Hi, and welcome back to Line Sheet. I’ve settled back into life in Los Angeles, where it’s always leggings season, but it’s also currently party season. First up: this weekend’s Lisa Love-produced Academy Museum Gala.

Now that I’m once again resigned to life in running shorts—wondering where I’m going to wear what I bought in Paris other than in Paris—I’ve had time to dig into some of what surfaced over the past month. So today, just for you, I’ve got the tale of two I.P.O.s, essential Arnault family updates, a statement on the state of Big Luxury, and perhaps most importantly, a brief but hopefully illuminating investigation into what the heck is actually going on in the world of American department stores.

As always, if someone forwarded you this private email out of the goodness of their heart, please (out of the goodness of your heart) do the right thing and sign up for Puck.

Mentioned in this issue: Alexandre and Jean Arnault, Pharrell, Roger Lynch, Saks, Nick Jonas and Priyanka Chopra, Richard Baker, Neiman Marcus, Agnes Chu, the Samira Nasr situation, Marc Metrick, Tracy Margolies, chaos, Tommy Ton, Hector Muelas, Birkenstock, Sabato De Sarno, Emma Tucker… and [redacted].

• Some nepo baby color on the Birkenstock I.P.O.: As you may have already read in the trades, the Birkenstock public offering did not meet expectations. The stock opened yesterday on the New York Stock Exchange at $41 per share, which was $5 below the target price. Today was worse. BIRK closed at $37.79, down 18 percent from the I.P.O. price, for a current market capitalization of about $7 billion. (Nevertheless, people are still making money. The market cap is 1.6x what it was valued at when L Catterton, the LVMH-friendly private equity firm, and Financière Agache, the family office of the Arnault family, which controls LVMH, invested in 2021.)

  I’m not totally surprised that the response was blah: Retail stocks are always tough and the market is generally weak right now. I’m also not sure American investors understand the value of a luxury stock versus a regular retail stock (I’d consider Birkenstock to be the former). These investors are probably comparing the company to Skechers or Crocs, even though they shouldn’t be. Skechers’ EBITDA margin is close to 11 percent, Crocs’ is almost 28 percent, while Birkenstocks’ is over 30 percent.

  The Arnault family is betting big on Birkenstock’s future success as a public company, according to an amendment to the company’s F-1 filing, which said it planned to buy $325 million in ordinary shares via Financière Agache. Alexandre Arnault, who oversees product and communications at Tiffany, was also nominated to Birkenstock’s board of directors. There have been rumblings for more than a year that Alexandre, the middle child of five in billionaire Bernard Arnault’s blended family, might be headed back to Paris, but this indicates to me that he is firmly planted here in the U.S. region, a big focus for the group. (When are they going to try to buy Ralph Lauren, by the way?) We’ll see how the rebranding of Tiffany goes now that he has brought on his old Rimowa comrade, Hector Muelas, as chief brand officer. The pressure is on.

• In other baby Arnault news: Jean Arnault, the youngest of the clan at 24, had a glowing writeup in the Wall Street Journal last week, where he showed off the Tambour, the new ubiquitously billboarded Louis Vuitton timepiece he helped develop as marketing director of the watch division. In the Journal story, which includes a lead image of Jean wading through tall grasses, he waxed on about how this launch wasn’t about profits, but changing the narrative. (Typically, fashion-brand watches aren’t taken as seriously by collectors as watch brands.)

  Honestly, what I’ve heard from watch people is that this thing is pretty good, and Jean sounded smart in this interview. (He’s also appeared in several Hodinkee videos, if you’re interested in complications.) Perhaps he is another contender for, you know…

• In other I.P.O.ish News: Perfect Moment, the London-based skiwear brand backed by Nick Jonas and Priyanka Chopra, just filed to list on the Nasdaq. I was a little surprised that they bothered, given that the company—which sells super-fashiony après-ski and ski-ski wear—only generated about $23 million in its most recent fiscal year and remains unprofitable. Why torture yourself on the public markets, which feel so inhospitable these days? Why not just raise more money privately, and then go public later, when you’re making money in your sleep?

  Small-cap I.P.O.s used to be far more common before private funding was so easily accessible. For a company like Perfect Moment, the logic in going public may be that, if the market is receptive, they’ll have more liquidity, and while there will be pressure to grow incrementally, there’s no hard exit necessary. The brand is popular, growing fast, and has some of the same qualities as Italian outerwear label Moncler, which has performed well since its I.P.O. almost 10 years ago. (It’s a luxury, trend-driven item that is also functional.) Canada Goose hasn’t done as well, but it’s not really luxury.

• What does the Condé shakeup mean for YOU?: On Tuesday, Condé Nast C.E.O. Roger Lynch sent out a difficult-to-decipher memo announcing what sounds like a disassembling of Condé Nast Entertainment, the video production and distribution arm founded in 2011 by Dawn Ostroff with the support of our old friend, Bob Sauerberg. (Those were the days.) From what I can glean, CNE’s team, along with editorial, audience development, and branded content, will be reorganized so that it all feels less siloed. (The restructuring means that former Disney exec Agnes Chu, who’s been running CNE for about four years, is leaving.) Will Chu’s former team leaders now report to worldwide chief content officer Anna Wintour? (She has a long list of direct reports at this point.) According to Lynch’s memo, those deatils are still being hashed out. Internally, they’re also communicating that no layoffs are currently planned.

  In some ways, this restructuring makes sense. CNE began with high hopes to pivot the company’s vast I.P. catalog into film and TV. Instead, after Ostroff left, it essentially became a video click farm for B-list celebrities. Its legacy, as one former colleague put it (guess who), is the Bon Appetit debacle, the 73 Questions-guy debacle, and Cat Person. Closer collaboration may produce better results. On the other hand, it could also be reduced to a cost-cutting measure. A representative for Condé Nast did not respond to my request for comment.

• Damned if you do…?: Harper’s Bazaar editor-in-chief Samira Nasr is getting dragged on social media, and offline by Hearst colleagues, for something she reposted about Israel cutting power to Gaza. A story in the New York Post from Alexandra Steigrad (yes, she used to be the media reporter at WWD) played up Nasr’s Lebanese background as you’d expect from a Murdoch paper, so let’s not give it too much credence. However, there were also complaints sent to Hearst’s human resources department. People were offended. And Hearst does not like press, especially bad press. A rep for Hearst declined to comment.

  Earlier today, Nasr apologized on Instagram, describing what she posted previously as “deeply insensitive and hurtful.” And Hearst Magazines president Debi Chirichella actually sent out a note to staff, referring to the statement published by “one of our editors,” never naming Nasr outright, but explicitly saying that it “expressed views that do not represent Hearst’s values and I know that it offended and upset many of our colleagues, partners and readers.”

  My hunch is that this will all blow over fairly quickly for Nasr: She runs one of the only remaining magazines that is desirable to luxury advertisers, so it has to. But it speaks to a bigger issue around how a public figure should act in these times. Like many fashion insiders, Nasr uses Instagram to promote both brands and the work of her team, and to occasionally speak up about social issues. (Sometimes, those two things merge, like her recent post on a Harper’s Bazaar package about banned books.)

  One reason Nasr got the Harper’s Bazaar job is because she is viewed by Hearst executives and advertisers alike as a just-progressive-enough, positive force in the fashion industry. She doesn’t rock the boat, but she doesn’t stay off the boat, either. In the case of this war, however, sending the right message via social media is pretty difficult. (One fashion industry friend, who is Jewish, said that the only post that she has viewed as heartfelt was Gigi Hadid’s.) It’s probably why most publications have not posted about what’s going on, despite the fact that, when the war in Ukraine started, just about everyone put up blue-and-yellow flags. And yet, if you don’t say anything, you’re going to be called out for that, too. Curious to know what you all think, if you’re not too exhausted to discuss.

You can decode LVMH brand performance through the words the company chooses to describe how a brand did each quarter. For instance, at Bulgari, there is talk of “excellent growth.” At Tiffany, there’s no mention of growth or performance, just “continued elevation of the brand.” (Global sales of watches and jewelry were up 5 percent when adjusting for currency fluctuations.) LVMH doesn’t break out sales for Louis Vuitton, which passed the €20 billion in sales threshold in 2022, or break them down by region. But this week, I had Earnest Analytics pull U.S. credit card data for LV, and sales were down by double digits every month this year so far. (Earnest is essentially scraping credit card bills for this info, so it’s by no means going to be exact in terms of actual percent changes in sales, but I’ve found it to be directionally accurate.)

These figures are making everyone (and by everyone, I mean the investment community) nervous. LVMH’s stock is down 24 percent since its peak in April. RBC Capital Markets recently sent out a note citing five reasons the “luxury supercycle” is over. These reasons include the unprecedented growth spurt that occurred during the pandemic, persistent inflation, the retreat of the aspirational customer in the U.S., and the continued weariness of the Chinese shopper. Many believe that LVMH shares are now a steal: Bernstein remains bullish, giving it an “outperform” rating.

The bigger existential question is one I’ve been trying to answer forever (or at least the last year or two): Has Big Luxury become commoditized to the point of undesirability? Is this the end?

Of course not. The industry is far from finished consolidating; I’m not sure it will ever finish. But I do think that the sort of plug-and-play formula many of the largest brands have been following may not work any more if they want to keep steady. For LVMH, Pharrell at Louis Vuitton is a big test. At Kering, it’s Sabato De Sarno at Gucci. We’ll see what 2024 brings.

I’m not sure anyone is really killing it right now at multi-brand retail, but I was amazed by the consistency with which Saks came up in these conversations. The is-Saks-in-trouble palace intrigue continued on throughout fashion month, with stories emerging of some brands being owed millions of dollars, other brands pulling out of their agreements, and still others refusing to ship to the store.

Was trouble really afoot? Were people merely player-hating on Baker, who has raised at least $2 billion from two Middle Eastern sovereign wealth funds to vacuum up Neiman? Was some Vulcan chess accrual accounting at work? Were people needlessly starting trouble? Or is this just life in retail, where operators must be ruthless cost-cutters, even if that means some vendors don’t get paid on time?

This week, I called a bunch of companies who work with Saks in different capacities, and found that, for the most part, they had been paid. Some big accounts have been paid on time the whole time. Some were consistently paid two-to-three weeks late, which is very normal, if annoying, in the world of receivables. One service provider I know, who hasn’t been paid for months, was told the proverbial check was in the mail. So what is going on here?

Turns out that, yes, Saks Fifth Avenue and Saks.com—two different companies, remember—have withheld payments in multiple cases. However, those delays are in no small part due to the problems that Baker and HBC are having in Canada, where retail has just been absolutely obliterated and it operates 85 Hudson Bay locations. (That’s a lot for a country of 38 million people.)

The bigger question is whether this is a sound business in the medium to long term. In some cases, it’s getting harder for retailers like Saks and Neiman Marcus to maintain a healthy margin. An increasing number of brands work with Saks via a concession model, which means that Saks doesn’t buy the inventory outright, but instead takes a percentage of sales. This is a less risky way to operate, and can be wildly profitable if the volume of products sold goes up, but only at the high end of the market. Now that there have been issues with payments, more mid-level brands are thinking about negotiating a concession deal for themselves. (More risk for the brands upfront, but a greater return if things sell well, just like everything in life.) Is it worth it for Saks to comply?

It’s a question that Neiman Marcus Group (NMG), currently backed by PIMCO, Davidson Kempner Capital Management, and Sixth Street, which bailed the company out of bankruptcy in 2020 by eliminating more than $4 billion of existing debt, must also be asking. Funnily enough, NMG released a business update today, touting “relatively flat” sales in its 2023 fiscal year from 2022. Sales in the fourth quarter, which ended July 29, were down “mid-single digits” from the same period last year.

The good news was that the company has better control of its inventory than before. (NMG entered the fall with less stuff on hand than it had last year, which is good given this is bound to be a tough season.) NMG also has $1 billion of available liquidity for “business investments,” which means it doesn’t necessarily have to sell immediately to anyone.

And yet, the merger of Saks and Neiman Marcus continues to feel inevitable to some, especially those on Baker’s side, even if nothing is imminent. (Believe me, it does not seem imminent.)

What I’ve been trying to wrap my head around over the past month is why Baker still wants Neiman Marcus Group so badly. I know he’s in it for the real estate, but still, why would he consciously take on all these leases; giant stores in places where he already operates giant stores?

The answer, I guess, is that they are in prime locations, and that he’ll monetize them in any way he can, whether that means turning a storied department store (Lord & Taylor) into a WeWork (he made $850 million), or putting a casino on the top floor of Saks Fifth Avenue in New York City, a proposal that has yet to materialize. Or continuing to operate them as Neiman Marcus. It’s all about extracting value. And maybe that’s the real lesson about what works in the industry these days. No wonder people are so annoyed at him.

Usually I’m pretty skeptical of the whole “the quality of clothing has declined” line because I think it’s all relative, but when it comes to knits… let’s just say that there is a huge difference between Scottish and Italian cashmere! Buy Scottish cashmere on Etsy and you will thank me. [The Atlantic]

Pharrell is showing Louis Vuitton pre-fall in Hong Kong. [Hypebeast]

Loved Sam’s walkthrough of how Tommy Ton got the Rei Kawakubo shot during fashion week. [GQ]

Collabs are dead. Long live the collab! At least this Loewe x On “Cloudtilt” sneaker. It’s really good? [Esquire]

Miu Miu is Q3’s hottest brand, of course. [Lyst]

The woman behind the Instagram handle @Chanel. [Emilia Petrarca’s Substack]

A fascinating look at the Wall Street Journal under Emma Tucker. [New York Times]

The RealReal’s C.F.O. is stepping down. P.S., it’s still not profitable. [Retail Dive]

And finally… Whoa, someone we know did get bedbugs in Paris! (I won’t say who, but it wasn’t me.)