Weekend Briefing: Fashion retailers slash earnings forecasts, bracing for a tough year

 Weekend Briefing: Fashion retailers slash earnings forecasts, bracing for a tough year

Welcome to the Glossy Weekend Briefing, a rundown of the week’s must-know fashion news. As a valued Glossy reader, you will receive it in your inbox over the next few Sundays. To ensure you continue to receive this email, sign up for the Glossy Weekend Briefing here. Enjoy!

This past week retailers saw the slashing of their earnings forecasts as industry challenges – rising inflation, continued supply chain delays, the loss of the Russian market and declining demand – continued to accumulate. There was also the tragedy of the shooting in Uvalde, Texas, shortly after a similar shooting in Laguna Woods., California and Buffalo, NY. Fashion brands responded, and we gathered what they said and where they donated.

Also: Dolce & Gabbana’s takeover of Kourtney Kardashian’s wedding has led to millions of media dollars for the brand, and Chanel is on a huge uphill trajectory. Don’t forget to check out the Glossy Week Review podcast with me and Glossy Pop’s Sara Spruch-Feiner, as well as the Glossy Podcast with Jane Win founder Jane Winchester Paradis. – Danny Parisi, sr. fashion reporter

Fashion retailers are lowering their revenue forecasts
Gap became the latest American retailer to cut its year-round earnings forecast on Thursday, joining the likes of Kohl’s, Tapestry, Estée Lauder, Walmart and Target, which did the same throughout the month.

Gap cited rising costs, especially in shipping by air and freight, along with slower -than -expected demand. It echoed similar comments from Gap’s peers like the American Eagle, which is also planning short sales for the rest of the year on Thursday.

Gap sales last quarter dropped by nearly half a billion dollars, compared to the previous quarter, from $ 3.9 billion to $ 3.5 billion.

As Glossy reported on Monday, what brands are feeling right now is “planning for the worst,” as the absolute storm of supply chain issues, inflation, an economic downturn and much of Covid’s destruction came together.

Farfetch also cut its forecast for the rest of the year on Thursday, but it had a different reason. Russia is the third-largest market the company sells to, and based on its growth, CEO Jose Neves expects it to generate a larger share of Farfetch’s revenue by 2022. But in March , the company left Russia entirely. The full effects of that decision will be seen soon.

For many brands lowering forecasts, strong indicators at the end of last year also led them to have higher revenue estimates for 2022. The gap, for example, is predicted to be up to $ 2 in revenue per year. about the beginning of the year, much higher than $ 1.34. earnings estimated by analysts. Today, the company has lowered its forecast to 30-60 cents.

In an earnings call Thursday, American Eagle CEO Jay Schottenstein said, “Apparently, our plans to enter the year are more optimistic.”

Chanel to open new stores
Despite all the trends working against fashion retailers, Chanel seems to be constantly plowing them. The French fashion giant’s revenue rose 50% by 2021 to more than $ 15 billion, and its operating revenue tripled.

In particular, things that have become a challenge for other brands are a blessing for Chanel. According to CEO Philippe Blondiaux, speaking to Business of Fashion, Chanel’s constant price increase has helped boost its revenue. A Chanel flap handbag costs more than $ 10,000 now, compared to $ 7,000 in 2019. That doesn’t scare Chanel customers, though, who buy the style in higher volumes.

While Chanel still does not sell its core products online and has a smaller crowd of stores than rival Louis Vuitton – 250 to nearly 500 at Louis Vuitton – Chanel plans to open a network of private boutique store available only to clients who spend high. The stores will open in 2023, starting in Asia before spreading to other regions.

Brands are responding to the tragedy of gun violence
In the days after the shooting in Uvalde, Texas on Tuesday that left nearly 20 children dead, the fashion industry’s response has been unequal. While some brands like Madewell are quick to speak out and support specific action, others are more reserved or unspoken. Many brand founders or executives speak on their personal social channels instead of communicating through an official brand account.

At Glossy, we cataloged various responses and updated our story as many statements, calls-to-action and donations were made across the industry.

Fashion brands have joined Don’t Ban Equality
On a related note, 62 fashion and beauty brands, including Lululemon, Patagonia, Goop and Glossier, joined Don’t Ban Equality, an organization that seeks to protect reproductive rights in the U.S. Tuesday, the brands released a joint statement expressing their readiness. to fight for and protect reproductive freedom. The group has already started running ads across fashion and beauty publications like Vogue and Refinery 29 to get more support.

From the Don’t Ban Equality’s FAQ on its website: “It’s important for companies to use their voice and influence to respond to stringent social policies and efforts to limit voting so that ways to counteract that social policies through normal democratic means can be protected. Morning Consult data showed that 67% of adults agreed with companies speaking out against efforts to limit voting access for qualified voters.

A day of action for the organization was originally planned for Tuesday but was postponed due to the Uvalde shooting.

The Wedding of Kravis
You’ll be forgiven for the wedding mistake of Kourtney Kardashian and Travis Barker last week for a Dolce & Gabbana ad. The Italian brand was given almost complete control of the event, with every dress worn by each member of the wedding from Dolce & Gabbana.

Not only that, several events with the Dolce & Gabbana brand led to the wedding, including a party on a yacht owned by the designers. Launchmetrics estimates that the entire event earned Dolce & Gabbana more than $ 25 million worth of media impact.

More details on the uniquely branded wedding can be heard on this past week’s episode of Glossy Week’s Review podcast, along with a discussion by Emily Weiss who left Glossier and Balenciaga in the new course of fun. film and collaborations under new creative director Demna Gvasalia.

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