Hello, and welcome back to Line Sheet. Anyone else getting trailed online by Sydney Sweeney
x American Eagle ads? Just me?
In today’s issue, I’m looking at what’s in store for Loro Piana as C.E.O. Frédéric Arnault settles into his new role in the aftermath of the “quiet luxury” boom. Up top, what’s up with those Saks Fifth Avenue August layoffs, artist Anna Weyant’s New York Fashion Week extravaganza, and the latest in weird behavior from our buddies at Naadam—Quince’s Public Enemy No. 1.
Programming note: Today on Fashion
People, my guest is Yael Aflalo, founder of Ya-Ya, Reformation, and now… Aflalo, which she launched late last year. Yael and I first chatted about Aflalo right before she was about to go to market, so this was a bit of a check-in to see how it’s going, almost one year on. (Don’t worry, I didn’t let her send me
this top, but I think you should buy it.) For more on serial entrepreneurship and what women want to wear, listen here and here.
Mentioned in this
issue: Sydney Sweeney, Bernard and Frédéric Arnault, Anna Weyant, Yael Aflalo, Matt Brown, Marc Metrick, Cheryl Han, Claudia Schiffer, Dominique Crenn, Larry Gagosian, Jason Isbell, Matt Scanlan, Thakoon Panichgul, Giorgia Meloni,
Damien Bertrand, Pietro Beccari, Booth Moore, and many, many more… |
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Three Things You
Should Know…
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- Yes,
the layoffs are coming: It’s the end of the first week in August, and Saks Global employees are waiting for the next round of layoffs to commence. Internally, there’s an expectation that the team still based in Dallas (from before the merger with Neiman Marcus Group) will be a focus, although it’s worth noting that there will still be hundreds of employees in the region and the group’s new C.F.O., Brandy Richardson, will be based there. I’m also told that Saks Global C.E.O.
Marc Metrick has made casual buyout offers to certain members of the team so they can go out on their own terms, sort of. Just a few days ago, Cheryl Han, the chief digital officer of Saks Global, announced she was leaving.
Certainly, there are some folks who are looking to exit the business, given what many view as its precarious condition, but the problem is that there aren’t a lot of jobs like this left… anywhere. Metrick needs to both conduct layoffs
and deliver the hundreds of millions of dollars in post-merger synergies that investors are expecting. (Read Bill Cohan’s latest to see how it’s going with creditors.) What I also suspect is that you will see top talent being promoted or assigned to new, bigger roles after Saks Global is finished with this round of layoffs. For instance, I hear
that Matt Brown—the beloved director of the group’s Fifth Avenue flagship, who also managed the now-closed Canada stores—is getting some sort of promotion. A rep for Saks Global had no comment. - The new Fashion Week activation?: In the good ol’ days of the Bryant Park tents, credit card companies would invite select big spenders to New York Fashion Week shows as a perk. But the tents are long gone, and fashion shows don’t necessarily
hold the same appeal they used to. Plus, any big spenders tend to get invited directly by the brands anyway.
And yet, the credit cards still want to connect to fashion customers, whether that means hiring a name-brand supermodel like Claudia Schiffer to star in their campaign, as Chase Sapphire Reserve recently did, or staging another sort of Fashion Week event that has nothing to do with a runway show. In the case of Capital One, that means partnering with the
private, art-world-adjacent members club The Cultivist, and contracting the in-demand artist Anna Weyant to create an installation. The Dollhouse runs September 10-12 at the Academy Mansion, with related events including a dinner by San Francisco chef Dominique Crenn and a tea party hosted by Weyant herself. (There is a press event the evening of September 9.) Capital One cardholders can
buy tickets for the dinner or the tea party, but anyone can visit the installation and attend one of the daily makeup tutorials, which the marketing material refers to as “doll-inspired masterclasses.”
If this all sounds a little… surreal, I guess that’s the point? Weyant does not want for attention. Since breaking up with gallerist Larry
Gagosian last year—and taking up with the musician Jason Isbell, via a meet-cute at a GQ party—she’s staged a major show at the Thyssen-Bornemisza Museum in Madrid and has plenty of respect in the art world, glittering social life aside. I asked Weyant why she bothered doing this, other than money, of course. She noted, via email, that the project offered audiences a new way to interact with her work, creating something that is between “a daydream and a trap.”
She also worked with a yet-to-be-named “visionary” designer to bring the house’s “dolls” to life. I guess that’s why this is being pegged to Fashion Week? The same reason fashion brands want to be in art world spaces like Frieze, I suppose. Monica Weaver, who works on brand partnerships at Capital One, said as much, noting that they have an ongoing relationship with The Cultivist in particular. Could be good? - Naadam’s
botched “Soft” launch: If you haven’t followed the saga of Naadam and its co-founder Matt Scanlan, you can catch up by reading one of my early dispatches. But all you really need to know is that Scanlan has run into plenty of trouble over the years, especially when managing businesses other than the namesake (and paying vendors).
I
hear that Naadam, the producer of cheapo cashmere, is actually pretty stable at the moment, despite being beaten at its own game by Quince. So stable, I suppose, that Scanlan is launching a sub-brand called Soft. Who knows what that means exactly—bedding? sweats?—but the company has taken over the Thakoon Instagram account to get it going. (If you recall, Thakoon Panichgul’s namesake label is one of the brands that died under Scanlan’s watch.)
Anyway, the problem is
that they haven’t changed the Instagram handle—it’s still Thakoonny—so several followers of Thakoon and his work have messaged me, asking if he is involved in the project. He most certainly is not—remember, he has Hommegirls now, and left
Thakoon years ago—but, geez, if you’re going to take advantage of a follower count, at least be a little classier about it.
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As Frédéric Arnault tries to figure out a new story for Loro Piana in a
post-Succession world, Giorgia Meloni’s crackdown on factory working conditions threatens to shed light on what that $3,000 “quiet luxury” cashmere sweater actually costs to make. Is this gig now one of the Herculean labors required to one day win the big job? |
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Earlier this week, as out-of-office emails were being composed across Europe, about 1,000 of Gucci’s retail
and logistics employees declared something of a protest against their employer. The workers, represented by three Italian trade unions, claimed that they had not received the welfare payments promised to them. Will they actually go on strike? (A rep for Kering, the owner of Gucci, didn’t respond to a request for comment on this one.)
Italy’s union membership is relatively high—about a third of all workers—but labor has less bargaining leverage in the country since the employment rate is
so low (62.9 percent, compared to the OECD average of 70.4 percent). And yet, as most of the country’s actually employed embark on their requisite August holiday, it’s a reminder that Italy remains a hotbed for these sorts of headaches. |
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Just a few weeks ago, for instance, LVMH-owned Loro Piana had its own labor issues. The entity was placed
under court monitoring for the next year due to allegedly substandard worker conditions at one of its subcontractor’s subcontracted facilities. (That’s right, a subcontractor’s subcontractor.) This is the fifth investigation into the working conditions at a factory connected to a luxury brand since the Italian government started dredging this stuff up around 2023: Valentino, Armani, and fellow LVMH brand Dior have also passed through court monitoring.
Unsurprisingly,
there is a political undercurrent here. MAGA-adjacent far-right prime minister Giorgia Meloni has introduced her own populist agenda for the country—one that favors workers over conglomerates (to an extent) and endeavors to make Italy, a regional economic player, great again. Meloni “sees a power vacuum Italy can fill as economic leaders in the European Union, and they know this kind of stuff won’t fly and don’t want to be caught sitting on their hands,” as one person who works
in the Italian manufacturing system put it. Meloni and her disciples are “really clued into optics” of claims of poor working conditions, as this person put it, and “they’re really trying to get in front of any criticism while still making sure Italian-made brands are the best brands.”
But how bad are the optics, exactly? It doesn’t help luxury brands that the press, even outlets that shy away from covering them critically, feel empowered to report on labor issues—it’s about human rights,
after all. Criticizing a company’s business strategy or runway show may be off-limits to more pliant outlets, but dirty factory toilets are fair game. As I wrote when the Loro Piana news first broke, I’m not convinced this will impact overall sales or brand perception, even in the short term, at least not everywhere. This isn’t a Foxconn situation—which, by the way, didn’t really have any lasting drag on any Apple products.
In the West, consumers are generally desensitized to this sort of
unpleasant news, especially in America. In other parts of the world, however, consumers exercise a different range of moral judgement. In China, Dolce & Gabbana’s sales were directly affected by their advertising scandal in 2018—and arguably never fully recovered—while women elsewhere continued buying their collectible, incredibly well-fitting dresses. (It certainly didn’t stop Lauren Sánchez from loving up the brand.) In Korea, the Italian court’s investigation of Dior’s
factory dampened sales in an already challenging environment, exposing the fact that the margins on this stuff are wide—meaning, the cost of raw materials and labor isn’t very high, at least compared to the final price. (Perhaps that helps to explain why Dior C.E.O. Delphine Arnault and creative director Jonathan Anderson used “quality” as a major talking point upon his debut.)
Anyway, perhaps the most significant downstream impact of this micro-scandal
is that it may add a new wrinkle to the Arnault family succession kremlinology. In June, after all, Frédéric Arnault ascended to C.E.O. of Loro Piana, one of LVMH’s fastest-growing brands, if not the fastest-growing. At the time, it was an open question whether LVMH C.E.O. Bernard Arnault, whose shareholders recently gave him the green light to rule the company for another decade, had given his 29-year-old son this plum assignment because it was the
best job, or the easiest. In other words, was this a light-touch act of favoritism to burnish his credentials? Indeed, his siblings appeared to be toiling away in other, more challenged parts of the empire: Delphine is turning around Dior; Alexandre is turning around Moët Hennessy; and Antoine, as head of communications and image (and chairman of Loro Piana), has to deal with all of it.
Loro Piana, for its part, was growing in a
market where very few brands were succeeding, and it seemed as though Frédéric had been set up for success by his predecessor—the incredibly well-regarded (especially for LVMH) Damien Bertrand, who was shipped over to (actual) behemoth Louis Vuitton, where he is presumably being groomed to someday take over for Pietro Beccari as C.E.O. But was it also possible that Arnault had actually entrusted his young son with the responsibility of cleaning up this
mess?
The real challenge isn’t so much the bad press around the factories, but rather how luxury consumers respond to new information about what “quiet luxury” actually costs to produce. As one former LVMH executive suggested, “Most customers won’t be sufficiently moved by the labor issues. They most certainly will take offense at paying $3,000 for a cashmere sweater that is known to cost the company only $100. Bottom line: Wealthy folks—especially those who consider themselves discerning
enough to spend $3,000 on a sweater—don’t like to feel duped.” Anyway, it’ll be up to Frédéric to pick up the pieces. |
There isn’t any one person who is obviously at fault here. Sure, there’s a consensus within LVMH
that you could blame Bertrand, but ultimately it was a subcontractor’s subcontractor—the latest reminder, in case the Arnaults needed it, that their teams have to have eyes on everything, even issues that are nearly impossible to manage directly at superscale. The solution may be further vertical integration, but a brand like Loro Piana can’t really eradicate the need for subcontractors in Italy. In reality, this is really just the price of doing business for a company
of LVMH’s size. |
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But being duped means different things to different people. Many of those consumers who are buying
Quince blankets for their Hamptons parties will still purchase Loro Piana polos in bulk. And while muted wardrobes might go the way of the pandemic, the clean, preppy look—a way of being for many—is still very much on trend. Loro Piana is set up to accommodate its look: Preppy codes are interchangeable with many quiet-luxury codes. Its merchandisers simply need to
dust off the colors a bit, market the chino program, and remind consumers—via events, advertising, and product mix—that nothing goes better with a pair of deck shoes than an Italian cashmere sweater.
In the coming months, Frédéric will need a new story for the brand, not just new policies, to shape what Loro Piana represents in a post-Succession world. Perhaps he’ll hire some name-brand designers for the individual categories, similar to Hermès. Or maybe he’ll launch a new
campaign—full-fledged or whisper—underscoring the quality of the brand’s goods.
He also may eventually want a new story to tell about himself, too. As Arnault’s second-youngest son, and the only one in the family with a prized degree from École Polytechnique, his father’s alma mater, Frédéric might be able to leverage a successful clean-up as the latest evidence that he is the heir apparent after all—especially as his father’s latest retirement moratoriums seem to dim his older
step-siblings’ chances.
The good news is, Loro Piana is performing so well that B.A. directed Bertrand to control growth, hence the limited availability of its best-selling style, the Summer Walk loafer. So he always has that to fall back on. Everyone loves a revival. At least in theory. |
Ralph Lauren’s share price dropped quite a bit after its first-quarter fiscal earnings report, despite the
fact that it beat analyst expectations, profits jumped 30 percent, and it raised its full-year outlook. However, the increased odds for stagflation made investors nervous. There is certainly a reason to be cautious, but this is also a good reminder that the stock market is kind of b.s. [Reuters]
Claire’s did end
up filing for bankruptcy. [CNN]
Capri will receive quite the cash windfall once the deal for the Prada Group to buy Versace goes through, putting Michael Kors, its greatest asset and biggest challenge, in a better position. [WWD]
In defense of criticism! [The New Yorker] |
And finally… Congrats to Booth Moore, who was hired by The Wrap
as a weekly columnist. Other than Alex Badia (we love him), who even works at WWD anymore in the U.S.?
Until tomorrow,
Lauren
P.S.: We use affiliate links because we are a business. We may make a couple bucks off them.
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