Fashion Business Is Not Performing Well, But Lifeng Group Has Not Given Up Treatment.

Over the past year, the group has taken a series of strategic initiatives to try to restructure its struggling and struggling fashion business. However, the Swiss luxury group's performance in the first half of the recent fiscal year is still unsatisfactory. If you want to compete with LVMH group and Kering, there is still a long way to go.
Due to the negative impact of ongoing protests in Hongkong, the group, which is known for its watches and jewellery businesses, has reported a profit of 1 billion 170 million euros ($1 billion 290 million), less than analysts expected, and net profit fell by 61% to 869 million euros.
The second quarter fashion business, including Chlo, Dunhill and Ala a, increased by 1% to 941 million euros, which has never provided a single brand's sales or profits.
Over the years, analysts have been speculated that it may consider selling its remaining fashion brands or merging with Kai Yun group to compete with LVMH group. Although the market value of the peak group has not changed much compared with that of five years ago, the market value of LVMH has soared, and this week has broken through the 200 billion euro mark.
Mario Ortelli, a luxury goods analyst, said, "investors have been questioning the efficiency of their fashion business for a long time."
However, Li Feng is still committed to developing its fashion business, which is confirmed by recent changes in the group. The head of the group fashion department left this autumn. Last week, the group announced that Chlo Geoffroy CEO La de Bourdonnaye will also leave the company. These initiatives are seen as an effort by the group to enhance its position in the field of soft luxury. In view of the group's core competitiveness, jewellery and watches have been threatened by macro trends (watch performance decline) and increased competition, especially if LVMH group successfully acquired Tiffany (Tiffany&Co.) for $14 million 500 thousand, a stronger fashion department will alleviate some pressure on the overall development of the group.
Next, BoF analyzes the development status of fashion brands under the group.
AZ Fashion
The group recently announced the launch of a joint venture with Alber Elbaz, a popular designer, calling it an innovative and dynamic start-up aimed at turning the dream into reality. The fashion industry is looking forward to more details of this cooperation, but there is still much work to be done if it wants to succeed in its financial performance.
In the absence of relevant facts to prove that the designer is enough to attract a large number of 00 young generation consumers, it is very risky and costly to launch a new fashion brand with them. The expectations of the group are also very limited. The brand will have a majority stake on the basis of cooperation projects. However, Ortelli said, "even with a talented designer at the helm, a start-up is unlikely to bring huge development and breakthroughs to the fashion business. "
　　 Chlo e
As the largest and most influential brand in the fashion business of the peak group, Chlo has undergone two major personnel changes this year: Eric Vallat will take charge of the group fashion and accessories business, and the former Maison Margiela chief executive officer, Geoffroy de la Bourdonnaye, Chlo Chlo's chief executive officer. Jerome Lambert, chief executive of the group, regards management change as a key factor of success, and said in an earnings call conference with analysts, "Chlo doubled in less than 5 years".
Morgan Stanley estimates that in the fiscal year ended March 2019, Chlo's sales amounted to 510 million euros, accounting for only 4% of the total sales of the group, and the brand may not be profitable.
After years of cooperation with Balenciaga and Louis Vuitton's Nicolas Ghesquiere, Natacha Ramsay-Levi joined Chlo in 2017 as a creative director, but she has not yet made breakthroughs in brand accessories and related businesses. It is rumoured that she will soon leave the brand, which Chlo has denied.
"The new brand series led by Natacha Ramsay Levi still takes time to get people to slowly accept it," Ortelli said. He also pointed out that Chlo is still a leading brand of women's clothing in a market environment with increasingly blurred gender boundaries. Under such circumstances, it is difficult for a medium-sized fashion brand to compete with those backed by LVMH and Kai Yun group. Those brands are able to enter and utilize large physical retail networks, expand their businesses faster and more directly, and at the same time, have more marketing budgets to attract customers.
According to sources, one of the first tasks of Bellini is to release the potential of Ramsay-Levi, which will last until March 2020.
Bellini will also be responsible for developing the brand's accessories business, including leather products currently accounting for about 60% of the total sales, while reducing dependence on department stores. Luca Solca, an analyst at Bernstein, said that if Bellini can lead Chlo ye to a more robust performance in key markets, "the enormous potential of the brand will be obvious". (Luca)
　 Ala a
In September this year, this very popular brand announced that Myriam Serrano will become its chief executive. But two years after the death of the beloved designer, it has not yet worked out a clear plan for future business development. Only one thing can be sure that its future growth will depend heavily on the accessories business. Morgan Stanley estimates that the net sales of the brand in fiscal year 2017 are about 65 million euros.
To a certain extent, the company needs to figure out how it intends to carry out its work creatively. Does this mean that Ala a wants to hire a new creative director to promote his vision, or to continue to rely on his huge work team for the time being?
Dunhill
Edouard Aubin, a securities analyst at Morgan Stanley, said the sales of British fashion brand Dunhill in fiscal year 2019 amounted to 160 million euros, and may not be profitable. Its chief executive, Andrew Maag, took office from Burberry in early 2017 and hired Mark Weston as creative director, although his fashion line has yet to make significant progress in men's wear.
The real opportunity of the fashion group's business may lie in its potential synergy with Yoox Net-a-Porter (YNAP), a luxury luxury electricity supplier. Lambert said that in the first half of this year, the link between YNAP and other fashion activities of the group has been further strengthened.
After stripping the Lancel last year, it seems unlikely that further streamlining of the current asset portfolio will not lead to any new takeover moves. In view of the fact that LVMH is far ahead of competition in the market, it may be the best choice for them to merge in a big way.