Luxury fashion enjoys a rebound, takes no risks
Alexander McQueen S/S 2011 at Paris Fashion Week
While buyers are slowly returning to the shops in Western Europe and the United States, designers seem to have received the same instructions to create outfits, bags and shoes that are both sellable and clearly recognizable among fashionistas.
The message being received is now is not the time to test consumers' appetite for something radically new and different.
Many had wondered if designer Sarah Burton, who recently took over at Alexander McQueen after its eponymous founder's suicide in February, would remain faithful to its feral looks and tapestry-inspired dresses.
After the house's show on Tuesday, critics were unanimous she clearly did.
As for Chanel, Karl Lagerfeld delivered the brand's traditional fringed suits and Jean-Paul Gaultier at Hermes drew inspiration from the brand's equestrian heritage, with tight-fitting leather pants and suede panchos.
"Brands have a fantastic advantage when they have a flagship product, which is easily recognizable and very representative of their style," said Luca Solca, analyst at Bernstein.
"Blending the core codes with new ideas, and standing out is not easy - especially in a market where fast fashion retailers are making trends and new ideas ubiquitous."
But if fashion houses tried to stand out, many explored the same themes. See-through dresses and lace outfits were spotted at Valentino, Alexander McQueen and Christian Dior.
The androgynous look was played out strongly at Balenciaga, Stella McCartney, Balmain, Givenchy and of at course Yves Saint Laurent, whose founder's past work influenced many designers this season.
Fashion buyers said well-to-do shoppers were back but spent money more carefully than they did two years ago.
"Customers are returning but the challenged economy is still with us, so when we buy something, it needs to feel worthy of the price," said Neiman Marcus Fashion Director Ken Downing.
"People pay a lot of attention to detail and craftsmanship. They won't buy something which is expensive for the sake of being expensive, there has to be some value in it."
But while customers are more cautious, the strength of the recovery has taken many analysts and luxury companies by surprise.
Demand for Louis Vuitton bags has been so strong, the leather goods maker last month decided to raise the price of some of its bags by as much as 9 percent and close its Parisian shops an hour early to preserve stocks ahead of Christmas.
Chanel has also increased the price of some of its classic wares by as much as 20 percent.
Meanwhile, Longchamp, France's biggest handbag maker which has hired super-model Kate Moss as part-time designer, told Reuters last month 2010 would be a record year with sales up as much as 25 percent.
And as demand has been picking up, many brands including Longchamp, Valentino and Hermes have lifted their full-year forecasts in recent weeks.
"The markets have come back," Gucci Chief Executive Robert Polet told Reuters with a big smile at the Stella McCartney fashion show.
LVMH, the world's biggest luxury group, will be the first in Europe to provide fresh details on the rebound when it publishes its sales numbers on October 14.
Citigroup this week said it had raised its earnings forecast for LVMH to reflect higher sales assumptions at the group's fashion and leather goods division.
Meanwhile, other brokerages including Deutsche Bank, HSBC and Oddo Securities said they expected strong third-quarter figures from LVMH and from rivals such Gucci Group, part of PPR, which reports at the end of the month.
And while China is the biggest engine of growth for fashion companies, the heads of Lanvin and Cerruti agreed Russian buyers were back after a two-year hiatus due to the financial crisis.
Mercury, Russia's biggest luxury group which distributes Chopard, Gucci and Armani, predicted 2010 would be a turnaround year with growth of between 20 and 25 percent.
"For luxury, the crisis is over," Lanvin Chief Executive Thierry Andretta told Reuters after the fashion show.
"There was a period when our rich clients had much cash at their disposal but did not wish to spend it. Now, this is over."
Christian Dior Chief Executive Sidney Toledano concurred.
"Customers are buying again ... It is true in Europe and in New York where I was last week," he told Reuters.
(Additional reporting by Marine Pennetier and Pascale Denis; Editing by Hans Peters)
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