13.33 million for the three months ended June 30. Shiseido said higher personnel expenses stemming from bonus payments bit into its profitability.
Japan’s largest cosmetics company saw its first-quarter sales rise 3.7 percent to 168.38 billion yen, or $1.65 billion.
First-quarter sales from the company’s Global Business unit grew 9.8 percent but lost 1.8 per-cent in local currency terms. Shiseido said it posted growth in its Chinese business and the Aupres brand performed well. As
for the Americas and Europe, the company said Nars sold well but sales of fragrances and bareMin-erals products declined.
Shiseido said first-quarter sales
at its Japanese cosmetics business lost 3.3 percent. The company said consumers pulled back after April’s sales tax hike, but demand “appears to be recovering with each passing month.”
Since appointing Masahiko Uotani as chief executive officer earlier this year, Shiseido is under-taking major changes in its strategy. This new plan is set to start in the company’s next fiscal period, and will include organizational, opera-tional and marketing reforms.
Shiseido left unchanged its guidance for the 12 months end-ing Mar. 31, 2015. It expects net income to jump 45.3 percent to 38 billion yen, or $371.15 million at current exchange rates.
The company is predicting that operating income will fall 15.4 percent to 42 billion yen, or $410.22 million.
It forecasts yearly sales growth of 2.4 percent, totaling 780 billion yen, or $7.62 billion.
By VICKI M. YOUNG
SECOND-QUARTER RESULTS at Avon Products Inc. certainly weren’t its best, but there are indi-cations of improvement, with the North American market possibly returning to profitability in 2015.
The company posted results for the period ended June 30 that saw a 40.4 percent decline in net in-come to $19 million, or 4 cents a di-luted share, from $31.9 million, or 7 cents, a year ago. Total revenues fell 12.8 percent to $2.18 billion from $2.51 billion, which included a net sales drop of 13.3 percent to $2.14 billion from $2.47 billion.
Sheri McCoy, chief executive officer, in a conference call to Wall Street analysts, said, “We also continue to be negatively impacted by economic head-winds in several key markets. From a geographic perspective, North America, while declin-ing in revenue, is making good progress on cost management and landed where we expected. [Europe, Middle East and Africa] performed slightly better than we anticipated, and Latin America was below our expectations. While we anticipated soft perfor-mance in Mexico, Brazil came in lower than we expected.”
She also noted the company’s actions, as previously stated, to reduce corporate overhead costs. “Along with the cost reductions, we’ve taken complexity out of the system and clarified roles and re-sponsibilities across the market, re-gional and global corporate teams. Having this clarity simplifies how we work together. It will also help us to ensure that cost doesn’t creep back into the system,” the ceo said.
She reminded analysts that the company has said previously that the first half was expected to be challenging and, looking ahead, said, “As we move to the second half, we expect to show improved performance. This is based on our expectation for continued prog-ress and representative engage-ment, particularly in a few key markets like Russia and Mexico.”
McCoy also spent time discuss-ing the approach the firm has taken in evaluating its perfor-mance in the U.K., one of its top markets. That includes analyzing whether the right management team is in place; execution of strategy such as activation of new customers and retention, and the ability to provide the field staff with the appropriate information and/or devices to connect with consumers. She said the company
has been “systematically address-ing” these areas across its top 12 markets, which represent 80 per-cent of its revenue.
The analysis of the U.K. op-eration started in late 2012, when the business there was declining midsingle digits. Changing the management team was one fix, and they needed about two quar-ters to “diagnose this situation,” McCoy said. After determining the causes of certain performance issues, and then putting together a strategic plan — one part fo-cused primarily on execution, which included face-to-face con-tact followed by phone and SMS contact, while another component called for improving data flow to the sales representatives in the field — early results show a 12 percent increase of those contact-ed after placing their first order,
who then place a second order, while those contacted after plac-ing a third order are more likely to place a fourth order.
In addition to improving ex-ecution in its top markets in field management and market-ing, McCoy said the company has “improved our product offer-ings across our base business for strengthening new product intro-ductions in our core categories, fragrance, color and skin care.”
She also noted that the U.S. market remains an important re-gion for Avon. “It’s a large and im-portant beauty market. We see a number of our direct-selling com-petitors doing well in this market and while there is a long road ahead to get this business back to where it needs to be, in 2015, I an-ticipate that the North American business will return to profitabil-ity and no longer be dilutive to Avon’s operating margin.”
The ceo also acknowledged that the “U.S. is starting from a far more challenged position. And so, it will take time as we fix the things most critical to our rep-resentatives. We now have a ter-rific management team in place, a team who has strong direct-selling capabilities, excellent leadership skills and also team members who bring in external perspectives.”
McCoy concluded by noting that the U.S. issues were deeper than thought and there’s been a greater influx of macro issues. “We still think these are the right goals and they are doable by 2016, but the degree of diffi-culty is greater today than when we set the goals in late 2012. We will know a lot more about how we are tracking against our goals over the next six months as we improve execution in our key markets and drive improved rep-resentative engagement. We will also have deeper insights into our progress in North America, which will also have an impact on the timing of reaching our goals. We will be in a better place as we close out the year to pro-vide more information on how we are tracking,” she said.
Masahiko Uotani
Sheri McCoy
Jean-Paul Agon
PHOT
O BY
STE
PHAN
E DE
BOU
RGIE
S
8 WWD FRIDAY, AUGUST 1, 2014
By CRYSTAL MARTIN
CVS PHARMACY has its sights set on the masstige beauty market. Throughout early August, the retailer will roll out its first upmarket proprietary beauty line, called Makeup Academy, or MUA.
“We saw a gap between entry-level and prestige — Makeup Academy fills that void,” said George Coleman, vice president of merchandising, store brands and quality assurance. “It’s a premium beauty collection designed by makeup artists that delivers professional results.”
The 145-item line, available this month at 4,000 CVS doors and cvs.com/muapro, includes lashes, brushes and lip. “We decided on these categories, based on suc-cesses we’d already seen,” said Coleman. “Lip is the number-one impulse buy in our stores, and over the last three years lash has been the fastest-growing cat-egory in cosmetics.” CVS added brushes into the mix based on feedback from its beauty customers. “She was asking for better brush finish and components and sleeker, more modern design,” said Coleman.
Coleman and his team tackled the design issue by wrap-ping their products in the chicest of shades: matte black.
“The color of the components and packaging indi-cates a sophisticated, professional-level product,” said
Coleman. The brush cat-egory, priced $9 to $26, includes everything from the most basic shadow brush to a tool designed specifically for BB and CC creams. Lashes, $5 to $10, are made of higher-quality fibers and are divided into “natural” and “glamour” styles to offer consumers both subtle enhancement and high-impact looks. The Lip collection, $6 to $10, houses most of the stock-keeping units, with gloss-es, balms, stains, crayons and lipsticks in a rain-
bow of shades. Although the brand declined to disclose numbers, industry sources estimate Makeup Academy could generate $9 million in sales in its first year.
In addition to its e-commerce site, CVS will also launch muapro.com, which takes a more editorial look at the line and features makeup tutorials. In stores, Makeup Academy will be displayed on dedicated kiosks that detail product highlights, and beauty advisers in 400 doors will receive samples and educational materials on the collection, so they can advise shoppers on purchasing decisions.
CVS will also leverage its 13 million member cus-tomer loyalty program, the Beauty Club, by offering coupons, samples and special offers. “When you think of color cosmetics in our chain, it’s mostly about the big brands — L’Oréal, Maybelline and Cover Girl. But we wouldn’t introduce this line if we didn’t think it could play in that arena. We think we’ve hit a sweet spot.”
By JAYME CYK
WITH ITS NEW Acqua Originale collection of five unisex fragrances, Creed is unveiling what it bills as its biggest launch ever.
In August, International Cosmetics & Perfumes Inc. will launch the scents — Asian Green Tea, Cedre Blanc, Aberdeen Lavander, Vetiver Geranium and Iris Tubereuse — ex-clusively at Neiman Marcus.
“The inspiration is based on Olivier [Creed’s] living fragrance jour-nal of travel throughout the world,” said Thomas Saujet, president of ICP. “It is inspired by different places that he’s fallen in love with.”
For instance, Asian Green Tea was inspired by the culture and art of Japan. Each retails for $300 for 100 ml. “We anticipate [Asian Green Tea] will be our number-one seller in the collection,” noted Saujet, adding that Acqua Originale goes back to the tra-ditional way of making perfume with the brand’s infusion technique.
Each fragrance is housed in a glass flacon that evokes the broad wings of a bird in flight. Acqua Originale will be launched at 53 Neiman Marcus doors and five Holt Renfrew retail locations. Following the exclusive, it will rollout to Saks Fifth Avenue, Creed’s Madison Avenue boutique in New York and creedboutique.com.
For the launch, Creed will uti-lize its Instagram feed and partner with artist Marta Spendowska, aka Verymarta, who will put one illustra-tion a day on the brand’s feed, show-casing the whimsy of exploration.
Executives would not discuss sales figures, but industry sources es-timate the new collection will ring up $7 million to $8 million in first-year retail sales in the U.S. and Canada.
But that’s not ICP’s only news. In September, the company will launch a new pillar for Hanae Mori.
“We haven’t had a permanent new fragrance since 2006, since the introduction of [Hanae Mori] Magical Moon,” said Saujet.
The new scent is a takeoff of the gourmand juice from the limited-edition Eau de Collection. Hanae embodies a spirit of youth and the three cities, Tokyo, New York and
Paris, that Madame Hanae Mori loved and worked in.
Top notes are of Sicilian berga-mot, blackcurrant, red apple and orange blossom; its heart is of wild strawberry, jasmine, tea rose, tof-fee and patchouli, and the drydown features white cedarwood, siam benjoin, sandalwood and vanilla.
Hanae will include eaux de par-fum in two sizes — 50 ml. for $80 and 100 ml. for $115 — as well as a 250-ml. body cream for $53. In October,
a portion of the proceeds from U.S. retailers will benefit the National Breast Cancer Coalition fund.
In the U.S., the scent will be available exclusively for six months at 300 Macy’s doors and 30 Hudson’s Bay retail locations. With Macy’s, the company will do a visual week with advertising throughout the store.
While Saujet declined to discuss sales projections, industry sources estimated that Hanae Mori Hanae could generate first-year sales of $6 million to $7 million at retail in the U.S. and Canada.
Meanwhile, in the spring, ICP will add to its portfolio with the in-troduction of two Carven men’s fra-grances, Pour Homme and Vetiver.
“The fashion is exploding in terms of [Carven’s] brand aware-ness,” said Saujet. “Paris opened its first men’s [clothing] store so there’s definitely a focus on developing the men’s business.”
Pour Homme will be an entirely new juice, while Vetiver will consist
of the classic formula from the 1957 original scent.
Since the fragrance won’t be available until 2015, executives weren’t open to discussing the scent further, but with all the newness for the distributor and licensee they are not planning on changing the way they focus on a new launch.
“Essentially, our objective is not a launch,” said Emmanuel Saujet, chief executive officer of ICP, add-ing that the fragrance business has
become more commoditized. “It’s really what takes place two, three or five years after a launch. Twenty years ago it was a lot less about the gift and more about the content. Most [beauty] companies choose venues that are rich in advertising and image driven; we focus on the store level and on our customers.”
Emmanuel Saujet hinted that ICP is looking to either acquire or cre-ate a new brand. While the brothers wouldn’t elaborate on the new initia-tive, Emmanuel Saujet said, “We are working on a grand project, which will hopefully fuel the future growth of ICP. It’s not a lot more, but perhaps one or two additional brands that we are working on either though an ac-quisition or partnership or creation.”
While the Saujets wouldn’t discuss ICP’s current sales, industry sources estimate that for the 12 months end-ing in June, its revenue was up 15 percent and the company is on track to achieve $60 million to $65 million within fiscal year ending in 2016.
Sephora Adds New Services
CVS Makes a Premium Play
ICP Plots Future Growthbeauty
TALK ABOUT a quick turnaround. In September, Sephora will launch a new initiative
called Store to Door. If a customer wants to purchase a makeup shade or product that’s not available or they don’t want to carry their bag home, a Sephora associate will place the customer’s order via iPod Touch and it will be delivered to their home in three days or less for free.
“It’s easy and it just leverages the e-commerce in-ventory,” said Julie Bornstein, chief marketing and digital officer at Sephora Americas. “[Before] we had the ability to call and place an order for you, but this is an added service.”
On Thursday, Sephora relocated its 711 Lexington Avenue store in Manhattan to 740 Lexington Avenue, making for a much larger and more spacious venue. The 7,000-square-foot shop includes all of Sephora’s IQ services, Color IQ, Skincare IQ and Fragrance IQ.
“For us, digital has always been a means to an end,” she said, “which is creating a perfect shopping experience.”
Bornstein noted that this is the second generation of Fragrance IQ and that consumers are able to narrow down their fragrance selection by telling the technol-ogy what they like. Then the interactive wall-mounted system narrows down a selection of scents for the con-sumer to try.
“Nothing is exclusive to this store,” noted Bornstein. “But because [this location] is newer, it brings together a lot of the pieces that we have in other stores.”
In addition to Fragrance IQ and Store to Door, the new Lexington Avenue location will add the Sephora Brow Studio in September. Powered by Anastasia, the shaping service includes a complimentary mini make-over for brows.
The retailer will also feature complimentary make-up application classes on Sunday mornings before the store opens. Each class — namely Perfect Paired Lips & Cheeks, Contouring & Highlighting, Colorful Eye Makeup with Radiant Orchid, Day-To-Night Smoky Eye, Flawless Foundation, Skin Care Basics, Party-Ready Smoky Eye and False Lashes — accommodates from eight to 12 people and consumers can sign up on-line or on mobile devices.
Bornstein added that Sephora has about 60 loca-tions that conduct classes and she believes next year they will be available at most stores.
While executives declined to discuss sales pro-jections, industry sources estimated that the new Lexington Avenue store could generate first-year sales of $15 million.
In terms of Store to Door, Sephora executives ex-pects the service to have a multimillion dollar impact in its first year. — J.C.
PHOT
O BY
GEO
RGE
CHIN
SEE
PHOT
O BY
JOH
N AQ
UINO
PHOT
O BY
THO
MAS
IANN
ACCO
NE
The new Sephora on Lexington Avenue.
The Creed Acqua Originale collection.
CVS’ new beauty line.
FOR MORE IMAGES, SEE
WWD.com/beauty-industry-news.
WWD.COM9WWD FRIDAY, AUGUST 1, 2014
By DAVID MOIN
LINDA LEE, who at Macy’s Inc. expand-ed the personal shopping service from the province of the privileged to the gen-eral population, concludes her 35-year career at the department store today.
“My customer is really everybody who walks through Macy’s doors,” said Lee, group vice president in charge of Macy’s By Appointment personal shopping, cor-porate sales and business to business ser-vices, in an interview.
Though retailers are not generally as-sociated with superior service, accord-ing to Lee, the personal shopping side to Macy’s is alive and well. “We are still building wardrobes for customers,” she said. “MBA is in 130 Macy’s stores across the country and still growing. Within Macy’s Herald Square, we have 10 MBA offices covering all categories. It’s a busi-ness that has gained momentum.”
Lee started her career as an assistant sales manager at Bergdorf Goodman, held jobs in publicity, consulting, art direction
and is co-owner of Connie’s Racket active sportswear shop in Westport, Conn.
She joined Macy’s in 1979 as a fashion consultant and not long after was asked by then chief executive officer Edward Finkelstein to attract the carriage trade to a special department at Macy’s Herald Square called The Little Shops that was transforming from an eclectic boutique including accessories and ready-to-wear, into a true designer space housing col-lections from Donald Brooks, Geoffrey Beene, Yves Saint Laurent, Byblos, Thierry Mugler and Calvin Klein, among others. Finkelstein’s aim was to make shopping easier for socialites and subur-ban housewives. “I told Ed there is a much more realistic application to personal shopping at Macy’s — that we should re-ally branch out.”
It was also when women were rapidly entering the workforce, and black suits, white shirts and string ties were the uni-form. “That was exactly what women felt safe in,” Lee noted. Yet many didn’t want to look cookie-cutter and needed help with their wardrobes, either because they had
no time to shop, no interest in fashion, or found navigating Herald Square, with its huge square footage, daunting. To build the personal shopping business, Macy’s management offered Lee a team of assis-tants. “I told them I didn’t need assistants. What I needed were clones.”
Macy’s began adding blurbs at the bot-tom of its full-page ads, instructing shop-pers to call Linda Lee and her MBA person-al shoppers. Those ads would help dispel misconceptions that the store charged for personal shopping, had a minimum re-quired if the service was utilized or that
personal shoppers exerted pressure on clients to buy. Ultimately, Lee became the face of Macy’s for years by having her pic-ture appear in ads in The New York Times, Playbill and elsewhere.
Though the setting and the products are different, MBA now works like other personal shopping services at high-end stores, Lee said. Shoppers make appoint-ments, personal shoppers pre-shop and clients visit a consultation area with a fit-ting room. The staff is salaried, not com-missioned, so they’re objective and don’t try to sell customers just anything to run up the ticket. “For me, it’s a great joy making someone feel special when they didn’t have to spend a lot of money to feel that way. That doesn’t mean fawning over someone. Lots of people don’t like that. They want an efficient service, good taste and someone who understands your unique style and needs.”
Leaving Macy’s and the business she built “is bittersweet of course,” Lee said. “But after 35 years, I believe in term limits.” She hints at getting involved in the online realm, possibly bringing personal service to a selling channel that’s largely impersonal, though nothing has been decided. “I’m going to see what’s under the bed. I’ve pushed so many things away. It’s time to take stock.”
In recent seasons, Bon-Ton has reported weak sales trends and losses. In the first quarter, the loss widened to $31.5 million compared with a net loss of $26.6 million, and total sales de-creased 6.1 percent to $607.5 million from $646.9 million a year ago.
Furthering the challenge is the company’s structure, operating under several nameplates in dif-ferent areas of the coun-try, including Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers, making it harder and cost-lier to market the business-es. The company has 272 stores — many of which are in small cities with weak economies — in 25 states in the Northeast, Midwest and upper Great Plains. It has dual headquarters, in Milwaukee and in York, Pa.
In addition, the stock is low, closing Thursday at $9.30, up 22 cents or 2.42 percent. In the last 52 weeks, the stock has ranged from a high of $19.25 to a low of $8.76. The announcement of a new ceo was made after the closing bell Thursday.
Hoffman’s agenda has been to pump up pri-vate brands, further e-commerce, open clearance centers, localize assortments, personalize e-mails to customers based on their purchases, expand radio frequency identification technology and foster “depth versus breadth” so the company has less breadth of styles and focuses on bestsellers.
Bufano is expected to further some of what Hoffman put in place and develop new turnaround tactics. “This is an exciting opportunity,” she told WWD. “I am originally from the Midwest and I have been a Carson’s customer for a good part of my life.”
Bufano also noted that in retailing, “there are not that many ceo opportunities” and that she considered it “a great accomplishment” to be-
come part of the small club of female retail ceo’s. Membership includes Karen Katz at Neiman Marcus, Mindy Grossman at HSN and Jane Elfers at The Children’s Place.
“Most department store businesses have been around for 100 years or more,” Bufano said. “They may have different name-plates, but it’s been an industry that shows resil-ience and has been adopt-ing more modern and for-ward-thinking strategies,”
including e-commerce, which she characterized as one opportunity to move Bon-Ton forward.
Bufano credited Hoffman with bringing some momentum to the business and said she hoped to capitalize on it. “There’s opportunity to add value, improve the business and make it worthwhile for shareholders and vendors. Progress has been made. There’s more upside.” She will go through a transition period with Hoffman at Bon-Ton.
“Belk has been terrific to me,” Bufano added. “It’s a great organization with great people. This is a bittersweet departure.”
Linda Lee Exits Macy’s
Thomas Pink Wins U.K. Case Against VS
Bufano Headed to Bon-Ton{Continued from page one}
By NINA JONES
LONDON — Thomas Pink — known for its men’s and women’s shirts — said that London’s High Court had ruled Thursday that Victoria’s Secret’s use of the name Pink infringes on Thomas Pink’s U.K. and European Community trademarks.
The ruling followed Thomas Pink starting proceedings against Victoria’s Secret for infring-ing on its trademarks after Victoria’s Secret launched Pink branded shops and clothing in the U.K. in August 2012. The label’s Pink brand targets college-age customers with sleepwear, loungewear and lingerie. Victoria’s Secret has six stores in the U.K., one of which in Bluewater, Kent, is a Victoria’s Secret Pink store.
Jonathan Heilbron, president and chief execu-tive officer of Thomas Pink, which is part of the
LVMH Moët Hennessy Louis Vuitton group said: “We are [pleased] with the outcome of this case, and will continue to protect the considerable in-vestment that has been made into building Thomas Pink into a leading luxury-clothing brand.”
Following the ruling, Thomas Pink will now seek an injunction from the court “prohibiting Victoria’s Secret from such infringement in the future,” said Alex Field, head of marketing at Thomas Pink. Field said a meeting to discuss the injunction and its terms is likely to be held in October, when the High Court returns from its summer recess.
A spokeswoman for Victoria’s Secret in the U.K. declined comment.
Victoria’s Secret launched Pink in the U.S. in October 2002, targeting 15- to 22-year-olds. The brand is sold at Victoria’s Secret stores world-wide, and also operates freestanding stores in Canada and the U.K.
By KRISTI ELLIS
WASHINGTON — President Obama will host a three-day U.S.-Africa Leaders Summit beginning Monday, the first-ever such meeting to fea-ture 51 African heads of state, that will place a focus on a wide range of issues, including apparel and textile trade with the African continent.
A delegation of African and other U.S. and international apparel and textile companies and industry trade associations plan to partici-pate in the summit.
“Next Monday, President Obama will welcome 51 heads of state and governments to the U.S.-Africa Leaders Summit. The summit will take place over a three-day period and it’s…the larg-est event any U.S. president has ever held with African lead-ers,” said Linda Thomas-Greenfield, Assistant Secretary of State for African Affairs, who outlined the scope of the summit on Thursday. “It is an unprecedented opportunity to strengthen U.S. ties with Africa and to highlight our commitment to address is-sues that affect us collectively.”
Thomas-Greenfield said the U.S. has two main objectives hosting the summit, which will also feature several White House officials, including Obama, Vice President Joe Biden, Secretary of State John Kerry and Commerce Secretary Penny Pritkzer, and former President Bill Clinton, who is set to moderate the opening session of the U.S.-Africa Business Forum, being cohosted by Bloomberg Philanthropies and the Commerce Department, on Tuesday.
Clinton will moderate a panel titled “Expanding Opportunities: The New Era for Business in Africa,” which will include Doug McMillon, president and chief executive officer of Wal-Mart Stores Inc., as well as ceos from General Electric and The Dow Chemical Co.
Thomas-Greenfield said approximately 300 U.S. company execu-tives, African heads of state, members of Congress and the U.S. gov-ernment are expected to attend the business forum.
“We want African leaders, African citizens and Americans to come away with the clear message that the United States cares about the continent of Africa and that we are committed to an en-during, multifaceted partnership,” Thomas-Greenfield said. “We also want to see the summit lead to increased American invest-ment to the continent and to more direct linkages between U.S. and African companies. If that happens, it is going to have a multiplier effect. It is going to create jobs on the African continent and it is going to create jobs in the United States.”
The fashion industry has long considered sub-Saharan Africa a potential apparel sourcing platform. Congressional passage of the African Growth & Opportunity Act in 2000 attracted the first flow of apparel and textile investment into the continent.
AGOA, a U.S. trade preference program that allows 40 of 49 sub-Saharan African countries to be eligible to receive duty benefits, ex-pires Sept. 30, 2015, which has raised concern in the fashion industry.
AGOA contains a stipulation known as the “third-country fabric provision” that helps companies producing in 27 least-developed countries that are part of the pact to use fabrics outside of the re-gion and still receive duty-free benefits when shipping to the U.S.
Business has grown steadily because of the provision. Apparel and textile imports from the 49 eligible countries hit 260.9 million square meter equivalents, valued at $983.8 million, for the year ending April.
Paul Ryberg, president of the African Coalition for Trade, said a delegation from Africa’s apparel and textile industry plans to visit Washington to attend a portion of the summit and lobby lawmakers on extending AGOA and the third-country fabric provision by the end of the year to avoid disruptions in business.
“There is definite reason for optimism but if AGOA isn’t renewed until the last minute — in August 2015 — it will be a catastrophe,” Ryberg said.
Linda Lee
PHOT
O BY
GEO
RGE
CHIN
SEE
Kathryn Bufano
U.S.-Africa Summit to Begin
10 WWD FRIDAY, AUGUST 1, 2014
By ALEXANDRA STEIGRAD
NORMAN PEARLSTINE, 72, is executive vice president and chief content officer of Time Inc., where he is charged with the development of new content experiences, consumer products and lines of business across the company’s titles. In this role, which he has held since October, he also oversees the company’s editorial policies and standards.
Pearlstine’s journalism career includes serving as Time Inc.’s editor in chief from 1995 to 2005 and working at The Wall Street Journal in several prestigious roles, such as managing editor, executive editor and founding managing editor of The Asian Wall Street Journal and founding editor and publisher of The Wall Street Journal/Europe. Pearlstine was also Forbes magazine’s executive editor, launched SmartMoney, and, most recently, from 2008 to 2013, he served as Bloomberg LLP’s chief content officer.
WWD: Time Inc. recently formed a native advertising unit led by Sports Illustrated Group creative director Chris Hercik. Could you talk about that and its importance to the company’s future?Norman Pearlstine: We did. Native advertising covers an awful lot of stuff. In many ways, it’s just an extension of what in print had been called for years an advertorial. We’ve had a unit in place that Chris Schraft runs called Time Inc. Content Solutions that has been playing in this place, mostly in print, but increasingly digitally. It’s not totally new, but what is new is that under Mark Ford, who took the position as head of corporate advertising, we are putting a unit together that Chris Hercik will work on. I think that the balancing act is that you would like to find appropriate ways to have editorial talent working with Mark and his team to come up with content solutions for advertisers and, at the same time, you have to be obviously mindful of potential conflicts if you are not careful in how you structure these things. The Time Inc. Content Solutions model is one to follow in that it’s got some very experienced journalists working on those products but they don’t engage in magazines on editorial where they’d be covering the people that they are writing about.
WWD: So, journalists for the publications are working on native content?N.P.: Chris is really the exception to that. He happens to be the creative director at Sports Illustrated, a magazine that doesn’t cover the people whom we’re working on. He’s a brilliant creative director with a wonderful commercial mind. The place we’ll have to be careful is if there are packages that he’s working on would somehow involve Sports Illustrated. He’s going to have to recuse himself from doing anything at the magazine itself that would raise conflict. It’s my job to ensure that it doesn’t happen.
WWD: Is native changing the culture of journalism?N.P.: There are two things at work. One is, there is the separation between edit and advertising, particularly as it goes to the business side, and whether that’s changing, and church and state, as how it’s practiced at Time Inc. It was very different from anyplace else I can think of in that editors reported up to an editor instead of to a business head, not to a publisher, not to an ad sales person, but to a business head. That’s actually the way networks and [24-hour] news organizations and competitors in magazines worked for a long time. The issues for journalism and journalists, we see obvious places
where presentation is very different in a digital space from traditional print. If you go to a New York Times homepage, you cannot get to a story about the Ukraine without a click-off on a banner ad or a slide show. They’re not alone in that — you think you’re clicking on a video about a news event and you have a 30-second ad that you have to watch before you can get to it.
The technology is not only the way we change stories, but also changing the relationship to the consumer. If our brands are going to be in print and on mobile handsets and in video and events, we have to acknowledge that the playing fields are going to be different than a print-only product or a print product with extensions to it.
I think what it does is put a higher premium on transparency. Yes, there may be some convergence to what you see on a screen that’s different from the way you will experience a magazine in your hand, but there are lots of ways you can signal differences. Where native advertising and these other things get tricky is when the consumer can’t tell the difference between edit and advertising. We should want our advertising to be compelling. We want advertising that works. If we can help an advertiser refine a message so it works for our consumers, we should be doing that, but at the same time, you never want to do it by confusing the customer about what the experience is. If we fail in that regard, we do our brand and our customers a disservice.
WWD: At a recent talk I covered, you said: “We have yet to come up with a business model that can support much of the journalism that is important.” Do you still stand by that?N.P.: It’s moving fast. We have several titles now where our non-print revenue is growing faster than our print revenue is declining. That wasn’t true a while ago and we’re beginning to get some traction with our digital revenue. I think we’re getting more efficient and effective
in the way we structure ourselves to continue to do great journalism in taking advantage of technology. Just as there’s some technologies that jeopardize revenue for traditional products, there are also technologies that can significantly lower costs. I think we’re getting better at that. I don’t think anybody has cracked the code at this point, but I’m much more optimistic about the future than I probably was, as I see some of the things that are moving in, and as I step back and realize how fast stuff is going.
WWD: What did you learn from the roadshow process for the spin-off of Time Inc.? N.P.: It was fascinating. For me, part of the migration from being a division of Time Warner to becoming a publicly held company with a broad shareholder base is sort of what the expectations are for us as a company. Internally, [chairman and chief executive officer] Joe Ripp, [executive vice president and chief financial officer] Jeff Bairstow and I made close to a hundred presentations during a six-week period. We solidified a message and a plan that was responsive
to the questions, but also in addition to learning when not to trip over each others’ lines, we came together in terms of a real sense of what the path forward has to be that probably was not as fully formed as before we began the roadshow. You learn a lot from your customers, and when your customers are also your owners, you learn even more. You have some shareholders and debt holders who want to make sure we have sufficient cash
flow to pay back our debts and invest. There’s also a shareholder base developing
that understands that the print products remain strong — we have profitable magazines — and our operating margin is certainly respectable. We are not shy about acknowledging the headwinds that any company that is as dependent on print revenue as we are has to face. We have to move quickly to become a far more diversified company that finds revenues by developing these brands across multiple platforms and creating
new brands that grow out of a better understanding of this huge customer base that we have. We deliver 33 million subscriptions a month and we have very big numbers in terms of products that might work across platforms. It’s not just a digital transformation story — that’s part of it — but it’s also what other adjacencies are there. Can you do more with video? Can you do more with events?
WWD: Has technology rendered the newsweekly irrelevant? To put it bluntly, are newsweeklies dead? N.P.: Oy. Well, there are newsweeklies that are dead. Some may still be walking, but they’re dead. Look, I think Time, The Economist and Bloomberg Businessweek are three different products providing complementary content that replicates each other, but each of them serves a smart audience, has the potential to be global and in many ways goes after the same advertisers. It’s a different group from say, Time, Newsweek and U.S. News. One of the things about Time that continues to amaze me is the convening power, as evidenced from the Time Most Influential issue, coupled with
the power of the Time cover when we hit it right. When we hit on a subject, we get extraordinary response from it. We’re doing a better job now with social media, so that we are getting the credit for our own stories, as opposed to some money-losing aggregator who summarizes the story and manages to get the traffic. We’re pleased with the improvement we’re getting there.
I think the growth in time.com’s audience over the last year is one of the things that give me a sense of real encouragement. There’s no doubt that a print weekly — we have four of them, so I shouldn’t just be talking about Time — has to adjust to the marketplace. But that’s been true for a long time. People launched in 1974. Forty years ago it was seen as a replacement for Life. “How could Life survive in the age of television?” was the question everyone was asking when they shut it down. Today you look at things like Entertainment Weekly and the kind of work that Matt Bean is doing both in print and digital to really be the place for the conversation about Comic-Con, about the Upfronts, about the new season and so forth. You can’t just reprise the news. You have to have journalism that makes a point and you have to be in sync with your audience. When I think about Sports Illustrated, when I think about People, Entertainment Weekly, Time — all four of them have editors who are very much in touch with their readers and that’s a comfort to me.
WWD: Let’s talk about Fortune. You recently brought in a new editor to replace Andy Serwer. Was his dismissal linked to the need to be a digitally savvy editor or was there something more behind the shuffle?N.P.: Andy’s pretty savvy. Look, Andy is a fabulous editor. I wasn’t here when he got the [Fortune] job in 2006. During that time, he put out some phenomenal issues. He built a conference business. As you know, he didn’t control his Web site until May 30 of this year. The fact that Fortune has a lot of catching up to do in the digital space is not the fault of Andy Serwer. Andy Serwer didn’t have fortune.com, you had to burrow into CNNMoney to find it. I remember when he was — we didn’t call them bloggers then — but he was writing a daily market wrap-up for fortune.com when I was editor in chief that was a must-read. He’s a phenomenal talent. What I did feel — it’s not true for every magazine — but eight years [as editor] is a long time.
In the last 20 years, you know Andy has done it longer than any of his predecessors. There are two things that I’d say are different. There was a time when you’d step down from a job like that and you’d typically come up to the 34th floor in a corporate kind of position while seeing if something else might develop. When Jim Gaines stepped down as the editor of Time at the end of 1995, he came up to 34 and he sat down the hall from me. When Rick Stengel left Time and was replaced by Nancy Gibbs, he was sitting next to Martha Nelson. Jim Kelly left Time before that and came up as John Huey’s deputy. One of the things that is just different is that as a publicly held company, we’re running a lot leaner than we ever have in the past. When I was editor in chief, I had two full-time deputies and I don’t have any deputies now. Ten years ago, if you left Fortune after eight years, you’d find a corporate-level job and deserve it. That kind of thing is no longer possible for us. I view our management to some degree as a pyramid with a flagpole on top. You get to a certain point where there’s not much upward mobility.
WWD: Do editors have a shelf life then? N.P.: There’s nothing magical about how long an editor ought to hold a job. There have been exceptions. Mark Mulvoy was editor of Sports Illustrated for 14 years. Jim Seymour was editor of Entertainment Weekly for 12. In general, I think eight, nine years is a
’’
’’
Time Inc.’s Norman Pearlstine
I think the growth in time.com’s audience over the last year is one of the things that give
me a sense of real encouragement.— NORMAN PEARLSTINE, TIME INC.
FASHION SCOOPS
w01a010(11)a.indd 10 7/31/14 7:39 PM07312014194100
HELPING OUT: Giorgio Armani continues to support upcoming fashion talents. During Milan Fashion Week, running Sept. 17 to 22, Armani will host the runway show of Greek designer Angelos Bratis at his own Theater on Via Bergognone. The show is set for Sept. 17.
Born in Athens, Bratis, who graduated in fashion design from the prestigious Fashion Institute Arnhem in Amsterdam, launched his women’s label in 2005 and won the Who Is on Next talent contest promoted by Alta Roma and Vogue Italia in 2011. Bratis has also worked with the design teams of labels including Vionnet and Roberto Cavalli.
“My initiative in supporting little-known but promising designers is paying off, and personally I’m quite passionate about it,” said Armani. “The future of the system depends on new generations, and I am happy to be able to contribute in an active way.”
Bratis is known for his couturelike approach reflected in sophisticated dresses with an easy feel but hidden elaborate constructions. Previous designers who have shown at Armani’s theater include Andrea Pompilio, Stella Jean, Julian Zigerli, Au Jour le Jour’s Diego Marquez and Mirko Fontana, and Christian Pellizzari. — ALESSANDRA TURRA
SPEAKING UP: Insisting that he was speaking as a “mere Italian citizen,” Diego Della Valle had a few suggestions for Italian Prime Minister Matteo Renzi through the columns of Italy’s daily La
Repubblica on Thursday. Although the interview mainly revolved around the changes to the Constitution that Renzi is working on in Parliament, it also offered the entrepreneur the opportunity to take another jab at former prime minister Silvio Berlusconi, whom he has often criticized. Referring to the Constitution, Della Valle warned against “shoulder charging” the text, enacted back in 1947, as it stems “from an idea of the country that gives it a soul, in which all citizens recognize themselves. Today you can’t see the soul of this constitutional reformation. Because it’s not there. There is no culture
and no leading idea.” Della Valle, who heads
the Tod’s group and has a diversified portfolio of investments, ranging from media to sports, manufacturing and transportation, said “the
economy takes absolute priority, so I hope that Renzi in September will present a real industrial development plan for the country, taking the time he needs, but letting us understand the direction we are going.”
Della Valle, a longtime Renzi endorser, did not withdraw his support to the young politician, but said he is looking for “a big change and for a discontinuity with the past. Since Renzi has said he wants to do this, I hope and wish it will be Renzi to do so. But if there is something that does not convince me, I tell him — privately and publicly, as one should do amongst loyal individuals.” — LUISA ZARGANI
WWD.COM11WWD FRIDAY, AUGUST 1, 2014
long time. These are grinding jobs to remain fresh and so on. If you think about where Fortune is now, having just gotten back its Web site, there is a major transformation that we need to do. It’s a multiyear project and I think there’s a great argument to be had for bringing in a new editor with fresh eyes. I don’t think Andy would have imagined himself staying in the job another four years or so. In our conversations, there was kind of a presumption that would not be the case, so when a talent like Alan Murray was available, it made sense to move at this time.
WWD: Can editors reinvent themselves?N.P.: I hope so because I’ve been masquerading as someone who can do that for a long time. It’s in my interest to certainly believe that editors can reinvent themselves. If Andy came and had a great idea for something he wanted to do, of course we’d take a look at it. There was no desire to purge Andy from Time Inc. It was just a realization that we didn’t have the kind of corporate structure around here. This is a collaborative management team that doesn’t have a lot of layers. There’s a de-layering across the industry — if you look at what has gone on at Condé Nast.
WWD: Do you think there can be a successful news blog or is the blogosphere oversaturated and has less relevance than it had before?N.P.: I think there’s huge room for a personality who can create a following, and that personality can be a person or a company. I don’t know the economics of Andrew Sullivan, but I’m amazed by the quality of the stuff he puts out. It is as he says, “Balanced and biased,” it’s not unbiased, but it’s a pretty compelling read. Can he make it big enough that it’s a compelling business? I don’t know. I think there’s still room for compelling voices to build up and get a great following.
WWD: What is Time Inc. looking to invest in next? Are they primarily digital entities or will the company look at print?N.P.: It is hard to say much beyond
the obvious fact that we have many investment opportunities. You should look to our recent investment in 120 Sports and our acquisitions of Cozi and, before that, American Express Publishing. These moves suggest that we are focused on better serving existing and new customers in existing and new markets and that we are especially interested in opportunities in video, digital and print, where our brands and our core business competence, very much including marketing, can accelerate growth.
WWD: What are the big stories that Time Inc. should cover?N.P.: Everything’s a big story. I was struck by the power of Steve Brill’s health care piece in Time last year. I think about things like that and education and pediatric health — you can imagine it being an important story for Time, for Essence, for People, for Real Simple. On the other hand, for InStyle, the big story may be a revolution in beauty treatment. We need to value and honor those stories as well. I wouldn’t want to solely look at the Ukraine and Gaza — those are big stories, too — but we have the obligation and the luxury to follow [founder Henry] Luce’s [thinking] that the entire world is fascinating and we want to cover all of it.
WWD: What are you reading these days?N.P.: My reading has changed a bit. I’ve always had an interest in geopolitics and macroeconomics. If a story breaks in the subcontinent, I’ll read Dawn out of Pakistan. I’ll read Mint, the English-language business title out of Delhi. I’m not relying on someone who has a bureau in Delhi. You can go right to the source. In terms of more traditional things, I read The Nation, I read all of our titles, obviously. I tend to read the big news organizations at night — Washington Post, Wall Street Journal, New York Times. Then there are certain trades. I’ve always loved entertainment, so I’m reading The Hollywood Reporter. Women’s Wear, I like. I tend to be more interested in the trend pieces then who got a licensing deal for sunglasses, but that’s not surprising.
THE BIG SHOT: Nars has unveiled its fall Audacious Lipstick Collection campaign as part of the company’s 20th anniversary, featuring a portrait of British actress Charlotte Rampling that François Nars took. Nars, a known cinephile, often references movies in his collections and product
names. He had been a longtime fan of the actress. “Charlotte’s ability to transform is unparalleled,” he said. “Whether captured in pieces of artwork, through the lens of a magazine photographer or on the big screen, she has an amazing power to encompass a character, ” he said. He photographed Rampling in New York, enlisting artist James Kaliardos for makeup and hairstylist Didier Malige.
The ad is slated to appear in Vogue, Grazia, Harpers Bazaar, Glamour, Elle and Marie Claire throughout the U.K., Korea, Taiwan and Thailand, beginning Aug. 15. — CRYSTAL MARTIN VOGUE’S LATIN AMERICAN PUSH: Vogue is looking to expand its Talents Corner and Who’s On Next designer support and contest programs in Latin America
with a view to rolling them out in Peru, Chile and Panama in three to five years.
“We are in discussions to launch our Talents Corner as part of Peru Moda next year,” said Kelly Talamas, the magazine’s editor in chief for Mexico and Latin America. “And depending on how the Talents Corner goes, Who’s On Next could also go to Peru next year or in 2016.”
Simultaneously, Vogue wants to deploy Who’s on Next in Colombia, where it has operated the Talents Corner as part of the country’s fashion week Colombiamoda since 2012. “Colombia has always been one of the most important Latin American countries in terms of fashion,” Talamas said. “Colombians are very fashion forward and they wear local designers’ clothes.”
Buoyed by a booming fashion industry, Vogue last year launched local pages dedicated to Colombia, including designers and socialite profiles among other tailored content. Colombian First Lady María Clemencia Rodríguez also appeared on a Vogue Latin America cover.
The actions come at an auspicious time for Vogue, which is celebrating 15 years in the region. Monthly circulation for Vogue Latin America and Vogue Mexico stands at roughly 298,000 and 74,000, respectively. The magazines have a 3.5 million multiplatform audience, according to spokeswoman Karina Balderas.
Talamas said Chile is a also an interesting market for Vogue’s designer-development programs, though she noted a rollout may not occur until 2016 or 2017. Panama is also an attractive long-term market. In Mexico, Vogue is working to expand Who’s on Next to include accessories. This year’s winner, Mexican designer Francisco Cancino of the Yakampot brand, received a 500,000 peso ($38,000) award to help launch his label abroad. He competed with more than 60 designers, up from 38 last year. — IVAN CASTANO
MEMO PAD
FASHION SCOOPS
FOR MORE SCOOPS, SEE
WWD.com.
Charlotte Rampling, shot by François Nars, in the Nars Audacious Lipstick Collection ad.
w01a010(11)a.indd 11 7/31/14 7:39 PM07312014194101
SMALL SPACE
BIG BUSINESS
WWD Marketplace is the premier destination for the industry’s classified and career listings.
800.423.3314WWD.COM/MARKETPLACE
12 WWD FRIDAY, AUGUST 1, 2014
WHEN THE MOVIE “Life After Beth” premiered at the Sundance Film Festival in January, critics and audiences in Park City, Utah, received it as a perfectly cute indie movie with a couple of likable leads in up-and-comers Aubrey Plaza and Dane DeHaan.
DeHaan plays the boyfriend of Plaza’s Beth, a sweet 19-year-old who is killed by a snake bite and then comes back from the dead. In other words, just your average boy-meets-girl-turned-zombie rom-com. A small distributor picked it up and that seemed to be the end of that — even with a limited theatrical run, it was unlikely to find a mainstream audience. In the time since Sundance, though, the already rising profiles of Plaza and DeHaan exploded thanks in part to the imminent conclusion of her TV show “Parks and Recreation,” and his performance as the Green Goblin in “The Amazing Spider-Man 2.”
So when the movie was screened Wednesday night at the Crosby Street Hotel in New York, it seemed like one of those rare Hollywood moments when a tiny movie got a shot to break out thanks to the rising tide lifting its two young stars. (The movie is already on DirecTV and will hit theaters Aug. 15.)
Though the part of Beth seems tailor-made for a comedienne like Plaza, who is known for her deadpan delivery, she said she’d never encountered anything quite like it.
“I thought it was one of the best scripts I’d ever read,” she said.
“Life After Beth” stands apart from all of the other zombie movies that have or are soon to hit theaters because it comes from the writer of “I Heart Huckabees,” Jeff Baena. Like that 2004 film, it defies easy classification — it is both a broad slapstick comedy and a poignant romance.
“The whole movie is a metaphor for a bad breakup. So I connected to it on a very human level. You don’t normally get to see a zombie movie that’s so personal,” Plaza said.
For Baena, who is making his debut as a director, the screening was a happy conclusion to a project that at one point
looked dead on arrival. He originally finished the
screenplay in 2003. “We got so close to
making it, it was about to happen,” he said, and then it didn’t. The following year, “I Heart Huckabees” came out to mixed reviews. Ten years later, he picked up the zombie script again and made it last summer with Francis Ford Coppola’s production company,
American Zoetrope. What was it that
prevented him from making the movie the first time? Were zombies not hot property back then?
“I was just discouraged and I felt it was better to have
a fresh start instead of trying force it,” he said. “I think it was easier to let it go, then somehow it came back.”
— ERIK MAZA
“YOU CAN DO modern Portuguese cuisine without killing the past,” says José Avillez, whose passion for food has spawned a batch of five restaurants in less than three years in the Chiado neighborhood of Lisbon’s Old Quarter — each with a different concept and personality.
“Portuguese cuisine is based on stories and history,” says Avillez. “We’re a small country with many regions and different flavors and seasonings. Our kitchen is inspired by these regions, from the sea and the countryside to a more urban culture, but it’s not a substitute for the original, it’s an addition to it. You have to maintain the traditions and gastronomic soul of a country and that means flavor and textures.”
As an example, the 34-year-old chef offers an “edible cocktail” of white port, tonic water and a frozen cocoa-butter ball. “It’s a new inspiration that has everything, including the fact that you can eat port wine. It’s a different concept like seafood and pine nuts that for me are meant to be together,” he says.
Avillez, a disciple of revolutionary Spanish chef Ferran Adrià and his restaurant El Bulli, adds, “You have to do inspiration your way, but Ferran was a big influence. He changed my life, especially in terms of options.
“Portugal has its own identity and it’s very important to respect and maintain it. We have a Mediterranean climate and cuisine. Cod is the most emblematic ingredient and market-fresh vegetables, fish and seafood are basic.”
Avillez spends 80 percent of his time
in Belcanto, his most acclaimed eaterie, across the street from Lisbon’s 18th-century Opera House, “because the creative brains and a small laboratory are here.” So are two kitchens and 25 cooks. “It’s quite an orchestra, everyone knows what to do — and they don’t talk much,” clarifies Monica Bessone, Avillez’s public relations director.
Belcanto’s two dining rooms reopened in 2012 under Avillez’s tutelage and it earned him a Michelin star within a year. (There are only two other starred chefs in Portugal). “It’s fine dining, but not too pretentious because people aren’t looking for formal,” he says. With vaulted ceilings
in a soothing pale pink, grained-wood panels, a wall of wines and black leather-tufted banquettes, the restaurant has a clubby British feel.
It’s not easy to describe Avillez’s cuisine because nothing is what it appears. Think air and irony — and that’s just the beginning. Specialties include a mackerel belly starter; baby carrots
and turnips in clotted buffalo milk; raw shrimp with walnut emulsion, and a suckling pig that’s slow-cooked for 72 hours. French-fried potatoes are boiled before frying, and desserts include a frozen tangerine juice sorbet the size of a small baseball, and jellied olive oil, chocolate truffles and cookies from the coastal town of Cascais, where Avillez was born, tucked in a gift box.
In Cascais, and taking a page from Adrià, Avillez helms a takeout and catering service. “After 13 years, I’m still growing as a cook and trying for something different all the time,” he says. “Every new concept comes about because I have the feeling we should be doing more. I think it’s safe to say customers weren’t expecting this kind of creativity.”
How did he manage to convince them?
“It’s a big challenge,” he says. “We have to deliver a special experience. The best way to maintain a clientele is quality and the team is ready and on the job up to 16 hours
a day. People need to come and taste for themselves. Press and social media are important, but after critical appraisal is word-of-mouth. And the details, lighting and music are important, too.”
— BARBARA BARKER
BelcantoLargo de Sao Carlos, 10LisboaClosed Sunday and MondayTel.: +351-213-420-607For Friday and Saturday dinner reservations, Avillez suggests
booking three weeks in advance.Lunch or dinner for two, 150 to 200 euros, or $205 to $275 at current exchange, without tip.
Pretty Young Zombie
A Taste of Lisbon
PHOT
OS B
Y M
ATTI
HIL
LIG
PHOT
O BY
MAR
ION
CURT
IS/S
TARP
IX/C
OURT
ESY
OF P
MK*
BNC
PHOT
OS B
Y ST
EVE
EICH
NER
BEFORE TUESDAY’S SCREENING of “Guardians of the Galaxy,” the latest superhero-themed juggernaut from Marvel Comics, Lee Pace’s publicist was preemptively banning questions asking for “funny stories on set”; Zoe Saldana was not to be asked about her pregnancy, and Vin Diesel, up since 7:30 a.m., was said to be running low on fuel.
Then there was Chris Pratt, who plays Peter Quinn aka “Star Lord,” the film’s reigning protagonist. Star Lord was notably chipper despite being in the thick of the promo circuit in advance of the movie’s wider release on Friday.
“I was a comic [book] fan. I was mostly a fan of the drawings and artwork, so I collected some as a kid. Incidentally, even ‘Guardians of the Galaxy,’” Pratt said at the screening held at the Crosby Street Hotel in New York. The actor was confident that he had lived up to the character’s promise. “I know I did the character justice — more than that, I was able to be part of the Marvel family that helped bring a new version of this character to life. When people think of Star Lord, they’ll think of the way I played it and that makes me feel pretty good.”
Saldana, dressed in a roomy black dress, was open to remarking on one of her physical attributes: her character’s green hue in the film. “The payoff was so beautiful because I went through the physical transformation of it,” she said. “Green was definitely rewarding in the end — in the beginning it wasn’t so cool.”
Also at the screening were Seth Meyers, Salman Rushdie and Russell Simmons, who stopped Sports Illustrated model Hannah Ferguson to take a selfie.
A late-arriving Diesel, who provided voice for one of the animated heroes of the film, a humanlike tree, was pulled away just as he was inching towards the press line. “Help me,” he mouthed back — echoing the same sentiment of the reporters abandoned by the star. “He’ll be back,” a publicist offered as the actor was dragged into the theater, where he gave a shout-out to his mom and dad in the audience and his character’s catchphrase, “I am Groot!”
After the screening, sponsored by the Cinema Society and Men’s Fitness, Platt and Pace headed over to the rooftop at Jimmy at the James Hotel, where they were joined by Amy Poehler and Oscar Isaac, who has a part in the upcoming “Star Wars” film. Presumably, Isaac picked up some intergalactic acting tips. — KRISTEN TAUER
An Action Star is Born
FOR MORE PHOTOS, SEE
WWD.com/eye.
José Avillez
Amy Poehler and Paul Rudd
Zoe Saldana
Chris Pratt
Belcanto
Aubrey Plaza
top related