Fashion. Beauty. Business.

DAILY EDITION 26 MAY 2016 1

TALKING GROWTHL’Oréal talks strategy for its fast-growing luxury division of fragrance, including a new YSL scent. PAGE 6

● Madewell still on a roll, while J. Crew brand sees revenue decline.

BY DAVID MOIN

J. Crew Group is banking on Madewell, Mercantile and cost controls to help it get through retail’s headwinds as the core J. Crew brand remains in repair mode.

As the retailer on Wednesday reported a nar-rowed net loss for the first quarter on a decline in sales, executives revealed aggressive expansion plans for the lower-cost J. Crew Mercantile format as well as the value-driven Madewell chain.

J. Crew saw a lower net loss in the first three months of the year to $8 million, compared to $462.4 million in the first quarter last year, reflect-ing the impact of the non-cash impairment charges.

Adjusted earnings before interest, taxes, depre-ciation and amortization increased to $45.4 million from $44.8 million in the first quarter last year. The company considers adjusted EBITDA an import-ant measure of the company’s profitability and performance.

Total revenues decreased 3 percent to $567.5 million from $581.8 million. Comparable company sales decreased 7 percent following a decrease of 8 percent in the first quarter last year.

RETAIL

J. Crew Narrows Loss, but Sales Continue to Fall

CONTINUED ON PG. 9

● The U.S. securities watchdog is the latest to take a close look at the Chinese web giant.

BY EVAN CLARK

The prominence Alibaba gained with its record-setting $25 billion initial public offering, along with its relentless growth and its geogra-phy-straddling structure, has powered a nev-er-ending spotlight probing both the strengths and weaknesses of the Chinese web giant.

While much of that heat has emanated from charges the company enables counterfeiters with its marketplace, its accounting practices are now receiving additional scrutiny from the Securities and Exchange Commission.

The U.S. watchdog has asked for more informa-tion on how Alibaba accounts for its investment into the logistics provider Cainiao Network, its policies around related-party transactions and how it reports operating data from Singles Day.

Shortly after the Nov. 11 shopping holiday, which was pioneered by the company’s Tmall, Alibaba said the day generated gross merchandise volume of

BUSINESS

Alibaba Under The SEC Microscope

CONTINUED ON PG. 7

As he did with Fendi fall, Karl Lagerfeld made watery ripples a major motif for resort — but with aquatic colors and a breezy feel. Of course, the characteristic craft and luxe was still evident, as in this cotton romper, whose multicolored wavy pattern is echoed — in fur — in a tulle jacket. For more resort, see page 4.

FASHION

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ON SHOWSavannah College of Art and Design unveils not one, but two retrospectives of Carolina Herrera’s designs. PAGE 5

TAKING FLIGHTCanada Goose launches its own retail with store openings in New York’s SoHo and Toronto. PAGE 7

FOR MORE INFORMATION, PLEASE CONTACT PAMELA FIRESTONE, ASSOCIATE PUBLISHER AT 212 256 8103 OR PFIRESTONE@WWD.COM

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26 MAY 2016 3

● Softness was seen worldwide with the exception of Japan.

BY DAVID MOIN

Tiffany & Co. is suffering from America’s retail malaise just like every other retailer.

Mirroring the disappointing first-quarter figures reported by the likes of Express, DSW, Nordstrom, Macy’s, Target, Kohl’s and J.C. Pen-ney, Tiffany on Wednesday reported declines in earnings and sales for its first quarter this year — and sees further declines ahead.

Tiffany is now forecasting full-year earn-ings per diluted share in 2016 to decline by a midsingle-digit percentage and diluted EPS in the second quarter to decline by a similar rate (14.8 percent) seen in the first quarter. For the full year, Tiffany projects worldwide net sales declining by a low-single-digit percentage from the prior year.

Last quarter, Tiffany saw weak consumer spending around the world except for Japan. Net earnings for first quarter ended April 30 fell to $87 million, or 69 cents a diluted share, from $105 million, or 81 cents a diluted share, a year ago, while worldwide net sales declined 7 percent to $891 million and comparable store sales fell 9 percent.

The latest earnings included a tax benefit of 5 cents a diluted share related to the settle-ment of a tax examination. Net earnings were generally in line with management’s previously announced expectations for the first quarter.

“As expected, this was a difficult quarter in terms of both sales and earnings growth. We faced numerous challenges, including contin-ued pressure from foreign tourist spending in Europe, the U.S. and Asia, particularly in Hong Kong,” said Frederic Cumenal, chief executive officer. “We are continuing to take actions that are intended to strengthen sales growth with local customers in the U.S. and around the world. From a strategic perspective, we believe that our initiatives will enhance our ability to provide our customers with extraordinary products and experiences and ultimately contribute to improved financial results. We remain focused on generating sustainable long-term sales and earnings growth.”

Tiffany’s strategy for improved performance revolves around store renovations, including those occurring in San Francisco, Beverly Hills and Vancouver as well as some store reloca-tions; in-store training and new systems to

engage with customers better, and introducing new designs across all product categories and price points.

In a conference call, Mark Aaron, vice president of investor relations, said, “The actual 15 percent EPS decline, which included a tax benefit and a 21 percent decline exclud-ing the benefit, were generally in line with our expectations. Most relevant, however, is that despite the persistence of well-known macroeconomic challenges, we are continuing to pursue a number of important strategic initiatives designed to strengthen Tiffany’s position as one of the world’s most important luxury brands.”

Tiffany’s total sales in the Americas declined 9 percent and comparable store sales dropped 10 percent. On a constant exchange rate basis, total sales fell 8 percent in the first quarter and comp store sales declined 9 percent. “We attribute the overall lower sales to softness in domestic customer spending in many U.S. markets as well as lower spending by foreign tourists of many nationalities in New York and other high-tourism markets,” Aaron said during the call. “The total sales decline was due to unit-related softness across most jew-elry categories.”

In the Asia-Pacific region, total sales dropped 8 percent and comp store sales declined 15 percent in the quarter. On a con-stant exchange rate basis, total sales declined 5 percent and comp store sales were down 12 percent. In Japan, total sales rose 8 percent and comparable store sales rose 12 percent

in the quarter, despite the Japan Department Stores Association reporting this week that its members’ sales to international tourists slid 9.3 percent in April to 17.9 billion yen, or $162.89 million. On a constant exchange rate basis, which excludes the recent dramatic strengthening of the yen, comp store sales rose 5 percent, due to increased spending by local customers. But that growth was mostly offset by lower wholesale sales, resulting in a total sales increase of 1 percent.

Total sales in Europe declined 9 percent and comp sales fell 15 percent in the quarter. On a constant exchange rate basis, total European sales declined 7 percent in the quarter and comp store sales dropped 14 percent.

E-commerce sales, which account for 6 percent of Tiffany’s total sales, rose “slightly” in the first quarter.

Engagement jewelry, wedding bands and fashion jewelry, specifically the Tiffany T and Atlas collections, performed relatively better than statement fine jewelry and solitaire jewelry.

“While we’ve seen lower overall unit volumes in fashion silver jewelry in certain regions, we are pleased with the initial reaction to new silver jewelry pieces that have been added to the Return to Tiffany and Infinity collections to address softness at price points under $500,” Aaron said.

In addition, the recently expanded Victoria collection performed well, but was offset by soft and mixed performances in other collec-tions, the company said.

RETAIL

Tiffany Takes a Hit in Q1

● The capsule collection will hit the fast-fashion retailer’s select stores and online on Nov. 3.

BY JENNIFER WEIL

PARIS — Hennes & Mauritz has teamed with Kenzo to create a limited-edition line for the Swedish retailer. The capsule collection will hit select H&M stores and go online November 3.

“Since joining the house in 2011, Carol Lim and Humberto Leon have set their own fashion agenda with collections full of bold colors and vivid prints, revealed through high-impact shows, artist

collaborations and creative digital cam-paigns,” H&M stated. “Global influences and traditions are remixed and fused with the energy of the street, resulting in collections that are both inspirational and accessible to their fans around the world. At Kenzo, fashion expresses freedom, joy and individuality for all.”

Lim and Leon, Kenzo’s creative direc-tors, said they want to think big with the collaboration, “push the boundaries and bring the new energy of Kenzo to every-one around the world.”

The line will launch in 250 H&M stores worldwide and online, and include apparel for women and men, plus acces-sories. H&M did not reveal price points or the number of styles.

H&M’s past holiday collaborations have been with the likes of Balmain, Karl Lager-feld, Lanvin and Stella McCartney.

It’s official! @kenzo is H&M’s next designer collaboration. Let the countdown to #KENZOxHM begin.

FASHION

Kenzo Joins Forces With H&M

Carol Lim, Ann-Sofie Johansson and Humberto Leon.

Rihanna and Dior Collaborate on Sunglass Collection ● Rihanna designed a collection of futuristic sunglasses for Dior.

● Parsons Honors Four Extraordinary Women at Annual Benefit Show

● Amy Schumer Addresses Her Trolls: “I Think I Look Strong and Healthy”

● Ashley Graham Launches Swimsuits for All Collection

● Kenzo Joins Forces With H&M

Global Stock TrackerAs of close May 25, 2016

ADVANCERS

DECLINERS

Marks and Spencer Group plc +2.82%

Luxottica Group SpA +2.45%

The Swatch Group Ltd. +1.77%

Inditex SA +1.72%

Lotte Shopping Co. Ltd. +1.72%

Elizabeth Arden Inc. -8.54%

Target Corp. -7.62%

Tailored Brands Inc. -5.54%

Sears Holdings Corp. -5.39%

Ascena Retail Group Inc. -4.10%

TOP 5TRENDINGON WWD.COM

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Fendi Resort 2017 Karl Lagerfeld’s resort collection for Fendi was highly crafted, hyper-decorated — and yet infused with fun. White and red prints, inspired by vintage American quilts, gave graphic appeal to flowing, feminine silk dresses. A search for the ulti-mate lightness also guided the construc-tion of coats, especially in a checkered mink intarsia jacket with leather details, as well as a hole-punched, black fur midi-length peppered with bright, whimsical long-haired mink and fox decals — an exquisitely bold effect.

As with Fendi’s fall collection, waves were a major motif, especially in a mul-ticolored cotton romper, worn under a tulle jacket with a similar pattern realized in mink and fox fur. As if that weren’t enough of a play of contrasts, in the lineup the watery ripples were juxtaposed with romantically flowered medallions, embroidered and printed on a satin blouse and skirt. — Alessandra Turra Jenni Kayne Resort 2017 Any variation on blue and white stripes brings to mind a nautical vibe, and the striped keyhole slipdress and blouses, and ivory and navy contrast shell and

matching cropped pants in Jenni Kayne’s resort lineup were no exception. Delicate black-and-white polka dot pieces and pretty V-neck slips with lace trim further conveyed a mood of unfussy feminin-ity, though nothing was too precious. The softness was grounded by chunky cashmere knits, and sturdy hiking and equestrian boots for a balanced noncha-lance overall. — Jessica Iredale

Resort Now

Wolk Morais Resort 2017 The Los Angeles romance continues for Brian Wolk and Claude Morais, who presented their resort lineup on Tuesday night at The Standard Hollywood hotel. The third collection and runway show the partners have produced since moving from Brooklyn and founding the line here was an ode to Saturday nights in Tinseltown.

“In general, our work since we started Wolk Morais has been this trajectory where we were inspired by our life around us,” Wolk said. “First was [multicolors, presented in a modern art gallery], and the last was inspired by our love of nature and hiking [shown in the now-defunct French Market Café]. This is really our Saturday nights out here.” He was referring specifi-cally to Giorgio’s, the Saturday night dance party held inside the hotel’s tiny backroom discotheque, run by producer Bryan Rabin and DJ-to-the-President Adam Bravin, who agreed to mount a Tuesday-night version of the party for the runway presentation. As smoke filled the air and the disco balls spun, starlets including Cody Horn, Debby Ryan, Arden Cho and Katherine McNamara sipped cocktails while perched on sofas in the club’s VIP area — editors, buyers and friends sat in folding chairs along the runway.

What followed was a 27-look collection of black denim day dresses trimmed in metallic brocade and disco-worthy dresses and jumpsuits in colorful lamé and striped brocade. There were even a few items thrown in for the boys: a gold lamé tuxedo jacket, a more traditional set of black tails and a black marabou coat, which could work for the girls, as well.

Morais explained the collection was “our interpretation of Saturday nights dancing and that sublime young Holly-wood [actress] who’s been wearing our

clothing.” It’s not just “young” Hollywood who’s adopted their look. Thanks to celebrity stylist Elizabeth Stewart, who has mentored the designers and styled all of their shows, Cate Blanchett and Julia Roberts have worn Wolk Morais’ polished denim dresses and jumpsuits at press calls in Hollywood and Cannes.

While that particular look was again a success this season, some of the more fanciful evening pieces — surely intended for Millennials too young to have worn the original bubble skirts back in the Eight-ies — felt a bit overwrought. A draped silk mini over a short tulle petticoat wasn’t as appealing as the well-constructed denim corset that went with it. Oversize bows worked on the jumpsuits and short dresses; the spiral ruffles and rosettes not so much.

What the duo did nail was the way Angelenos, and increasingly more women around the world, organize their closets: denim for day, special going-out pieces for night, all in seasonless fabrics. “Here peo-ple can wear their favorite things all year round. Obviously there is always a time for a coat or jacket, but we just decided that when that time comes, it calls for some feathers. It’s not fur and it’s not wool but it’s something fantasy and fabulous you can wear any time of the year,” Wolk said. And can get any time, as well: While they experimented last season with see-now-buy-now and e-commerce, this season their clothes are set to be delivered to store or private clients within one week of orders being placed. The city’s flexibility has freed them from traditional retail or fashion show timelines, as Morais pointed out.

“Our romance with L.A. doesn’t have to be a one-night stand,” the designer added. “It’s become a steady affair.” — Marcy Medina

Fendi

Jenni Kayne

Actress Katherine McNamara in Wolk Morais.

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● The Savannah College of Art & Design’s “Refined Irreverence” features more than 130 of the designer’s creations.

BY BRENDA LLOYD

Carolina Herrera had a big march through Georgia last weekend, when the Savannah College of Art & Design honored her four decades as a designer and simultaneously opened two exhibitions of her designs over the past three-and-a-half decades in Savannah and Atlanta.

Named “Refined Irreverence,” the exhibi-tions, which opened May 20 and close Sept. 25, are at the SCAD FASH museum in Atlanta and at the SCAD Museum of Art in Savannah. They mark Herrera’s first major exhibition in two cities simultaneously and SCAD’s first concurrent exhibitions at its two museums. Originally intended to display about 75 of Her-rera’s designs, the exhibits ended up with 134 pieces, loaned from Herrera and from SCAD’s own collection: 99 in Atlanta and 35 in Savan-nah. Both exhibits were curated by Rafael Gomes, SCAD director of fashion exhibitions, with the aid of Herrera’s daughter, Patricia Herrera Lansing, who works alongside her mother as special projects director at Carolina Herrera Ltd.

Herrera also received SCAD’s prestigious Etoile award, which honors outstanding achievements in style and design, on May 20 in Savannah. Past honorees include Pierre Cardin, Catherine Deneuve, Graydon Carter and Russell Simmons. She was in Atlanta the previous evening for the members’ preview party.

“SCAD is quite a remarkable place,” Herrera later told WWD. “What they achieved with the exhibition, capturing my 35 years in fashion, left me speechless.”

Paula Wallace, president and founder of SCAD, said, “Over the course of 35 years, Carolina Herrera has ascended to the top of the fashion world. Her person, her career and her creations deserve to be shared, lauded and studied.”

The first design in the exhibit represents Herrera’s signature look: a white blouse. Several of them are framed, like pieces of jewelry, in shadow boxes. In one vignette, which includes a dress from the first collec-tion on which she and Patricia collaborated, the backdrop is a gallery of family pictures, including one of Herrera’s father and one of her mother under a huge black-and-white-striped umbrella.

Another vignette features wedding gowns, including the one worn by Herrera’s daugh-ter Carolina Herrera de Baez at her 2004 wedding. In another, a stunning laser-cut cardboard zebra sculpture, created by SCAD alumna Emily Nelms Perez, is mounted within a group of black-and-white dresses — including, of course, a zebra-print one.

Many of the looks had been created for and/or worn by celebrities. They included the navy strapless silk faille dress worn by Sandra Bullock at the 2013 movie “Gravity” premiere in Tokyo; a white Mikado gown worn by Zhang Ziyi at the 2015 Met Gala, and an abstract Mikado print dress worn by First Lady Michelle Obama at the Stanford Center at Peking University in Beijing.

The exhibit concludes with a group of man-ikins, clad in the designer’s characteristic big-skirted gowns, looking as if they were striding down a runway with a video projection of a fashion show edited by SCAD alumni.

A photo exhibit of fashion from 1973 by Bill Cunningham, photographer of The New York Times, precedes the Atlanta version of the show. SCAD said the juxtaposition reflected Cunningham’s influence in getting designers to choose New York as their base of opera-tions. Venezuelan-born Herrera was one of those designers.

FASHION

Carolina Herrera HonoredWith Dual SCAD Exhibits

● The event honored Joseph Abboud, Iris Apfel, Christian Siriano, Shinola Detroit and BBC International.

BY JEAN E. PALMIERI

From mavericks and mainstays to notable newcomers, the fashion industry can boast people and brands that fit the bill. And the 38th annual American Image Awards celebrated both.

This year’s dinner on Tuesday night honored the 94-year-old Iris Apfel, design-ers Joseph Abboud and Christian Siriano, accessories brand Shinola Detroit and footwear company BBC International.

The event served to “recognize every aspect of achievement in the industry,” said AAFA president Rick Helfenbein, who noted that brands such as those being honored “have made fashion the club everyone wants to belong to.”

Doug Ewert, chief executive officer of

Tailored Brands, presented the Person of the Year award to Abboud, the company’s creative director, saying the designer is the “living embodiment” of the “lofty honor” due to his “deep passion” for his family, men’s wear and the Boston Red Sox.

Abboud downplayed his own achieve-ments and instead singled out America’s “rich and fertile fashion landscape,” adding that there is “nothing more styl-ish than giving of ourselves to a higher cause.”

Proceeds from the dinner went to Mercy Ships for the second year in a row. The charity provides free health care and surgeries to impoverished people around the world. “If you find a lump, you’re in a doctor’s office in a week,” said Dr. Mark Shrime on behalf of the group. “But five billion people around the world can’t get surgery.”

That figure, and a touching video show-ing the work Mercy Ships does, prompted Isaac Ash, ceo of United Legwear, to donate $100,000 to the group on behalf of

Apfel, who received the Fashion Maverick award.

“I was never aware I was a maverick,” she said, referring to herself as a “geriatric starlet. I always just did what I wanted to do.”

Jacques Panis, president of Shinola, accepted the award on behalf of his com-pany, which is helping to transform the beleaguered city of Detroit. Bobby Camp-bell, ceo of BBC, picked up the award for his business and said the company is giving back in the form of a shoe that it is producing in partnership with the Univer-sity of Ohio to correct club foot.

Siriano, who arrived with actress Debra Messing and a bevy of models, said he hoped to be able to continue to create “beautiful things for women of all sizes and shapes” around the world.

EYE

American Image Awards Celebrates Many Facets of Fashion

Carolina Herrera and pieces from the “Refined Irreverence” exhibitions at SCAD FASH and

SCAD Museum of Art.

Isabel and Ruben Toledo

Debra Messing and Christian SirianoDoug Ewert and

Joseph Abboud

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● The beauty company aims to mirror its success in the men’s prestige scent category.

BY JENNIFER WEIL

PARIS – L’Oréal keeps bolstering its prestige perfume focus and making great leaps for-ward in the key women’s segment.

Over the last few years the group’s strategy has been to accelerate the feminine business, explained Nicolas Hieronimus, president of the beauty giant’s Selective Divisions, refer-ring to the category representing two-thirds of the total fragrance market.

L’Oréal has had enormous success with scents targeting men. L’Oréal ranks num-ber-one in the segment globally, thanks pri-marily to the compounded sales of fragrances from three brands: Giorgio Armani, Ralph Lauren and Yves Saint Laurent.

Last year, according to a host of panels from The NPD Group combined, the rank by individual men’s scent worldwide on a sell-in basis was Bleu de Chanel first, Armani’s Acqua di Giò second and Paco Rabanne’s One Million third.

Hieronimus called perfume, in general, “the quintessence of luxury.”

“It’s also the best way to evolve the image of brands,” he continued, addressing jour-nalists in Paris earlier this week. “When one wants to evolve or communicate something on a brand, wants to say something to con-sumers about a label — about its personality, spirit or positioning — perfume is the best means to do it.”

The executive said that’s because fragrance has a wide reach, through media such as television, and an ability to embody all of a brand’s values.

Hieronimus cited some examples of the muscle that perfume has flexed recently for some of L’Oréal’s fragrance labels, all of which are licensed. Yves Saint Laurent’s Black Opium, for instance, was launched to shake up the brand’s image in scent, in line with its visual shift in fashion. The idea was to take YSL from an established, bourgeois label to something more rock ‘n’ roll. Hieronimus said Black Opium succeeded in rejuvenating the label’s image in countries such as the U.S.

The launch of La Vie Est Belle, meanwhile, helped reposition Lancôme as a brand meant to make women feel more beautiful and happy, he said.

And the Sì scent, fronted by Cate Blanchett, allowed Giorgio Armani’s overall women’s business to accelerate. For the first time, in 2015, two years after Sì’s launch, sales of Armani’s feminine fragrances and makeup together were greater than the revenues from its men’s scents.

“That’s never happened since the brand existed,” Hieronimus said.

The three perfumes, launched over the past four years, figured among Europe’s top-10 women’s prestige fragrances in 2015. (Specifically, La Vie Est Belle came in first; Black Opium, fifth, and Sì, seventh, according to NPD.)

And the brands will keep on being devel-oped. YSL, for example, is set to introduce,

starting in July, the women’s scent Mon Paris, whose positioning remains young but more romantic than Black Opium’s, Hieronimus revealed.

The executive also stressed the importance of “alternative fragrances,” such as exclu-sive niche lines, for their ability to nourish a brand’s luxury and creativity quotients.

L’Oréal has been building such niche collections organically, in each of its brands, starting with Armani, whereas many other companies have chosen to delve into the cate-gory by buying existing alternative labels. The latest for L’Oréal will be a new line for Ralph Lauren this fall paying homage to places from which the designer draws creative inspira-tion, such as the Hamptons and Africa.

On a manufacturer sell-in basis, the alternative perfume category generates an estimated one billion euros, or $1.12 billion at current exchange, of the worldwide prestige fragrance market worth 14 billion euros, or $15.62 billion, said Marc Dubrule, chief strategic development officer at L’Oréal’s Selective Divisions. (The selective beauty

market, comprising fragrance, skin care and makeup, for its part, is estimated at about 44 billion euros, or $49.11 billion, according to the division.)

Dubrule added that growth of the niche category — which isn’t backed by advertis-ing — is more than 15 percent per annum, versus about 3 percent that the total perfume business has shown annually over the past five years.

The niche segment is especially strong in markets such as the U.S., Middle East, Russia and some Western Europe countries like the U.K., France and Italy.

“It saved the market,” Dubrule said, explaining that between 2000 and 2010 some people felt fragrance had lost some of its luster due to too many limited-edition and celebrity perfumes, and that alternative scents helped raise the industry’s profile, thanks to using more qualitative ingredients, for example.

L’Oréal’s overall fragrance business is on a roll. During the past four years it has systematically outpaced the worldwide prestige perfume market by almost two times. In 2015, the company posted a 6.1 percent revenue gain in the segment, versus 2.9 percent for the global business, while in 2014 the breakdown was 6.4 percent against 3.5 percent.

The company has a 50-year history with perfumes, beginning with the 1966 launch of Fidji from Guy Laroche, followed by Ô de Lancôme in 1969 and Cacharel’s Anaïs Anaïs in 1978.

Today its fragrance brands — also including Diesel and Viktor & Rolf — make up a varied portfolio.

L’Oréal’s internal olfactive department, headed by Karine Lebret, was created in 2002. It serves as the interface between the brands and perfumers, employing 13 experts in olfaction with scientific backgrounds. The department’s responsibilities are manifold, including working on sustainability sourcing programs with major fragrance suppliers such as Firmenich and Givaudan.

“We have the responsibility to protect the richness and diversity of the perfumer’s palette,” she explained.

Hieronimus acknowledge the company has been striving to be the leader worldwide in prestige fragrances, which comprise the group’s second-largest category after skin care.

“It’s really a long-term project,” he said.

BEAUTY

L’Oréal Keeps Upping Women’s Scents

● The company delivered the increase for the first quarter with the help of Calvin Klein.

BY DEBRA BORCHARDT

PVH Corp. saw its stock increase in after-hours trading after the company managed to do what many other firms haven’t — deliver a strong quarter in earnings.

Net income for the first quarter rose to $231.6 million, or $2.83 a diluted share, up from $114.1 million, or $1.37, a year ago. Adjusted earnings per share totaled $1.50 and were flat versus last year, but beat the FactSet estimate for $1.43 a share. Non-Generally Accepted Accounting Principles net income was $122.8 million, which was lower than last year’s $124.7 million.

Net sales for the three months ending May 1 increased to $1.81 billion from $1.78 billion a year earlier. Unfortunately, this was short of the FactSet estimate for sales of $1.9 billion.

“We are very pleased with our first-quarter 2016 results, which exceeded our expecta-tions despite the difficult retail environment experienced in the U.S. market,” said chief executive officer Emanuel Chirico. “Our Calvin Klein and Tommy Hilfiger busi-nesses were the highlight, with significant strength demonstrated by our international businesses.”

Revenue in the Calvin Klein business increased 13 percent for the quarter, with North America leading the way gaining by 14 percent. PVH did say that consumer spending trends in tourist areas continue to be weak. Calvin Klein’s international sales decreased by 1 percent.

Revenue in Tommy Hilfiger increased 4 percent, but North America declined 5 percent, while its international business grew by 11 percent. Hilfiger was also affected by weak tourist spending in North America. The acquisition of TH Asia helped to contribute to the international business.

Heritage Brands dropped by 12 percent as PVH rationalizes the operation, including the exit of the Izod business.

Total gross profits were $1.01 billion, an increase on last year’s $970.6 million.

PVH also managed to do something else other recent reporting firms couldn’t do: raise guidance for the rest of the year. “Looking ahead to the remainder of 2016, we are increasing our earnings guidance on a non-GAAP basis for the year, while continu-ing to take a prudent approach to planning our business, as foreign currency and global

consumer spending remain unpredictable and the U.S. retail market is increasingly vola-tile and promotional,” said Chirico.

This year, the company is forecasting full year earnings per share to be in the range of $6.45 to $6.55 and that includes a $1.55 per share negative impact related to foreign cur-rency headwinds. The Capital IQ estimate is for $6.41. Excluding this impact, earnings are forecast to rise 13 percent to 15 percent.

The guidance reflects the proposed joint venture for Mexico that is expected to close in the third quarter. Last week, PVH revealed an agreement to form a joint venture with Grupo Axo that will operate and manage the distribution of Calvin Klein, Tommy Hilfiger, Warner’s, Olga and Speedo brand products in Mexico.

The second-quarter guidance is projected to be in the range of $1.25 to $1.30 including a 45 cent a share negative impact from foreign currency. That would be a 24 percent to 28 percent increase over the same period a year ago and is better than the FactSet estimate for $1.21.

BUSINESS

Calvin Klein Helps Boost PVH Sales

Nicolas Hieronimus

Armani Si

Black Opium

La Vie Est Belle

26 MAY 2016 7

● Ceo Dani Reiss said he sees the stores as a key element in telling the story of the brand.

BY ARTHUR ZACZKIEWICZ

After expanding its online efforts with an e-commerce push into the U.S. last fall and its first pop-up shop at Sundance in January, luxury outerwear company Canada Goose said it is opening two stores this fall.

Described by Dani Reiss, president and chief executive officer, as a “new chapter” for the Canadian company, one store is planned for 101 Wooster Street in New York’s SoHo while the other unit is set to open in the Yorkdale Shopping Centre in Toronto.

SoHo is considered a top shopping destination, and notable brands in the neighborhood include Chanel, Prada, Armani, Uniqlo, Adidas Originals, Apple and Marc Jacobs, as well as numerous boutique merchants.

The Yorkdale Shopping Centre is Can-ada’s fourth-largest mall with 1.7 million square feet. It has more than 250 stores, and more than 80 fashion apparel and luxury retailers, which include Armani Exchange, Burberry, Holt Renfrew, Coach, Kit and Ace, Moncler and Ted Baker.

“Having a store is important for brands, and for Canada Goose it’s really the next step in our evolution,” Reiss told WWD. Reiss described the e-commerce business, announced last summer and initiated last fall, as “very successful” — and he added that the stores will serve “as a foundation for the brand.” And although the com-pany did not release sales figures, it noted that revenues have increased 450 percent in the past five years.

Reiss said he sees the stores as a key

element in telling the story of the Canada Goose brand. “We have a long and storied history,” Reiss said. “And we’re more than just a label. Our products are best in class, and our stores will communicate that heritage and story.”

The company said shoppers will be offered full assortments “of every seasonal collection with the largest variety of colors and sizes anywhere in the world, enabling consumers to find the perfect product for any adventure they seek or element they face.” The stores will also showcase “spe-cial collaborations” as well as exclusives.

Reiss said the openings have been a long-desired dream, and described Can-ada Goose as a “point of origin product” for many consumers — one that also resonates with shoppers who demand authenticity. “We have a long history, and we don’t need to make it up. We are the real thing, and the real deal.”

The company said that the Canada Goose brand is “equally at home on the fashionable city streets of Paris and Milan

as on scientists working in Antarctica.” The company noted its popularity with “film crews, athletes and adventurers alike.” And the company said the new stores “will capture the spirit of Canada Goose, weaving together its Arctic heritage with modern innovation in an experiential environment.”

The footprints for the stores is planned for more than 4,000 square feet and will be designed in a way to invite shoppers to “explore the company’s rich heritage and unique culture through the curated exhibi-tion of vintage designs such as the Snow Mantra first worn by industrial workers facing punishing wind and cold, as well as innovative new styles including its award-winning HyBridge Lite collection.”

The company also said it was commit-ted to providing top-notch service. And to achieve that, Canada Goose said it developed an “in-depth brand immersion program” that transforms employees into “brand ambassadors” via experiential learning.

RETAIL

Canada Goose to Open Stores In New York and Toronto

● Nicola Zotta will replace Gottardi on June 1.

BY MISTY WHITE SIDELL

Eyewear veteran Claudio Gottardi is retiring. The president and chief executive officer of Marchon Eyewear had left Safilo to join the firm in 2009.

“After seven successful and very ful-filling years with Marchon Eyewear and VSP Global, and almost 30 years in the eyewear industry, I have decided to spend more time on the two passions in my life — the arts and my family,” Gottardi said. “My decision to retire from my full-time executive role at Marchon comes after a thoroughly outlined succession plan that we set into place well over a year ago.”

In his time with the firm, Gottardi devel-oped a swath of fashion eyewear licenses — helping to re-envision Chloé optical products and develop a new eyewear footprint for labels like Marni. In 2012, he helped develop a collaboration between Google and Marchon account Diane von

Furstenberg to bring the technology firm’s Google Glass product onto the runway.

Gottardi has also recently been involved in developing high-tech products for Nike, to be used at this summer’s Olympic

Games in Rio. In 2015 he was honored by the Accessories Council with the ACE Leadership Award.

Succeeding Gottardi, effective June 1, is Nicola Zotta. At present the managing director of the firm’s operations in the EMEA and APAC markets, Zotta also joined Marchon in 2009. His prior expe-rience includes a 15-year tenure at Safilo, his last role at which saw him serving as group vice president of marketing and licensing.

“Claudio has had a tremendous influ-ence on my entire career, in particular these last seven years with Marchon. As such, I feel well prepared to assume my new responsibilities and look forward to pursuing the pattern of profitable growth that he started,” Zotta said.

VSP Global chief executive officer Jim McGrann said of the executive shake-up: “We are confident Marchon is in good hands with Nicola at the helm. His exper-tise in go-to-market strategies, product and supply chain that have allowed Marchon to grow significantly in Europe and Asia, will be further utilized in his new role.

“The company thanks Claudio for his service, which has included strengthening Marchon’s position as one of the world’s largest manufacturers and distributors of premium eyewear and sunwear. We wish Claudio great success as he heads into retirement.”

ACCESSORIES

Marchon CEO, PresidentClaudio Gottardi Retires

Alibaba Under The SEC Microscope CONTINUED FROM PAGE 1

$14.3 billion, a 60 percent increase from a year earlier, for what it dubbed as “ the largest shopping day in history.” This year, the company declared itself the world’s “largest retail economy.”

“We are voluntarily disclosing this SEC request for information and cooperat-

ing with the SEC and, through our legal counsel, have been providing the SEC with requested documents and information,” the company said.

Investors sent shares of the Alibaba down 6.9 percent to $75.53

Wednesday, giving it a market capitaliza-tion of $186.6 billion.

Rob Sanderson, an analyst at MKM Partners, predicted that the market would digest the news quickly.

“People will forget about it next week, it will be gone,” Sanderson contended, stressing that this was a request for docu-ments still and not a full-blown inquiry.

This type of scrutiny, though, might not go away anytime soon.

Sanderson said that for most Chinese companies, “There’s a reasonable degree of suspicion, concern, anxiety around the legitimacy of their reporting and for potential fraud, that’s sort of the under-current that comes with many of these companies.”

Alibaba has also come under the microscope — from the Chinese govern-ment, trade groups and brands — for how it deals with counterfeits on its marketplace.

“Anything that feels like it’s a shady business practice, that strikes a nerve with U.S. investors for Chinese compa-nies,” Sanderson said. “It’s not surpris-ing to me that the stock is down on this because it is the fear of the unknown.”

The analyst said its in Alibaba’s own economic interests to ensure that it’s on the straight and narrow.

“They’re a huge, huge player,” he said. “They control a giant ecosystem and they have a responsibility to fight bad guys, just like Visa and MasterCard [do on their own networks]. To the degree that there’s a higher amount of bad actors and bad activities in their ecosystem and that compromises the trust of the buyers and sellers in the ecosystem, that hurts them more than anybody.”

Alibaba, which is led by founder Jack Ma, provides a marketplace for buyers to reach sellers and doesn’t hold inventory of its own, operates less as a single entity and more as a network of affiliated com-panies with a broad range of interests — from financial services to entertainment to shipping.

How that structure works and is reported appears to be part of what the SEC is looking into.

Alibaba holds a roughly 47 percent stake in the logistics firm Cainiao. But the shipper’s results are not included with Alibaba’s own books.

Needham & Co. analyst Kerry Rice said, “The question is influence [over Cainiao]. It’s just kind of hard to deter-mine where the SEC might fall on that.”

Alibaba’s own profit margins could fall if it had to, under U.S. accounting laws, incorporate Cainiao’s results into its own.

“This is an accounting issue, not an operational issue,” Rice said. “It’s not going to change the way they operate the company, I wouldn’t believe. I think it’s business as usual.”

Jack Ma

Marchon’s new president, Nicola Zotta

Canada Goose Wooster Street exterior.

8 26 MAY 2016

● According to Erwan Rambourg, luxury brands are missing the point: the consumer.

BY PAULINA SZMYDKE

PARIS — To put it in a nutshell: “Luxury is not doing well,” says HSBC analyst Erwan Rambourg. And a lot if it has to do with China, he adds.

“Forget the anticorruption laws. They are ancient history. Their impact was felt between 2013 and 2014, and perhaps up to mid-2015, but they have been well absorbed by the market. For the past 12 months, the reasons for the sluggish luxury sales have been psychological. It’s what the English refer to as the feel-good factor. If I feel good, I buy,” the Hong Kong-based researcher said during a meeting with journalists on Wednes-day at the bank’s headquarters on Avenue des Champs-Élysées in Paris.

Unfortunately, the Chinese, which account for 40 percent of the luxury brands’ customer base, have been feeling the blues.

“Let’s put it this way: Although China is coming back, the Chinese are not,” Rambourg argued.

Chinese travelers have been discouraged by a series of geopolitical factors, including volatility on the stock markets, terrorist attacks in Paris and Belgium, talks of Brexit, and elections in the U.S., Taiwan and even Austria, where a right-wing candidate came within a hair’s breadth of victory, he noted, adding: “The Chinese are staying at home, also helped by lower importation taxes and the development of a local duty-free industry,” which has buoyed local spending but in turn hurts regions like France, were three-quarters of sales are achieved through foreign money. “In Paris that number stands at 75 percent to 80 percent of sales,” he said.

The analyst nonetheless projected that it would be China — alongside the U.S., which is slowly waking up — which will drive luxury consumption in the next five to 10 years. “Even if current luxury consumption is slow at the moment, we are a lot more optimistic about U.S. luxury consumption than the French or Italian,” he said, noting how “for a long time a guilt factor has stuck with the American consumer — perhaps because of its predominantly protestant culture, then linked to 9/11 and the collapse of the Lehman Brothers. It was just not considered appropriate to flash a new Rolex when the neighbor has lost everything. Now, little by little, we see the resurgence of a new, more confident generation, and of minori-ties, most notably of Hispanic and Asian origin, which accept to pay the price of luxury.”

Viewing the slowdown and the changing demographics, fellow analyst Antoine Belge said luxury labels would be well advised to hold their horses when it comes to new store openings and to focus on what he dubbed “retail excellence” instead. “This is really the new buzzword. To give you an example, we know there are fierce battles going on for the best salespeople, who truly have a sense of what the clientele wants, as we begin to understand that 10 percent of the sales personnel can generate 40 percent of business.”

Both Belge and Rambourg singled out LVMH for its ability to adapt to the widening spectrum of consumers.

“Four years ago, Louis Vuitton had a real problem of credibility — it was considered as a brand for secretaries, could see it everywhere, had it up to here. But the group initiated a hyper-segmentation of its product and retail spaces. When you enter a store today there is a VIP section which serves bespoke alongside your favorite bubbly — away from the masses, while on

the other extreme, you will find a special cashier for the middle class, where a 23-year will spend three minutes buying an item from his wish list with the money from his first job, and he will also be happy. What Vuitton managed to do is to stay relevant at all price levels and with all customer groups without alienating one or the other.”

Among other key factors, the analyst named creativity, which he identified as Chanel’s forte, a brand that according to him was doing “much better than everybody else,” as well as the ability to create “the illusion of rarity,” as is the case with Hermès. “When you have been on the waiting list for four years to acquire a Birkin bag and you finally get the call that the bag is ready, you will buy it,” he argued.

Vice versa, when Cartier started selling watches with complications, the novel product and price proposition did not jibe well with its customers, Rambourg said. “The client expects a Cartier watch to be pretty not to tell the time for 30,000 euros. You have to adapt to the person you are selling to,” stressed the analyst, arguing that luxury in essence is useless. “Five years ago Prada, Gucci and Louis Vuitton thought their biggest competitors were Prada, Gucci, Louis Vuitton. While in reality it’s plastic surgery and Apple. There are alternatives. A client today will need to decide between spending 2,000 euros on a Louis Vuitton bag or on fixing her eyelids. The key word is targeted communication.”

In general, he lamented, chief executives do not spend enough time on the ground hearing about what the customer wants, which also includes e-commerce. “The fact that I can order a book on Amazon and have it delivered in 24 hours or a pair of Nike with my initials on them, but that it doesn’t work the same with a luxury handbag, is shocking to me,” he said.

BUSINESS

HSBC Analyst: China Coming Back, Not Chinese

BUSINESS

Guess Losses Hit $25.2M in Q1● CEO Victor Herrero is sticking by

his plan to hit $3 billion in annual revenues in three years.

BY EVAN CLARK

Guess Inc. Victor Herrero’s “transition” during the first half has been more challenging than expected. But the chief executive officer is keeping his eye on the prize and plans to hit $3 billion in annual revenues in three years, as laid out in March.

He also sought to distance Guess from the belea-guered department store sector to Wall Street analysts on Wednesday, stressing that the retailer was a global player and was also ready to shutter U.S. stores or rene-gotiate rents in coming years to help boost profitability.

The company’s first-quarter net losses totaled $25.2 million, or 30 cents a diluted share, which compared with year-ago earnings of $3.3 million, or 4 cents. Adjusting for restructuring and tax charges, Guess logged a net loss of $19.4 million, or 23 cents a share — greater than the 19 cent loss Wall Street analysts had penciled in.

Investors pushed shares of the company down 1.8 percent to $16.15 in after-hours trading.

Revenues for the three months fell 6.3 percent to $448.8 million from $478.8 million. Comparable retail sales, including e-commerce, fell 4 percent.

Herrero said Guess wasn’t the only retailer to struggle in the first quarter, singling out weakness at department stores.

“With respect to the department stores, two things are happening,” he said on a conference call with ana-lysts. “Their footprint is mainly in the U.S. And business is shifting from bricks-and-mortar department stores to online, especially online only, multibrand retailers. It is very important to know that in the U.S. Guess is not a big supplier to department stores, whether brick-and-mortar or online. Wholesale revenues represent only about 10 percent of our total revenues in the U.S., so we are not impacted very much by the shifting landscape in U.S. department stores.”

He also characterized Guess as one of the “very few U.S.-based retailers that has the majority of its revenues from outside the U.S.”

Last year, nearly 60 percent of the company’s sales came from international markets. The company plans, for instance, to open 45 doors in Europe this year, including ten in Russia and stores in Turkey, Ireland, Finland, Sweden and Denmark.

At home, Herrero said he would “monitor the performance of the Americas fleet” as it adds 50 stores, particularly under the Factory and G by Guess banners.

“We have a lot of flexibility as roughly half our exist-ing leases in the U.S. and Canada are either expiring or have kick-out clauses in the next three years,” he said. “Should we need to moderate our expansion plan or prune the store base based on productivity of existing stores. The timing of this lease expirations also provide us an opportunity to renegotiate lower rents to make profitable stores, which we will otherwise exit profitable again on a forward basis.”

Globally, the company operates 840 stores, with licensees and distributors running another 792. In the first quarter, 45.5 percent of the company’s sales came from its retail operations in the Americas.

The first half of this year was already billed as a “tran-sition period” for the company.

The ceo acknowledged that it was more challenging than anticipated, especially in the Americas and also to a lesser extent in China. But he also expressed con-fidence that the company would achieve the goals laid out in its three-year plan in March, just with a different cadence.

For the second quarter, Guess is looking for earnings per share ranging from 4 cents to 8 cents with revenues rising between 0.5 percent and 2.5 percent.

● Retail and mixed-use set backdrop for authentic experiences industry craves and Millennials now demand.

BY KARI HAMANAKA

LAS VEGAS — The retail industry could stand to rid from its lexicon the word “experiential” and maybe throw out “authenticity” as well.

As the International Council of Shopping Centers wrapped the 2016 RECon retail real estate conference, attendees — of which there were more than 36,000 — had the words experiential, Millennial and authenticity beat into their heads. If they didn’t hear it from the conference floor, the concepts made their way into the conversations of panels talking about everything from leasing to development.

And for as much as the words became overused to the point of losing meaning, a panel assem-bled of developers and retailers talking urban development reined the conversation back in and managed to show projects aren’t just about smack-ing in a local restaurant — the golden child of retail leasing at the moment — and calling it a day.

“The answer isn’t to do an urban location and put a restaurant in it,” David Stanchak, chief real estate and development officer at Restoration Hardware, told an audience during a panel at RECon.

The furniture company has proved a case study in what it means to create spaces far evolved from places merely meant to transact.

Take RH Chicago, the Gallery at the Three Arts Club, which fuses a gallery, café, wine tasting room, espresso bar, garden courtyard, design ate-lier and lounge areas spread across six floors total-ing nearly 70,000 square feet. Fifteen marriage

proposals have occurred in the café at RH Chicago since its October opening. Some 800 to 1,200 people are served there daily and there are lines outside the door Fridays through Sundays before the space opens, Stanchak pointed out by way of exemplifying these aren’t just stores the compa-ny’s building out.

“It’s creating something that is magical,” Stanchak said. “That’s what we have to do: throw everything out and destroy today’s reality of retail. We’re like residential that’s blurring the lines between residential and retail. We think urban is the right kind of cool place to be doing it....It’s a whole different way of thinking.”

RH’s Meatpacking District location in Manhat-tan, the real estate of which it acquired, is set to open next year, and aside from the gallery, will feature a guesthouse where people can stay.

Bottega Veneta’s recently opened Beverly Hills maison is another good example, said Richard J. Johnson, senior real estate specialist for the Americas at Kering, the brand’s parent. The 4,828-square-foot boutique designed by creative director Tomas Maier fuses together styles from Southern California’s Mediterranean and Mexican Colonial Spanish revivals. A similar tack of creat-ing a market-specific location will be taken with Bottega Veneta’s future New York boutique.

While tenants are key to any project, site selec-tion in urban development provides the backbone on which success is measured. That process varies depending on the retailer, but for luxury brands it’s slightly different from most, Johnson pointed out.

“We as luxury brands tend to clump together and cluster together,” he said during the day’s panel. “We also look for iconic locations.”

The latter point of which provides a 401(k) plan of sorts on the real estate decision. Iconic locations can boost real estate value, which is why some houses choose to purchase the properties in which they reside, thus shielding themselves from rising rents and providing peace of mind for the long term. Still, Kering doesn’t own any of its properties in the U.S. and isn’t currently scouting locations, Johnson added.

Acadia Realty Trust, as a real estate investment trust, owns its portfolio and tapped downtown Brooklyn, N.Y., to be the site of its City Point proj-ect. The development boasts three residential tow-ers and some 700,000 square feet of commercial space, anchored by an Alamo Drafthouse, Cen-tury 21 and Target. A portion of the project had originally been earmarked for big-box tenants, but feedback from retailers and residents had the developer addressing the missing food compo-nent, requiring an $11 million design change to accommodate a 6,800-square-foot food hall that will see Katz’s Delicatessen expand to its first loca-tion outside its original Houston Street shop. Just be sure not to call the space a food court.

“Food courts are for B malls and C malls and airports — not for Brooklyn,” Chris Conlon, Acadia executive vice president and chief operating officer, told the crowd.

Store environment goes a long way in produc-ing an experience for Kering’s luxury brands that can’t be duplicated online, Johnson said.

“We’re a little protected on the luxury side from the Internet,” Johnson said. “People tend to look online and purchase in store. We do have robust online sales but it’s just an additional incre-mental growth.”

Restoration Hardware, being in the furniture business, is also more insulated from the pains retailers, such as those in the apparel business, may be feeling. The Internet is important, though, with about 50 percent of sales done online. It’s not so much about next-day delivery for RH customers in store as much as it is being able to offer something in the real world that doesn’t waste people’s time by sending them to physical stores that look the same across a chain, Stanchak said — a sentiment echoed throughout Vegas over RECon’s four-day run.

“To me, it really ends up being how do you solve time for customers?” Stanchak said. “How do you make their interaction with you very respectful of their time because, really, that’s the ultimate luxury and we’re in the luxury business. We don’t think about digital versus physical. It’s physical with digital.”

RETAIL

ReCon 2016: Why Urban Development Is Cool

J. Crew isn’t alone in reporting weak results. For the past year, specialty and department stores have been challenged by macroeconomic forces and changing consumer shopping dynamics, with shifts to spending more on home prod-ucts, cars, restaurants, travel and other experiences, and away from fashion. In addition, international tourists, particu-larly from Russia, Brazil and China, are spending less money in U.S. stores due to the strength of the dollar and eco-nomic issues in their own countries.

At the J. Crew brand, the situation is compounded by product issues, to some degree, though executives have told WWD that they are working to correct the problems and have been pumping up assortments of several of the classic best-selling items and categories. There are 287 J. Crew retail stores and 164 J. Crew factory outlets. This year, the J. Crew brand will open two stores and close four, one of which will be con-verted to a J. Crew Mercantile unit. The J. Crew Factory division will open three units and convert nine to Mercantile stores.

On the other hand, the Madewell division continues on its roll, and is planning 10 openings and one closing this year. Madewell has 106 stores.

The J. Crew Mercantile value division, currently with 22 locations, has 30

openings slated this year. The low-er-priced chain was launched a year ago and is geared to reach more value-ori-ented customers and help reverse weak results.

The company continues to operate J. Crew Factory Outlets, but Mercantile represents an expanded effort to seek that value-driven customer in more places than just factory outlet centers, such as at strip centers, off-price centers and power centers.

“Overall, we have been aggressive in managing all aspects of our business in a challenging retail environment while continuing to focus on delivering the very best product and brand experience for our customers across all channels,” said chairman and chief executive offi-cer Millard Drexler. “We look forward to the contributions from our assortment and merchandising strategies within

our J.Crew brand, the continued growth of Madewell and Mercantile and other key operational initiatives including our [Selling, General and Administrative Expenses], sourcing and supply chain optimization programs.”

At the J. Crew brand, sales decreased 6 percent to $480.7 million, and compa-rable sales decreased 8 percent follow-ing a decline of 10 percent in the first quarter last year.

At Madewell, sales increased 17 per-cent to $72.5 million and comparable sales increased 6 percent on top of an increase of 12 percent in the first quar-ter last year.

Gross margin was 36.1 percent com-pared to 37.2 percent in the first quarter last year.

Selling, general and administrative expenses were $192.2 million, or 33.9 percent of revenues, compared to

$203.8 million, or 35 percent of reve-nues in the first quarter last year.

Operating income was $7.3 million compared with an operating loss of $520.6 million in the first quarter last year, reflecting pre-tax, non-cash impairment charges of $5.4 million this year and $533.4 million last year, respectively.

“Overall, the retail environment continued to be challenging during the first quarter,” said Michael J. Nicholson, president, chief operating officer and chief financial officer. However, Nich-olson added that the company “effec-tively” managed margins and inventory levels, bringing the adjusted EBITDA slightly ahead of last year.

He cited several key initiatives includ-ing the “continued focus” on providing customers with a “seamless” omnichan-nel experience, enhancing the mobile site, and actively exploring opportu-nities to enhance sourcing and supply chain capabilities.

“Madewell continued its solid perfor-mance. We remain excited about the prospects to further grow this brand through additional stores and enhanced e-commerce,” he said.

Regarding Mercantile, “We will con-tinue to assess its long-term potential as we enter new markets in 2016.”

Regarding inventories, “We are comfortable with the overall level of inventory so far this quarter.”

On the less optimistic side, Nicholson said, “We expect traffic headwinds to persist,” but he stressed the company has a “disciplined approach” to manag-ing expenses and capital expenditures.

“We continue to invest for the long term while carefully managing through the retail environment,” he said.

26 MAY 2016 9

● Value Retail’s second discount complex is a 592,000-square-foot upscale outlet center.

BY DAVID MOIN WITH CONTRIBUTIONS FROM CASEY HALL

There’s a worldwide malaise in retail-ing, but not at Shanghai Village, the 592,000-square-foot upscale outlet cen-ter that opened last Thursday in China.

“This is a soft opening, but it’s the most productive opening we’ve ever had,” said Scott Malkin, chairman of the U.K.-based Value Retail PLC, developer of Shanghai Village and other designer outlet centers in Europe and China.

Malkin said that over the course of the four-day opening weekend, sales at the 60-plus outlets in business so far tracked at 3,500 euros, or about $4,000, a square foot, on an annualized basis.

He’s also bullish on the pace of outlet openings on the site, with another 10 set to launch before the end of this week and, through the summer, another 60 or so, which will bring the store count in phase one of the development to about 140 units. Phase two is expected to bring the total store count to 240.

“This is our most rapid opening ever in terms of actual number of stores,” Malkin said. “Our philosophy is not to

lease up the project all at once but to make sure we have the right mix,” that evolves over time.

In terms of footfall, Malkin projected 25,000 visitors for the first week; 30,000 per week within the first 10 weeks of operation, and up to 60,000 weekly, after the adjacent Shanghai Disney Resort officially opens.

Malkin said Shanghai Village will have a grand opening in the fall, following the formal opening of Shanghai Disney. “Between us and Disney, this is a mas-sive complex.”

The site also has a man-made lake with shuttle boats going back and forth between Disney and Shanghai Village, as well as 15 hotels and restaurants.

Among the outlets opened so far are Giorgio Armani, Coach, Kate Spade, Theory, Michael Kors, Sandro and Maje.

Malkin characterized Shanghai Village as “an authentic European, quality experience focused on hospitality,” including a VIP program that’s about “serving the customer” as well as offering discounts. Among the ameni-ties — valet parking, lounges, personal shopping, hands-free shopping, meet-ing rooms and exhibition spaces. The overall program of services is “modeled on hotels not shopping centers,” said Malkin, who considers himself to be in the tourism business, more so than being a retailer or developer, and bent on providing shoppers with unique

experiences.For Shanghai Village, Value Retail

partnered with Shanghai Shendi Group. Shanghai Village is located in the huge Shanghai International Tourism and Resorts Zone in the eastern district of Pudong. Shanghai Disney, which offi-cially opens June 16, is part of the zone.

The outlet center’s design takes its cue from 1920s Art Deco architecture seen in New York, Paris, Milan, Vienna and Shanghai.

Shanghai Village is Value Retail’s sec-ond discount complex in China, with the first launching in Suzhou in 2014. It’s also the company’s eleventh outlet cen-ter, with the others operating in Europe in London, Paris, Milan, Barcelona, Madrid, Frankfurt, Munich, Dublin and Brussels. Chinese consumers represent the company’s single largest customer demographic worldwide, and the cen-ters have a high component of tourists.

“We are very pleased to see the vil-lage’s streets come to life with people enjoying not only the beautiful bou-tiques, but exploring its architecture, the lounges and our many exhibits,” said Value Retail China chief executive officer Mark Israel.

Value Retail has other projects in the works, including expanding Suzhou Village, as well as Bicester Village near London, and Fidenza Village outside Milan.

RETAIL

Shanghai Village Launches, Expanding Designer Outlets in China

J. Crew Narrows Loss, but Sales Continue to Fall CONTINUED FROM PAGE 1

Outside the J. Crew Store on Regent Street.

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Rose

Showing up to WWD’s offices in flat sandals, a slouchy tweed jacket and striped button-down, her hair thrown into a topknot and sans makeup, Clé-mence Poésy is embodiment of chic French insouciance. It would be easy to hate her for exuding effortless cool so expertly, but it’s her lack of preten-sion that makes her likable. When she opens her mouth to speak about her latest film to hit American theaters this Friday, the British art house proj-ect “The Ones Below,” her accent is a mix of French and British, evidence of her lives in both cities.

“I’m French, but I’m not sure where I base myself really. I guess both Paris and London,” she says. She’s in Los Angeles for the week to see old friends and do a bit of promotion for the film, which premiered at the Toronto Film Festival.

“There’s not one drop of blood,” she says of the psychological thriller, about two pregnant couples living on different floors in the same building. “I thought it was a really interesting take on a moment in your life of having a new life to be responsible for and I found the way David [Farr, screenwriter and director] wrote the

script incredibly smart and playful. The two women characters become close friends even if they are incred-ibly different, and then something goes wrong. The house they live in becomes almost a character,” she alludes.

Poésy, 33, actually likes to keep

people guessing. It’s hard to pinpoint her acting style, since she’s appeared in French, English, Italian and Ameri-can productions as varied as “Harry Potter and the Deathly Hallows: Parts 1 and 2,” “In Bruges” and “Gossip Girl.”

“The way I spent the first 10 years [of her 17-year-career] working, I was

quite curious and I just felt like I had to try a few things to figure out what felt best,” she says.

Despite having studied the arts at university and attending drama school in France, she still likes to say she’s not sure acting is her calling. “I don’t think I grew up thinking this

is what I want to do…although I just might not have admitted it or felt a bit silly saying it because everyone was saying that, so I was saying some-thing else…which I might be continuing in interviews…at 33,” she says.

Poésy is also known in fashion circles as a model and the face of two Chloé fragrances, a relationship that began almost 10 years ago. “I was just really touched by how faithful they were. It’s quite rad to get the chance to work at different stages of your life with the same people and Clare [Waight Keller] is incredibly talented and the coolest. I just feel really priv-ileged. I had pictures of Chloé cam-paigns on my teenage walls because I thought it was poetic and romantic. It never feels super aggressive or overly sexy, it just feels like girls you know or would like to be friends with,” she says.

Poésy does seem like the sort of gal who would be a fun friend, in part because she could tell tales of her upcoming projects, which include “Demain Tout Commence” with “The Untouchables” star Omar Sy, to be released in France in December; “Final Portrait,” written and directed Stanley Tucci and starring Geoffrey Rush as artist Alberto Giacometti (she plays his muse and mistress); and the Italian films “7 Minutes” (in which she acts in Italian) and “Tito Il Piccolo,” which she’s filming now in Rome and Spain (most of her dialog is in English, as she plays an Englishwoman who tries to communicate with the Italians using “very bad Spanish”).

Still, she’s not content to just star in films, she’s just written and directed her first short “La Grande Adventure” due out in June. “I’ll just be stopping in France to edit it, before going back to work in Italy,” she says. “But I wouldn’t say I’m that busy.”

— MARCY MEDINA

Clémence Poésy Dishes on Keeping People GuessingThe French actress discusses her latest film “The Ones Below” and what it’s like to front for Chloé.

Clémence Poésy in “The Ones Below.” Clémence

Poésy

“We did have a speech written, but to be honest, when I heard there was only 21 scholarships given today, I ac-tually got really upset,” Public School’s Maxwell Osborne told the crowd at the 10th Annual Awards Dinner and Auction for The Gordon Parks Foun-dation, which included Chanel Iman, Prabal Gurung, Victor Cruz, Martha Hunt and Constance Jablonski. “There needs to be one scholarship for everyone in this f-----g room. Excuse

me, mom.”Osborne and Dao-Yi Chow were

both being honored. The design duo created limited-edition hats for the scholarship students and scholarship auction donors that are embroidered with “WNL,” which has a dual meaning for We Need Leaders or When No-body’s Looking.

Other honorees included singer Janelle Monae, who proudly pro-claimed that similar to Gordon Parks

she’s from Kansas; Leonard A. Lauder, chairman emeritus of The Estée Lauder Co. and his wife, photographer Judy Glickman Lauder; photographer Latoya Ruby Frazier; Bryan Stevenson, founder of Equal Justice Initiative, and special guest Kathleen Cleaver, a former Black Panther leader who was photographed by Parks with her husband Eldridge Cleaver in Algiers in 1970.

Music producer Kasseem “Swizz Beatz” Dean co-chaired the event along with his wife Alicia Keys, Usher and Grace Raymond, Alexander So-ros, Nejma and Peter Beard and Karl Lagerfeld, who didn’t attend the event but was there in spirit — the founda-tion auctioned off a pair of tickets to Chanel’s spring 2017 show in Paris this October that fetched $16,000.

To the audience and Osborne’s surprise, Swizz Beatz later revealed that the co-chairs helped raised an additional 30 more scholarships.

— ARIA HUGHES

Gordon Parks Foundation’s 10th Annual Awards DinnerThe event honored Maxwell Osborne and Dao-Yi Chow of Public School, Janelle Monae, Leonard and Judy Glickman Lauder and more.

Usher

Kasseem ‘Swizz Beatz’ Dean

Prabal Gurung and Constance Jablonski Chanel Iman

Maxwell Osborne and Dao-Yi Chow

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● “The Art of Humanity,” a collection of 3,000 works by artists from 14 countries, was unveiled this week.

BY LUISA ZARGANI

Imago Mundi, the cultural nonprofit project part of the Luciano Benetton Collection, has landed in New York.

“The Art of Humanity,” a collection of around 3,000 works by artists from 14 countries, was unveiled at the Pratt Institute of New York this week. The works in the 3.9-inch-by-4.7-inch format were created by artists from regions including Australia, Afghanistan, China, Japan, Iran, Israel, Syria, Tibet, Italy, Chile, the Americas, Egypt, South Africa, and Tunisia. They are an extract of a global collection that has now passed the 100-nation milestone.

“We are interested in understanding the public, which is always different from one exhibition to the next,” Luciano Benetton told WWD. “We chose this creative university because the project targets young people and we want to understand what they think.”

Benetton was enthusiastic about the art world, which “is much more democratic — there are no dis-cussions, no differences, no jealousy.” The arts and culture, he said, are tools to battle intolerance. “We aim to show the world as we would like it to

be: colorful, in peace and without walls, building bridges between apparently conflicting ideologies and faiths.”

The choice of the exhibition, admitted Benetton, is “provocative” at a time when many countries are shutting their borders and politicians talk about building protective walls. “It is right to encourage dialogue, things are not worked out because there is little will to do so,” contended Benetton, the cofounder of the namesake Italian clothing and textile manufacturer, who left his role as chairman in 2012.

The exhibit is on until Saturday in New York at a time when Donald Trump, the presumptive Republi-can nominee for president, is speaking of walling off Mexico. Benetton said, “The U.S. represents us all. I hope these are boutades [jokes]. After all, it wouldn’t be possible.”

A tireless globetrotter, Benetton was setting off to China to prepare the next Imago Mundi exhibi-tion. “There are 55 minority groups in China,” he said, envisaging “an extraordinary period of work” spanning two to three years until each minority is represented. Imago Mundi exhibitions have traveled from Venice at the 2013 Biennale to Senegal, New Orleans and Vienna, to name a few.

“The Art of Humanity” marks Imago Mundi’s debut on the Google Cultural Institute platform, which houses the works of many museums and art projects around the world, allowing virtual visitors to have access.

On its web site, Benetton is also launching a creative competition to submit an ad campaign for Imago Mundi. Whoever is selected will develop the project at Benetton’s communication and research center Fabrica.

EYE

Luciano Benetton’s Imago Mundi Exhibit Staged at Pratt Institute

Imago Mundi - The Art of Humanity, Pratt

Institute, New York

All’s WellsWhat a difference eight months makes.

Linda Wells held court at the townhouse of Laura and Harry Slatkin on Manhattan’s Upper East Side on Tuesday night to fete her new chapter in life.

The Slatkins, along with John Demsey and Cornelia Guest, hosted the party for the founding editor in chief of Allure, who was let go from Condé Nast in November amid a company shake-up. Since then, Wells has ratcheted up two gigs — as The Cut’s beauty editor at large and as a special contributor to various Hearst titles in a role that will allow her to create a mini beauty magazine of sorts.

“Is that not enough?” Wells said when asked if there were any more projects in the pipeline.

Apparently not.“I’ve been doing some things

with a beauty company and con-sulting on a big global company that I can’t name that is coming

out with its first beauty line — they’ve never had one,” she said.

Asked whether she misses Allure, where she served as editor in chief for 24 years, Wells said, “I loved my job so much and there are parts of it I really miss. What I love about what I’m doing [now] is being out in the world and reporting. It’s really fun to report. It’s like you’re kind of living when you’re reporting. It’s good if you’re a voyeur — I am. But it gets me out and talking to people. I love that engagement.”

Wells noted that she’s still in touch with her former coworkers who departed Allure after incoming editor in chief Michelle Lee put together her team.

“I did a shoot with Paul Cavaco last week,” she said. “He’s doing freelance. He did a shoot today for Italian Vogue and he’s been doing a lot of Michael Kors and he did some W.”

Later, Slatkin gave a toast to Wells, saying: “The thing I’ve always

thought about Linda is the beauty of insides. What’s great about Linda is that she is amazingly loyal, amazingly kind, beautiful on the outside, yes, that’s the beauty part, but really a true friend.”

Guests including Linda Fargo, Desiree Gruber, Frédéric Malle, Mark Lee, Dennis Basso, Ivan Bart and Glenda Bailey raised a glass to Wells, who gave a brief, but surpris-ing, speech in return.

“I want to thank Harry and Laura for this beautiful party in this amazing house, which I’m so happy to have moved into on the third floor. You didn’t even notice, right?” Wells said, before turning to a “big announcement.”

“I’m pregnant,” she said.At the mere suggestion of that,

the well-mannered crowd froze.“I’m just kidding,” Wells howled.

— ALEXANDRA STEIGRAD

Hitting the WavesGeorgia May Jagger is dipping her city toes into the surf.

For a new gig as Volcom’s global brand ambassador, the London-based model has been frolicking in the waves off the coast of Kauai with dolphins, models Kei-lani Asmus and Tina Kunakey, and

pro surfers Quincy Davis, Coco Ho and Maud Le Car. The forthcoming spring campaign, which also her-alds an eco-centric collection for the Kering-owned brand, features bikinis made of recycled fishing nets, shorts, dresses and, Jagger’s personal favorite, denim overalls.

“I do love the ocean,” Jagger said, before noting the importance of having broad appeal. “We don’t necessarily have to be a brand that is a surf brand or a skate brand. I think it works in cities, too, and for girls like me.”

Selecting Jagger was one of the first moves made by Volcom chief executive officer Todd Hymel after he joined the Costa Mesa, Calif.-based brand in December. As part of the process of boosting the women’s division, he hired Lyndsey Roach as global head of women’s business.

While the men’s component makes up the majority of sales, the deal with Jagger spans mul-tiple seasons, allowing Volcom to sharpen its focus with the goal of increasing sales.

“The vision we have is to actually be that link for girls be-tween the beach and the city,” Hymel said. Aside from bringing more global awareness to Volcom, Jagger’s role is to prove that “a girl doesn’t have to be a surfer to buy into the brand,” he added.

Volcom and Jagger are keep-ing the door open for a potential design collaboration in the future. “I’ve been working in the industry for almost 10 years. It’s a natural progression to want to work with different brands and try new things and try my hand at designing and things like that,” she said.

Based on past projects de-signing for Hudson and Mulberry, she said, “I like being part of the process with it. With modeling, a lot of hard work goes into fashion, but you show up for the final bit, the last day if you will. It’s nice to be a part of the entire process. I enjoy that. It has more creativity in it.” — KHANH T.L. TRAN

Memo Pad

Georgia May Jagger in Kauai for her spring 2017 campaign as Volcom’s new global brand ambassador.

Linda Wells

Not TrueIn response to growing market spec-ulation that Gian Giacomo Ferraris was headed to Burberry, the former Versace chief executive officer told WWD: “I know Christopher [Bailey] and I think very highly of him, but I haven’t had any contact with Burberry.”

Burberry also denied the rumors, sparked by Ferraris’ abrupt exit from Versace revealed earlier this week. He was succeeded by Jonathan Akeroyd, former ceo of Alexander McQueen. Ferraris’ experience in operations and having worked at Gucci at the same time as Bailey may also have triggered the speculation he was set to lend a helping hand to Burberry’s chief creative and ceo as he embarks on a major new strategy that involves simplifying the group’s structure and cost cutting. — LUISA ZARGANI AND

SAMANTHA CONTI

A Special GreyFor the June launch of Grey Jason Wu, the sibling collection to Wu’s main line, there will not be 50 shades, but one proprietary color for his branding materials. Wu enlisted the Pantone Color Institute to develop a specific color gray that will be exclusive to him and the Grey label, named for his favorite color.

“We thought, ‘This is a collection named after a color. It would be really great to work with Pantone on a cus-tom shade,” Wu said. “When you think about colors, Pantone is the standard. It’s something we use on a daily basis.”

The shade Wu had in mind was something that would reflect the collection’s casual elegance — it’s a lower price point than his designer line, which also has a gray label. “The gray mélange I used for the Grey label reminds me of a favorite T-shirt or sweatshirt,” he said.

The result is a light tone, comprised of 90 percent white with a hint of blue that will be used for packaging, labels, notecards, “anything we touch, we’re going to make it in this color now that we have our own Pantone number,” Wu said.

Laurie Pressman, vice president of the Pantone Color Institute, noted that Pantone works with companies such as Tiffany and UPS that want to be sure their shades of blue and brown, respectively, are consistent across all materials. “Color is a language and a way to communicate,” said Pressman, noting that Pantone hadn’t worked with a designer in this capacity. “It was great to work with Jason, someone who understands the importance of color and identity.”

Grey Jason Wu will launch in June for spring 2016 at select retailers and through the collection’s web site greyjasonwu.com. A more casual counterpart to his designer collection, Grey is inspired by Wu’s friends and what they wear. The prices range from $295 to $1,395. — JESSICA IREDALE

Honors TrioThe annual Purses and Pursenalities lunch, which featured an auction of

more than 100 designer bags benefit-ing the Madison Square Boys & Girls Club, honored designer Dee Ocleppo Hilfiger, 25 Park’s Alison Brettschnei-der and stylist Ty Hunter.

Upon accepting her award, Hilfiger told the crowd. “I feel awkward, strange and slightly embarrassed at accept-ing this award, not because I’m shy, which I am, but because the charity work my husband and I do is pretty much what any decent human being

should do.”Hunter gave up the idea of reading

his speech, saying, “I’m not a speech kind of guy anyway,” and instead extemporaneously spoke about the work the club does, adding that he hopes to mount a book drive for his lo-cal club, similar to the one he has done with toys. Winding up, Hunter said, “Oh, and I have a great speech here if anyone wants to bid on it. It’s never been used.” — MISTY WHITE SIDELL

Fashion Scoops

Amy Fine Collins and Dee Ocleppo Hilfiger