Hi, and welcome back to Line Sheet. I’ve been in New York for four days and have already visited three
different members clubs, “eaten” three meals at Sant Ambroeus Lafayette, drunk drip coffee spiked with half-and-half at the Waverly Diner, and met Margherita Missoni twice. Tonight, I’m hosting a Puck Private Dinner with Swap Commerce at one of my favorite restaurants in the city—only to be named in tomorrow’s issue. (We value discretion!)
In this very, very special Inner Circle issue, Sarah “ SShapiro@puck.news” Shapiro assesses the state of the American upscale department store: With the merger of Saks and Neiman Marcus Group, the privatization of Nordstrom, and the rise of Macy’s-owned Bloomingdale’s as a formidable competitor in the designer space, the battle lines have been redrawn, and Sarah has plenty of behind-the-scenes details on how it’s all playing out. Up top, a little bit more from me on the Marc Jacobs situation and what
Olivier Rousteing’s exit from Balmain might say about the business itself. Plus, Rachel Strugatz is back with intel on the Dua Lipa–Augustinus Bader collaboration. I’ll be back tomorrow with more on the wild turn in these Condé layoffs.
Programming note: Tomorrow’s Fashion People guest is casting agent Greg Krelenstein, founder of GK-LD and a founding member of the Misshapes. Greg and I discuss the state
of campaign casting—has the era of the celebrity ambassador peaked?—Don Hill’s, Madonna, and why I was always too tired to go to Sway on Sunday nights, even as a 22-year-old. Listen here and here.
In-real-life programming
note: Puck’s Stories of the Season event is back in Los Angeles on November 14. Come for my talk with an incomparable roster of costume designers— Ruth E. Carter ( Sinners), Kate Hawley ( Frankenstein), Paul Tazewell ( Wicked: For Good), and Malgosia Turzanska ( Hamnet)—and stay for Peter Hamby’s conversation with Elle Fanning ( Sentimental Value),
Jesse Plemons ( Bugonia), Tessa Thompson ( Hedda), and Will Arnett ( Is This Thing On?). And for the grand finale, Matt Belloni will be chatting with Jay Kelly director Noah Baumbach; star and co-writer Emily Mortimer; and casting director Nina Gold. I would show up for that even if I wasn’t getting paid! (Matt is also interviewing
director Chloé Zhao for a live episode of his podcast, The Town.) If you’re an awards voter, or want to come to see what Jesse Plemons is wearing, request an invite at Fritz@puck.news.
Mentioned in this issue: Saks, Nordstrom, Erik and Peter Nordstrom, Catherine Bloom, Bloomingdale’s, Skims, Olivier
Bron, Denise Magid, Yumi Shin, Macy’s, LVMH, Dua Lipa, Anish Melwani, Olivier Rousteing, Balmain, Hedi Slimane, Marc Jacobs, and many more…
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Three Things You
Should Know…
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- But
what about Marc?: On Wednesday night, I stopped by the Financial Times’s Investing in America conference, held in the old Condé Nast building off Times Square, to hear LVMH North America C.E.O. Anish Melwani chat with Brooke Masters, the FT’s U.S. managing editor. Melwani, who has been on something of a press tour, shared some high-level intelligence about the state of the U.S. business, and how it relates back to the broader themes of our
current economy: tariff troubles, the immigration slowdown, etcetera.On tariffs, Melwani took a light touch, noting that the administration had been receptive to feedback regarding things that cannot be manufactured in the U.S. (He also reminded the audience that most Tiffany jewelry is made stateside, even if the diamonds are sourced elsewhere.) On retail, he said a big challenge is finding affordable housing for store staffers less than a two-hour commute away. And he downplayed
impacts of immigration on the business, noting that fewer than 100 LVMH U.S. employees are on H-1B visas. (He didn’t say whether they’ve had trouble finding skilled workers to make handbags in the still-new Louis Vuitton factory in Texas.)
During the Q&A, I asked about the company’s acquisition strategy in the U.S., especially now that the deal with ABG to offload Marc Jacobs has fallen through. Melwani said that LVMH remains acquisitive, and listed all the U.S.-based transactions the
business has made in recent years—from a winery to luxury hospitality company Belmond. (Neither is a fashion brand, obviously.)
Anyway, it’s unlikely that Melwani actually knows what’s going on with Marc Jacobs. (This is a job for Mr. Arnault himself, Fashion Group C.E.O. Sidney Toledano, and Melwani’s new boss, Michael Burke.) I’ve heard from sources that LVMH is recommitted to the brand for as long as necessary in order to find a sale
partner—in other words, LVMH will continue to manage the asset profitably to ensure a worthwhile transaction for the company and one that works for Jacobs, himself. Remember, Marc Jacobs is still a strong business; it’s just discordant, like Fenty Beauty and Kenzo, with LVMH’s pure luxury strategy.
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A MESSAGE FROM OUR SPONSOR
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- Fixing
Mayhoola’s Balmain problem: Somehow, the non-news news that Olivier Rousteing is exiting Balmain after a long and truly remarkable tenure—from intern to brand architect—has barely registered in my networks. Someone joked that the folks in Europe were speculating that Hedi Slimane might be next. That’s a laugh-out-loud, non-serious suggestion. (I didn’t even ask Hedi’s lawyer for comment!) The reality is that Balmain is in big trouble, and its owner,
Qatari-backed Mayhoola, needs to figure out if it’s worth keeping or selling.As I wrote back in April, Mayhoola acquired Balmain for $522 million in 2016—a ghastly sum that was contemporaneously viewed as extremely high and frankly crazy. Mayhoola was attempting to build a luxury group to rival Richemont, Kering, and even LVMH—an ambition that seemed crazy, too. Now, though, those ambitions have evolved, and Mayhoola is currently in the long, drawn-out, multiyear process of
offloading its prized possession, Valentino, to Kering.
There was hope at one point that Kering might also bite on Balmain, but Rousteing’s whole inclusive-exclusive fashion proposition has grown tired for the masses, and its beauty partnership with Estée Lauder has yet to deliver notable results. (They lowered the price of the product, which is never a positive indication.) But Balmain has an incredible history and archive, and there remains an opportunity to rebuild from Rousteing’s
loyal clientele, who loved his blow-up-doll take on fashion. I’m sure there are some young-and-hungry designers out there who could reset the brand and start moving the business forward so that Mayhoola, if the company so chooses, can recoup its investment.
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Rachel Strugatz |
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- Dua purpose?: Diffusion
lines, especially in beauty, present unique business challenges, and it’s unlikely that Dua by AB Science—the new line from Augustinus Bader, which launched on Tuesday—will be an exception. It’s unclear whether Dua Lipa is co-creator, creative director, an investor, the face, or… what. “They didn’t do any real storytelling about the partnership, Dua’s skin issues, or even show her in the lab with Dr. Bader—all the things that are required to build credibility,”
said a person close to the brand.Anyway, the collection is launching with three products that range from $40 to $80, and are sold on a separate site, DuaByAB.com. I’ll have more intel on sales—and thoughts on the Augustinus Bader brand in general—sometime soon.
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Now, on to the main event…
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With Saks preoccupied with post-merger integration and financial restructuring, Nordstrom
and Bloomingdale’s are battling it out to scoop up as much of its market share as possible. That means retail talent is up for grabs, brands are being wooed, and the fight for number two is heating up.
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On Saturday afternoon, I arrived at Stanford Shopping Center to enjoy an afternoon of channel checking—an old
habit from my days in corporate retail that has since become something of a weekend pastime. The upscale outdoor mall was busy: There were lines at On and Skims, and sales associates at Hermès were fully occupied with shoppers.
At Nordstrom, customers were clustered around a free charm bar and calligraphy station. The holiday gift shop, part of the store’s heavy rotation of pop-ups and activations, cleverly pulled together categories that usually live on different floors and
departments—women’s cashmere sweaters next to lip balm sets next to kids’ toys. The shoe floor, as always, was buzzing. Across the parking lot, Bloomingdale’s was noticeably quieter—not dead, exactly, but missing some of the same kinetic energy. That’s not surprising: While Bloomingdale’s rules New York City, the West Coast has always been Nordstrom territory. (Disclosure: I was a buyer at Bloomingdale’s for a decade but left 14 years ago.)
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A MESSAGE FROM OUR SPONSOR
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For decades, Saks Fifth Avenue has reigned supreme in the high-end multichannel retail space—its 50th and
Fifth flagship has stood as a beacon of American luxury for over a century. It’s the store where Chanel, Dior, and Celine made their homes, and where the .01 percent received literal champagne treatment. But as the O.G. department store brand has stumbled through its merger with Bergdorf Goodman and Neiman Marcus Group under the auspices of Saks Global, which has been undergoing waves of post-merger layoffs and financial restructuring, Nordstrom and Bloomingdale’s have been seizing the
opportunity to expand their market share.
I’ve heard that Bloomingdale’s is offering higher commissions to poach top Saks sellers, up to 10 percent in handbags and ready-to-wear in some instances—a rate once reserved solely for shoes. (A rep for Bloomingdale’s said they have a variable commission rate that is competitive with the market.) Meanwhile, Nordstrom is tracking the company’s every move.
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Even in an era when many have written off the department store category, luxury customers still
crave physical spaces where they can shop across multiple categories and experience not just selection, but also service. And Nordstrom is leaning into this opportunity. Since going private again earlier this year, the company has redoubled its efforts to become the go-to destination for V.I.C.s. Last February, Nordstrom hired Catherine Bloom, the longtime Neiman Marcus personal shopper, to run an appointment-only space in Beverly Hills.
Some observers have been
skeptical of the strategy—one, in particular, recently noted that Bloom had a great reputation and network, but the cost of her operation might outweigh her book of business. Regardless, Nordstrom is betting big, granting her the new title of director of luxury styling, and turning the former Nordstrom Local space on Melrose into a dedicated “Catherine Bloom for Nordstrom.” More recently, Nordstrom enticed former Bergdorf chief merchant Yumi Shin to switch teams, too. There’s
been no public announcement of Shin’s new title—and Nordstrom wouldn’t confirm her employment status—but perhaps she has been brought on to secure big deals to compete with Bloomingdale’s.
Nordstrom also has category depth and plays at the high-low merchandise really well. It has 90 main-line department stores, compared to 32 for Bloomingdale’s. Nordstrom Rack has 300 locations, and is expanding, whereas Bloomingdale’s has only 25 outlet stores. But in this case, more stores might mean
more problems. That’s more upkeep, more inventory, and the need to renovate more locations.
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The Olivier
& Denise Show
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Bloomingdale’s, meanwhile, is trying a similar tack. For decades, under Kal
Ruttenstein, Bloomingdale’s was known for capitalizing on trends, fashion, and discovery, but trailed in prestige as the more contemporary option. Under C.E.O. Olivier Bron, a former Bain consultant, and chief merchant Denise Magid, the brand is pivoting from its late ’90s and early aughts emphasis on young Eastsiders (a.k.a., its Y.E.S. department) to instead chase luxury shoppers who previously sought out Neiman Marcus, Saks, and Bergdorf
Goodman for more luxury labels and experiences. The retailer is investing millions in flagship renovations, partnering with Burberry to wrap their entire facade for the holidays, and attempting to secure exclusive capsules. Magid told me the “amount of newness we’re launching in every single family of business is just phenomenal.” (A source with knowledge of the in-shop boutiques at other department stores offered that that kind of investment could get expensive quickly for any retailer looking
to go there. Building the world of Chanel, to take a particularly high-cost example, would run about $1,500 a square foot at a minimum of 1,000 square feet.)
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Magid also mentioned their focus on the private-client strategy, and on customer service for all players
involved—including vendors, sellers, and partners. She said Bloomingdale’s allows brands to create their own worlds—like the Staud swim space this past summer. Other new launches this year include Toteme, Zimmermann, Chloé RTW, Tove, Rohe, and Victoria Beckham. She also noted that Bloomingdale’s has the upper hand in certain categories, like furniture, which can be a source of loyalty for customers decorating homes over time, who can shop for furnishings, housewares, and clothing all at once—you
know, the whole point of a department store.
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Of course, while Bloomingdale’s writes its comeback story in full view of the public
markets—parentco Macy’s trades on the New York Stock Exchange—Nordstrom is operating without the same investor scrutiny. After failing to take their family heirloom private in 2018, Nordstrom co-C.E.O.s, brothers Erik Nordstrom and Pete Nordstrom, bought back the company in May for $24.25 a share, with the help of Mexican retailer El Puerto de Liverpool—a significant discount to the $50 a share they had offered six years earlier.
In any case, the
real winner of these latter-day department store wars won’t be whoever carries the most brands. It will be whoever convinces big spenders that a department store still matters. Whether that means superior service, exclusive capsules, and merchandise—or an ecosystem of private-client relationships.
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No reading list today because this was long, but I’ll do a special Friday one to make you feel good that
includes lots of news and notes from the week.
Until then,
Lauren
P.S.: We use affiliate links because we are a business. We may make a couple bucks off them.
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