Daily EDition december 22, 2016 1

Fashion. Beauty. Business.

Take TwoBrioni opens multifloor flagship at Madison Avenue and 62nd Street in New York.

Page 6

Retailers Blink FirstMarkdowns rise as holiday shopping shifts later and later.

Page 12

Betting Big on BeautyCVS is getting behind emerging cosmetics and skin-care brands.

Page 11

● The designer is seeking to stop Laura Kim from joining the rival fashion house as co-creative director until April.

by WWD Staff

Carolina versus Oscar.In a battle pitting two grand names

in American fashion — Carolina Herrera and Oscar de la Renta — Herrera has sued de la Renta in the Supreme Court of the State of New York over a young designer who has helped each brand inject a more youthful air into their collections: Laura Kim, who founded the Monse brand with Fernando Garcia.

Herrera on Wednesday filed a lawsuit seeking to block Kim from joining de la Renta as co-creative director with Garcia. The duo was named creative directors in

business

Berkshire Takes Kendra Scott Stake

business

Carolina Herrera Sues OscarDe la Renta

continued on page 12

The chic geek is the leading character in spring outerwear. That infamous shade of brown that screams Seventies, with distinctive panel detailing, was one of the

season’s most defining statements, as seen in this Neil Barrett jacket. For more on the cropped jacket trend, see pages 4 and 5.

That Seventies Show

photograph by anDreW JacobS

● The founder of the Austin-based accessories brand retains majority control of the business.

by evan clark

Kendra Scott found her new partner.Private equity firm Berkshire Partners

acquired a minority stake in Scott’s hot Austin-based accessories brand, bringing to close one of the more closely watched auctions in fashion.

WWD reported Dec. 8 that Scott was drawing the interest of big-name investors in a Jefferies-run auction that could poten-tially value the company near $1 billion. The final sale price was not disclosed and sources close to the process could not immediately be reached.

The brand, which mixes accessible accessories with social-media savvy and a philanthropic bent, is something that’s become a rare commodity on the fashion dealmaking scene — a growth story. Inves-tors are always keen on companies that

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A curation of the must-have gifts of the season from jewelry to gadgets and everything in between, brought

to you by Marni Harvey, the NYC based influencer and Creative Director of Style on the Rise

Holiday Gift GuideUltimate

@styleontherise

S H O P H E R E

A D V E R T I S E M E N T

Studios

december 22, 2016 3

Sources: Jared Kushner Quietly Tries to Sell New York Observer● According to insiders, Kushner has been quietly shopping the Observer to potential buyers.

● Makeup Artist Bobbi Brown Ending a Chapter

● Year in Fashion: The Social Media Influence Peddlers

● Beauty’s Top Influencer: Zoella’s Zoe Sugg

● Queen Elizabeth Passes 25 Patronages to Younger Royal Family Members

TOp 5TreNdiNgon WWD.CoM

nEWSMAKERSThis Week’s Most Talked About names In our Industry

Carolina Herrera

Ted Gibson

Jared Kushner

Chriselle Lim

● David Falwell returns to firm as chief executive officer.

by vicki M. Young With contributionS from liSa lockWooD

Kellwood Co. is now under Asian ownership.

The apparel manufacturer has been acquired by a Hong Kong-based private equity firm for an undisclosed amount from U.S.-based private equity firm Sun Capital Partners.

Kellwood said in connection with the acquisition, David Falwell is returning to the company as chief executive officer. Falwell left Kellwood in 2013 after a 29-year career at the firm. At the time, Falwell was executive vice president of operations. He succeeds Joseph Lom-bardi, who was named ceo of Kellwood in January 2015. Lombardi is leaving the company to seek other opportunities, according to a Kellwood spokeswoman.

Caren Belair, a 33-year veteran of Kellwood, will continue as the firm’s president. Xiaopei Chin, a 10-year veteran of the firm, was named president of the western region.

Falwell said, “We believe there is tre-mendous growth potential for Kellwood’s businesses, and this acquisition will allow the company to leverage its existing rela-tionships in Asia to grow its businesses and increase profitability.”

Falwell added “Together with a strong investor group that believes in the com-pany’s growth potential, I believe that Kellwood has a bright future and is better positioned than ever to serve its retail partners and consumers.”

Kellwood’s apparel brands — My Michelle, Jolt, Rewind, Democracy, Sangria, JAX, Briggs New York and XOXO — target the women’s and juniors fashion segment.

Sun Capital acquired Kellwood in 2008 for $762 million. Since the acquisition, Sun has sold the yoga brand Zobha and spun off Vince in an initial public offering on November 22, 2013. Both were under the Kellwood umbrella. Vince was a part of the portfolio when Sun acquired the

company. Rebecca Taylor, Parker and Zobha were acquired while Kellwood was under Sun’s ownership. Sam Edelman, which licensed its sportswear collection to Kellwood in February 2014, no longer has a deal with Kellwood.

Rebecca Taylor and Parker are not part of the transaction and will remain as affil-iates of Sun Capital. Janice Sullivan, presi-dent of Rebecca Taylor, has been elevated to ceo of Rebecca Taylor and Parker.

Rebecca Taylor was acquired in 2011. The designer is still with the firm, although her business partner Beth Bugdaycay left the business in December 2014. Sullivan was tapped as president of the contem-porary sportswear firm in August 2015. At that time, the business was generating $75 million in wholesale volume.

Parker, another contemporary brand, had volume of around $50 million at the time of its acquisition in 2014. Howard Highman, ceo at the time, has since left the company.

Kellwood was formed in 1961 by the merger of 15 independent suppliers of soft goods to Sears, Roebuck & Co. The merged entity at the time had 22 plants across 10 states and 7,000 employees.

In its heyday, Kellwood’s sales surpassed $1 billion, and under the leadership of William John McKenna, Kellwood made several acquisitions, including Smart Shirts, Cape Cod Cricket Lane, Goodman Knitting Co. Inc., and Parsons Place Apparel, which was renamed Sag Harbor in 1994. The Sag Harbor IP was put up for sale in January 2015. Before that, in March 2012, Kellwood put up for sale its Koret apparel brand. Founded in 1938, the brand was known for coordinating tops and bottoms and was once a $200 million brand, but posted net sales of just $12 million in 2011, mostly from sales in catalogs and midtier retailers.

Kellwood’s main office is based in New York, although its St. Louis office houses the finance, accounting, legal and information technology teams. It also has a Western Region in City of Industry, near Los Angeles, now headed by Xiaopei Chin. The West Coast site houses a state-of-the-art pattern and sample making room, as well as West Coast showrooms, sales and design teams and product development. According to a spokes-woman for Kellwood, they also have a Hong Kong office.

business

Kellwood Sold to Hong Kong Investor Group

have a proven customer base and plenty of room to expand.

Kendra Scott has more than 50 doors and a core base of strength in Texas and Oklahoma, along with a presence at Neiman Marcus, Nordstrom, Blooming-dale’s, Von Maur and more than 600 spe-cialty boutiques globally. The company was said to have been looking for addi-tional funds to help it expand toward the coasts and to get into other categories.

Scott, who founded the company with $500 in a spare bedroom in 2002, will continue on as majority shareholder and chief executive officer and the firm’s leaders will remain in their current posi-tions. Norwest Venture Partners, which bought a stake in the business in 2014, will continue to hold a minority stake.

Norwest and Scott were said by sources to be the sellers in the process.

“Kendra and her team have built an authentic brand that is widely loved,”

said Marni Payne, a managing director at Berkshire Partners. “The company’s deep focus on its customers, commit-ment to product innovation and culture of giving back has led to impressive growth. We look forward to partnering with Kendra and her team to support their continued success.”

Scott, who has 464,000 followers on Instagram and clearly the attention of the financial set, has been raising her profile lately.

She sketched out her story for the crowd at a WWD forum event last year.

“Farmers and coal miners are my family in Kenosha, Wis. At seven years of

age in a blue-collar community, I saw the magic of fashion,” she said, noting her aunt was a buyer at a local department store. “I went to school for business and marketing, but I had the fashion bug.”

At 19, she opened a shop called The Hat Box. The store was shuttered, but she bounced back.

And big time.In addition to accessories, the brand

sells home goods and nail polish. A program dubbed Color Bar helps engage consumers in stores and online by letting them craft personalized jewelry.

Prices vary, with rose gold pendant necklaces selling at $65, pavé diamond and yellow gold earnings at $750 and a cuff bracelet in pavé diamond and yellow gold for $1,500.

Scott said on Wednesday of her new investor, “Berkshire has significant experience in helping leading brands maximize their potential and a deep appreciation for the Kendra Scott culture and organization.”

The investment firm has made more than 115 investments since 1986 with more than $16 billion in aggregate capital commitments. Its other retail investments have included Aritzia, Bare Escentuals, Carter’s and Party City.

Berkshire Takes Kendra Scott Stake continued from page 1

Kendra Scott, right, celebrates the 2015 launch of her brand

in Bloomingdale’s in new York.

rebecca taylor’s miami store at the aventura mall. rebecca taylor and

parker are not part of the acquisition.

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4 december 22, 2016

TrendsCropped Jackets

Retro Seventies references and heritage plaids are key inspirations influencing the cropped jacket for spring.

A Tight CropphotographS by anDreW JacobS

by alex baDia

Lanvin’s wool outer jacket; andrea pompilio’s nylon jacket; cos’ technical rib knot sweater; Brooks Brothers’ cotton turtleneck, and dries Van noten’s wool pants.

Bottega Veneta’s cotton and baby calf light velvet jacket; neil Barrett’s viscose and

nylon sweater, and tim coppens’ wool pants.

december 22, 2016 5

TrendsCropped Jackets

Lanvin’s satin jacket; maison Kitsune’s polyamide jacket.

dsquared’s polyester outer jacket; missoni’s cotton, wool and polyester inner jacket, and christopher Kane’s wool pants.

edward crutchley’s wool jacket and shirt; 22/4 Hommes’ cotton tank, and missoni’s cotton pants. Bottega Veneta belt.

modeL WilliaM Porter at MSa; aLL ShoeS J.W. anDerSon; aLL JeWeLry bYthiel

neil Barrett’s leather jacket; ami’s wool sweater and cotton pants, and Brooks Brothers’ cotton turtleneck.

6 december 22, 2016

● The 5,974-square-foot store is located on the corner of 62nd Street and Madison Avenue.

by Jean e. PalMieri

NEW YORK — Brioni is taking its lux-ury Italian aesthetic to Madison Avenue here with the opening of a two-level, 5,974-square-foot flagship on 62nd Street.

The store is the second iteration of a David Chipperfield Architects Milan design that launched in Paris in July on Rue Saint-Honoré. But Gianluca Flore, chief executive officer of the Ker-ing-owned Brioni, said the layout of the New York store allows for a fuller expres-sion of the design.

“It’s even nicer than Paris,” he said. “That fact that it is two full floors allows for the concept to express itself in a better way.” The Paris store is also on two levels, but one is below ground.

The New York store, which opens Thursday, replaces a smaller unit on 57th Street that closed on Sunday. The flagship was intended to open in late October, but construction delays, due in part to the fact that the location is a residential building, pushed back the opening date.

The opening of the store comes as Brioni is in the midst of another reboot after a tumultuous 10 months. It parted ways with its then-creative director Brendan Mullane, tapped Justin O’Shea as his successor, and then pushed O’Shea out after six months following pushback from retailers and customers over O’Shea’s attempts to make the storied brand “edgier.”

Flore said the store may offer a few O’Shea designs, but the bulk of the offering will be the more-sedate high-end tailored clothing, sportswear and accessories that have become a hallmark of the label since its founding in Rome in 1945. “We will have the entire lifestyle,” he said.

The store design also speaks to the “roots of Brioni,” Flore said. It features gray Travertine floors and walls and colored marble columns that are intended to be reminiscent of ancient Roman

architecture. But the cursive script spell-ing of the brand name is gone, replaced with the controversial Gothic lettering that O’Shea championed during his short tenure at the label, but that the brand says is a reworked version of its historic logo.

Lighting is housed in the ceiling, there are rosewood cases and timber paneling to distinguish the different areas.

A stairway between the two floors is also created from the Travertine and large windows on both floors allow for natural light to complement the interior space, although frosted shades are used on the upper level.

On the second floor, a special plaster is used to provide a textured finish.

Throughout the store, there are velvet seating areas and other furniture from 20th century architects including Albini and Mies van der Rohe. For the opening, a moving tailoring machine, complete with gold spools of thread and thimbles, fill the

Madison Avenue windows.Upon entering, a few suits are hung

front and center and the rest of the floor offers clothing, sport shirts, sweaters, jeans, dress shirts, ties, shoes, small leather goods and sunglasses. The upper level focuses more on tailored clothing and includes a bespoke area at the front. The fitting rooms are large and the walls are covered in vintage leather designed to look like upholstery that would be used in Sixties cars.

Overall, the store is airy and modern with no racks full of merchandise to obscure its design. It has two entrances, on Madison Avenue and 62nd Street, and is located across the street from Hermès and near the soon-to-open Tom Ford store.

Flore said Brioni’s store “enhances the brand’s Roman roots with a contemporary undercurrent.” And the design offers the “same quality and details as we put in our garments. We created an environment

linked to the DNA of the brand but with a fresh environment.”

He said the large size of the store allowed Brioni to create a special VIP area for its bespoke service — perfect for long-time bespoke client President-elect Don-ald Trump — oversize fitting rooms and an airy environment that is appropriate for a brand whose off-the-rack suits can retail for less than $5,000. Bespoke suits start at around $7,000 and go up from there.

The store is also intended to plant a stake in the ground in the U.S., which accounts for about one-third of the brand’s global business.

Flore said after a tough 2015, sales have improved here and in fact, Brioni experi-enced “a strong recovery” starting in the June-July period. “We’ve seen a better trend,” he said. “Our loyal customers are coming back and buying with more confidence.”

Business improved even more after the U.S. presidential election, he said, which is “a very good sign.”

Brioni has also been successful in attract-ing a different customer and is appealing to men from their mid-30s to 50 in addition to its older core shopper, he said.

Flore said the plan is not to add to the store count in the U.S., which includes 10 stores in Bal Harbour and Palm Beach, Fla.; Las Vegas; Beverly Hill; Chicago and Washington, D.C. (There are also 49 stores around the world in Europe, Asia, the Middle East and other countries.)

Instead, the goal is to increase compara-ble-store sales in its own stores as well as with its wholesale partners, which in the U.S. include Neiman Marcus, Saks Fifth Avenue, Barneys New York and others.

But while the store count may not change, Flore said Brioni is still expecting to bring on a creative director to succeed O’Shea and design the brand. “We’re con-sidering and looking for the right person to fit within the strategy of the brand,” he said. Although he provided no time frame, he said: “We will appoint someone.”

For now, the focus is on the New York store. “Our position in America is to refer-ence the iconic elegance of the brand that is recognized by our customer as having style, elegance and quality,” he said. “And we want to make sure we give them an excellent experience too — that’s why we invested in New York.”

men’s

Brioni Opens Flagship on Madison Ave.

the new Brioni flagship on madison avenue.

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december 22, 2016 7

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Powered By:

s P o n s o r e d

● What are the main challenges in today’s fashion business?

The fashion world is fiercely competitive with rival brands competing to outdo each other on price, design, innovation or sheer variety of products. In order to keep a competitive advantage, brands need to ensure they produce fresh, relevant collections that consumers demand. We are moving toward a level of connectivity where everything from machines to systems to data and analytics are connected in the cloud. The right partnerships aligned to the right innovations will enable fashion and apparel companies to turn these challenges into opportuni-ties, enabling Lectra to help its customers succeed in this fast-evolving industry.

How can you predict consumer demand?

Predicting how a season will go is incredibly difficult. The same goes for pre-dicting how consumers will respond to new collections and whether retailers will sell enough units to reach revenue targets. It can be challenging to keep up with consumer trends without harnessing insights throughout the whole process. It’s a juggling act to manage production in line with forecasts, though technology helps compa-nies face such challenges and in a very effective way. Additionally like any business, fashion brands need to remain profitable. But with rising costs from materials to wages to ship-ping, fashion companies need to control costs and make their processes as efficient as possible.

What about changes in the global economy? How are they affecting the industry?

Changes in the global economy also increase the challenges for the fashion industry. Companies need to adapt to fluctuations in currencies, rising wages in manufacturing countries, and global instability. Combined with changing regulations and trade agreements, it is more challenging than ever to run a successful, profitable fashion business. The mar-ket demands integration so companies can master the entire the product lifecycle.

you mentioned the need for insights throughout the process. Will you explain this?

Often people involved in the development of a new collection act as isolated islands — they end up not contributing to the full potential of a project. Today new business models demand more integration and collaboration. This inte-gration brings necessary insights so a company can make a difference in the marketplace. This integra-tion is made easier by tech-nology, which connects people and enables them to follow the process in real time. Integrated platforms have made it possible and have become essential in a time when the world is experiencing its fourth industrial revolution.

What kind of insights do these platforms generate?

To successfully design, manufacture and deliver fashion collections that consumers want, it’s crucial for brands to have a streamlined process throughout their whole supply chain. From ensuring cost-effective design to negotiating with suppliers and delivering products in line with fore-casts, it’s important to see what’s happening at every stage. Through lifecycle management platforms, professionals can get complete visibility into budgeting and reporting, making them easier to understand. It’s now possi-ble to manage budgets of every collection in line with financial forecasts. That way you can ensure you have the best margins at all stages. It has become feasible to identify poten-tial issues at every stage of production, meaning decisions are made earlier and responded to accord-ingly, should profitability be at risk.

Does this concept also apply to the work of fashion designers?

This increased visibility enables everyone from planning and design to product development to see how designs are progressing. Teams can share and collaborate more easily, reduce errors and make the whole design and validation process more efficient. As a result fashion designers can assess much earlier in the process whether their designs are commercially viable. And with complete visibility over all costs, it is possible to design to cost and ensure the profitability of each collection.

s p o t l i g H t o n f a s H i o n a p pa r E l

Brands Get Lean and Mean

Companies are turning to product-lifecycle management systems to help speed up their supply chains. by eliZabeth DouPnik

Fueled by dramatic shifts in the market, product-lifecycle manage-ment systems serve as an integral component for successful business models — models that are tradition-ally fashioned to support supply chains that function on a nine-month or one-year turnaround for product development. As consumer

appetite for new trends and accessible products grows, manufacturers are straining to keep step with shopper expectations — and create leaner, faster supply chains.

Customers are on the hunt. Brand loyalty is arguably at an all-time low, informed by Millennials and Gen Z-ers. The

demographics prioritize ethos and cost over the traditionally perceived prestige of a luxury fashion house or even their for-merly favorite brand. “The Retail Perceptions, The Next Gen-eration of Retail” report released by Interactions Consumer Marketing and Peanut Lab said “72 percent of Generation Z shoppers will switch from their favorite brand if they find a similar product for a lower price.”

Hence, the attraction of fast-fashion retailers, which are more nimble, and frequently model supply chain infrastruc-tures as tech start-ups rather than established retailers. As a recent L2 report noted, Zara, for example, has inventory planning for only 15 percent of sales volume. The rest is based on demand culled from data analytics of its shop-pers. So as fast fashioners such as Zara and H&M continue to deliver high volumes of product on short turnarounds, traditional fashion apparel brands are faced with the chal-lenge to reclaim their market leadership in terms of design, specifically new trends that are pioneered every season.

The disruptive nature of fast fashion and a desire for “see-now-buy-now” is perhaps good medicine for many of the more traditional fashion brands. “Use disruption as questions about the business to address the company’s cul-ture. Attack yourself before someone else does,” said Matt Laukaitis, managing director of U.S. at SAP North America, during the WWD Digital Forum in October.

Younger companies like Warby Parker and Everlane have championed not only efficient supply chains, but transpar-ent ones. It’s a one-two punch: ethos-conscious companies with visible supply chains that quickly unroll next waves of merchandise are a consumer’s dream. What’s to be learned from these swift start-ups is in their lean processes that don’t compromise product quality. In other words, don’t work

harder, work smarter.In an effort to emulate the business model of these

novice successes, department stores like Neiman Mar-cus are tapping executives from fast-fashion, mass-mar-ket and e-commerce companies. The Dallas-based retailer appointed Michael Fung as interim chief financial officer. Fung logged 11 years at Wal-Mart in addition to a stint as chief financial officer at 99 Cents Only Stores. British jewelry brand Monica Vinader recently named Erica Allen as commercial director. Allen formerly worked at e-tailers like Farfetch.com and Net-a-porter.com. Retailers that tap talent from corners of the industry where they’re looking to infiltrate will benefit vastly. ■

Zara has inventory planning for only 15 percent of sales

volume. The rest is based on demand culled from data analytics of its shoppers.

B u S i N e S S i N S i g h T S

Executive Q&A with Daniella Ambrogi, vice president of marketing at Lectra.

m a r k e t a n a ly s i s

8 december 22, 2016

Powered By:

F a s h i o n a P Pa r e l m a r k e t B y t h e n u m B e r s

Key Apparel Market Trends

¬ The “see now, buy now” phenomenon is transforming how designers present collections to the market

¬ Technology is helping reduce apparel lead times, which have been reduced to one to three months from six to nine months

¬ That same technology is being coupled with other processes to create lead times with fast fash-ion firms that range from three to four weeks

¬ The plus size market is expected to grow 3 percent in 2016, to about $10 billion

Source: WWD reportS, IBIS

$1.2Ttotal, global apparel

and accessories Sales

$285Bglobal Luxury Sales (excluding

cars, yachts, wines and spirits)

$111BWomen’s apparel Sales in the u.S.

$64Bu.S. apparel and

accessories retail e-commerce Sales in the u.S.

Source: BaIn co., StatIStaSource: S&p capItal IQ. theSe are puBlIcly traDeD apparel, acceSSorIeS anD luxury fIrmS aS claSSIfIeD By StanDarD & poor.

● Digitalization and the industry 4.0. We are moving toward a level of connectiv-ity where everything from machines to systems to data and analytics are connected in the cloud. The right partnerships aligned to the right innovations will enable fashion and apparel compa-nies to turn these challenges into opportunities. Lectra is committed to helping its customers to succeed in this fast-evolving industry.

Waste and more efficient use of mate-rials: Lectra has helped customers for years to reduce manufacturing waste with technologies such as Optiplan, Lectra’s proprietary order planning and optimization solution; the marker-making solution Diamino Fashion; and Vec-tor, Lectra’s fabric-cutting technology. Versalis, Lectra’s precision leather cutting solution enables suppliers to achieve substantial material savings with maximized yield, enhanced productivity, reduced labor costs and consistent quality.

optimizing entire end-to-end processes

Next generation dash-boards enable effective planning of collections from the big picture down to the smallest details. All CAD tools can be integrated eas-ily into the platform, enabling businesses to link targets, schedules, and develop-ment activities. This brings real-time data sharing to life, improving collaboration, avoiding bottlenecks and overlapping tasks, while meeting KPIs.

streamline every design element and development process to increase efficiency.

The system enables integration of all design tools including Adobe Illustrator and Kaledo, Lectra’s fashion and textile design solution. People can work individually while staying connected via the platform to share designs.

Challenge: sourcing the right products/

Thanks to greater visibility over supplier costs and quality throughout every aspect of the development process, it is easy to identify the best suppliers. By keep-ing all costing information and vendor communications in one system, businesses can run “what if” cost sce-narios to model the effect of using different suppliers, materials or patterns. This enables more informed decisions and feedback to suppliers in real time.

Lectra Solutions

s P o n s o r e d

● The flattening of fash-ion’s seasonality along with the explosive growth of fast fashion and the “see now, buy now” trend are redefin-ing how apparel brands bring products and collections to the market.

From a supply-chain management and prod-uct-lifecycle management perspective, these changes are challenging fashion brands on a most fundamen-tal level.

Every touch point in the PLM process is affected. From requests for quotes and sample requests to purchase orders and sourc-ing materials, the demands on apparel companies are amplified by shoppers who want to buy apparel that is in-season and on-trend — and at the right price point. Moreover, meeting these demands has to be done while controlling costs and maintaining gross profits.

What’s most difficult is that this new consum-

er-centric environment has created numerous friction points for fashion brands, with the most overwhelming being the need to drastically reduce lead times while also improving efficiencies across the supply chain. The goal is to be lean and fast.

Traditionally, a fashion brand launching a collec-tion would use various software platforms to support that PLM process. This would include software used by designers and others for preproduction work and planning as well as software for managing the sourcing of materials, inventory, purchase orders and shipments.

For brands doing their own manufacturing, the equipment used was considered antiquated, but adequate. With the software, none of the platforms were integrated. But as the demand for shorter lead times increased, inefficien-cies and weak points across the entire PLM process were revealed.

As a result, apparel brands are increasingly turning to

more sophisticated PLM and SCM platform solutions that are more fully integrated as well as new, more advanced manufacturing equipment.

For the apparel companies not making these invest-ments, navigating in the current landscape has been nearly impossible. Persistent issues for the non-adopters include lost sales, eroded gross margins, fabric waste, a lack of visibility in the supply chain and — for the larger apparel firms in par-ticular — difficulties planning collections across different brands, product segments and divisions.

On the IT front, internal and external communica-tions that occur across global time zones are also pressured by the demand for shorter lead times. It’s no longer acceptable to wait a day to get an approval on a garment care label. Product information has to be updated in real time and it needs to be visible to the key

people and vendors involved in the PLM process. This has given rise to the need for more improved product data management.

From a business culture perspective, market changes are forcing apparel brands to be more collaborative. Product design and development as well as sourcing were previously conducted in separate silos. Now, as apparel brands are forced into being smarter and leaner, collaboration and teamwork are the words of the day.

Subsequently, providers of PLM solutions are working with apparel brands to make sure they have the right platforms as they seek to be more efficient. And this includes cloud-based plat-forms, more efficient design software, more consistent and accurate color man-agement software as well as ways to leverage data to make launching apparel collections more successful at retail. — arthur ZacZKieWicZ

Eliminating Supply-Chain Frictionthe changes in the apparel market are forcing brands to rethink how they develop products and collections.

Top Apparel, Accessories and Luxury Goods Companiesranked by annual revenue (in u.S. millions)

The goal is to be lean and fast.

F r i c t i o n P o i n t s

december 22, 2016 9

● Ath-leisure players are emerging with distinct artistic collections of tailored silhouettes and detailed elements.

by Sofia celeSte

MILAN — As major U.S. players such as Under Armour and Lululemon continue to post disappointing sales, smaller Euro-pean ath-leisure players are emerging with distinct artistic collections of tailored silhouettes and elements like elastic lace and tastefully abstract patterns.

In many cities, such as Milan, prome-nades that were once flooded with women in fur, high heels and stockings are now shared with people in constant movement, who need their clothes to take them from the morning yoga session to their network-ing aperitivo.

Italy-based No Ka ‘Oi, launched in 2014, is one of those brands changing Milan’s dress code. Owned by the Bologna-based Rilievi Group, No Ka ‘Oi captivates custom-ers with a zen mantra and designs inspired by the colors and nature of Hawaii. Designed in Italy, No Ka ‘Oi’s ensembles are made in the Rilievi Group’s production factory in India.

“Nature is the beholder of enduring strength and we translate its elements into our apparel each season. Although we are inspired by this island’s energy, Italy is our country of origin and where we are headquartered,” said Michele Galliano, managing director of Rilievi Group and cofounder of No Ka ‘Oi.

Since its debut, No Ka ‘Oi has since been sold on Net-a-porter, Matchesfashion and in Harvey Nichols, and now has clients in the U.S., Europe, Asia and the Middle East.

Sàpopa is a Milan-based brand that prides itself on its Italian tailored elements and one-of-a-kind eponymous sportswear fabric that the company developed with

an Italian laboratory in the Veneto region. Sàpopa’s material is woven with threads that contain enzymes similar to natural ones that aid human blood circulation.

During a recent press presentation, founders Piero Righetto and Maria Elena Ghisolfi invited a small number of jour-nalists to join them at a yoga class in the swanky Hotel Magna Pars in the Via Tor-tona design district.

Attendees were impressed by the elegant contours, light, temperature-reg-ulated materials and the fashion-forward

patterns.“We realized there was room for an

activewear brand that is sophisticated and infused with tailoring techniques that doesn’t make you look like you just stepped out of the gym,” Righetto said.

Righetto added that the company started with about 200,000 euros, or $266,000, in 2014. It used start-up capital to help fund its team that had design and tech experience in companies such as Dolce & Gabbana, The North Face and Patagonia. Driven by sales in global markets and in

upscale stores like Harvey Nichols in Hong Kong and Bloomingdale’s in Dubai, the brand expects sales to triple in 2016 from its 2014 levels.

Elsewhere, players like the tennis-in-spired brand Monreal London and Lucas Hugh are emerging in a similar vein.

Galliano noted that these brands are responding to the same intention of creating stylish activewear and developing their collections with their concepts and construction techniques that are similar to No Ka ‘Oi.

Retail prices for Sàpopa and No Kai ‘Oi are in line with the luxury market. Online prices run from about 160 euros, or $172, for a pair of leggings to well more than 400 euros, or $429, for a sweatshirt.

In the U.S., activewear sales overall are still growing: they grew by 16 percent in 2015 versus the year before, compared to a two percent year-over-year rise in total apparel sales, according to the U.S.-based NPD Group.

The founders of the Hong Kong-based fashion development firm Vertical Collec-tive stressed the need for emerging active-wear players to cater to performance as well as art, science and the tricky business of complimenting a feminine silhouette.

“The brands that are succeeding in this market are focusing on aggressively pushing trends forward in order to stand out. The most relevant product needs to give a nod to streetwear but find a way to stay feminine and sexy, since it is all about showing off your body — that is not an easy intersection,” said Vertical Collective’s cofounder and co-ceo Katherine Zabloudil.

Zabloudil’s partner, Morgaine McGee, praised brands such as Sàpopa for their smart, patented innovations like Sleggings, a pair of workout pants that hide a wom-an’s backside with a discreet flap.

“Sleggings is an incredible new take on active leggings, but it also provides a bit of modesty for those women who may not be into showing it all off,” McGee added. “Couple that with state-of-the-art [Made in Italy] fabrics they are using, and you have a winning combination.”

fashion

European Activewear Takes Shape

Looks from Sàpopa.

10 december 22, 2016

● The AAFA and 17 other organizations filed a complaint in October with uSTR over counterfeits sold on Alibaba’s online platforms, urging the agency to relist it on the watch list.

by arthur frieDMan

After pressure from a broad coalition of business groups, the U.S. Trade Repre-sentative’s Office has relisted Alibaba’s Taobao e-commerce site on its “Notorious Markets” list for 2016, four years after removing it.

The American Apparel & Footwear Association and 17 other organizations filed a complaint in October with USTR over counterfeits sold on Alibaba’s online platforms, urging the agency to step up its scrutiny of the Chinese e-commerce giant and relist it on the counterfeit watch list.

The USTR report said, “The Taobao.com e-commerce platform is an important con-cern due to the large volume of allegedly counterfeit and pirated goods available and the challenges right holders expe-rience in removing and preventing illicit sales and offers of such goods.”

Right holders in the U.S. and interna-tionally have continued to report serious challenges to reducing high levels of coun-terfeit and pirated goods on Taobao, said the report, and “long-standing obstacles to understand ing and utilizing basic IP enforce-ment procedures continue unabated.”

Rick Helfenbein, president and chief executive officer of the AAFA, said, “Today’s action shines a renewed spotlight on the considerable concerns we and others

continue to see on Alibaba platforms. In the coming year, we will work with our mem-bers, USTR and other government agencies, outside stakeholders and Alibaba itself to seek sustained improvements that lead to the permanent removal of counterfeits from these online platforms.”

Noting that Alibaba has made efforts to improve its intellectual property rights enforcement, its so-called “Good Faith Program” reportedly remains out of reach for the majority of right holders, due to stringent eligibility criteria that must be met and maintained over a period of time.

“There is a reported significant dispar-ity be tween the timeliness and effective-ness of Alibaba’s responses to complaints submitted by right holders in the Good Faith Program and those outside the pro-gram,” USTR’s report said. “While recent steps set positive expectations for the future, current levels of report ed counter-feiting and piracy are unacceptably high.”

Michael Evans, president of Alibaba Group, said, “We are very disappointed by the USTR’s decision to include Taobao on its Notorious Markets list, as we are far more effective and advanced in IPR pro-tection than when the USTR took us off the list four years ago. The decision ignores the real work Alibaba has done to protect IP rights holders and assist law enforce-ment to bring counterfeiters to justice.”

USTR Michael Froman, in unveiling the report on Wednesday, said, “Tens of mil-lions of American jobs and several trillion dollars of our gross domestic product rely on American creative and innovative indus-tries. The marketplaces, tactics and schemes that undermine and threaten America’s cre-ative industries change quickly and require our constant attention.”

The report notes that during the past year, some previously listed online markets have been subject to successful enforcement efforts or are reported to have undertaken various measures that demonstrated a willingness to cooper-ate in addressing infringement. Alibaba claims, for example, that it has proactively removed more than 380 million product listings and closed about 180,000 Taobao stores in the 12 months through August.

“In 2017, the U.S. will closely monitor the implementation and effectiveness of the set of prospective actions described in Alibaba’s Notorious Markets List sub-mission,” the report said. “As Alibaba moves forward with its plans to further reform and enhance its enforcement tools across platforms, the recommen dations highlighted in the 2015 list remain valid, namely simplifying processes for right holders to register and request enforce-ment action, making good faith takedown procedures generally available, and reduc-ing Taobao’s timelines for takedowns and issuing penalties for counterfeit sellers.”

While many of the companies cited in the report are involved in illegal piracy of media such as movies and games, as well as digital copyright infringement, Alibaba is not alone in the fashion realm being targeted on USTR’s naughty list.

The business-to-business e-commerce platform GongChang is reportedly one of several online markets in China that are well-known for the sale of counterfeits, including counterfeit security tags that retailers affix to products as part of a shop-lifting prevention system.

Muaban is one of several Vietnamese e-commerce platforms nominated this year. Al though this Vietnam-based online

marketplace facilitates sales of legitimate goods, stakeholders have identified this site, which has over 3 million page views each month, as one that also offers coun-terfeit apparel and footwear. Muaban does not appear to have an effective mechanism to remove counterfeit listings.

China is reportedly the global hub for manufacturing counterfeits, with Guang-dong Prov ince at its epicenter, USTR said. At the Baiyun Leather Goods Market, ven-dors reportedly sell a wide range of coun-terfeit leather goods. Also in Guangzhou, shops in the Jin Long Pan Foreign Trade Garment Market allegedly sell low-quality, relatively inexpensive counterfeit ver sions of U.S. and other branded apparel and footwear on a wholesale scale for export to Africa and the Middle East.

Many retail vendors at the Silk Market reportedly distribute counterfeit consumer prod ucts. Despite posted signage indicat-ing that the Silk Market should be a model of IPR enforcement, multiple vendors reportedly sell counterfeit goods at a small fraction of the price of authentic articles, and openly assert that the fakes are of high quality. Such conditions are reported to persist despite welcomed efforts by Chinese authorities to work with manage-ment and engage in enforcement actions, and even though some right holders have successfully sued the market’s operators.

In Hanoi, the Nihn Hiep retail market has been the target of raids and seizures of counterfeit goods and labels. USTR said it urg es the government of Vietnam to con-tinue to take enforcement actions to deter sales of counterfeit goods and labels at this and other nominated markets in Vietnam.

Numerous markets in India have appeared in past Lists, with no effective response by the Indian government. In the 2016 Notorious Markets pro-cess, stakeholders highlighted dozens of markets across India for counterfeit apparel, footwear, automobiles and auto parts, electronics, leather goods, mobile phones, CDs and DVDs, and luxury goods. Gandhi Nagar is highlighted for counter-feit apparel, while Burma Bazaar is high-lighted for a wide variety of counterfeit goods and pirated media discs.

business

USTR Relists Alibaba on Notorious Markets List

● The category remains strong, part of the health and wellness trend and fueled by never-ending product innovation.

by evan clark

When the gladiators of sport in the active market update investors, quarterly conference calls can start to take on the air of a pep rally.

And there’s plenty of reason to fire up the fans.

Despite many dimming lights in the fashion world right now, activewear is still ultrahot, part of the health and wellness trend and fueled by never-ending product innovation promoted as a means to help celebrity athletes up their performance.

Nike Inc. reigns in the kingdom, with sales of $33.5 billion in the most recent 12 months and a market capitalization of $86.3 billion. By comparison, Adidas has sales of 18.8 billion euros, or $19.6 billion, and a market cap of 28.9 million euros, or $30.2 billion, and Under Armour Inc. has sales of $4.7 billion and a market cap of $12.2 billion.

It’s a sector that takes the primary lesson of George R.R. Martin’s “Game of

Thrones” to heart: “When you play the game of thrones, you win or you die.”

Nike president and chief executive offi-cer Mark Parker, despite his commanding position, certainly feels the competition.

“With the energy we see in sports right now, along with today’s more active life-style, it’s no surprise that our industry con-tinues to attract the competition,” Parker told investors Tuesday, while reporting better quarterly sales and profits.

“As in sports, competition is a positive thing,” he said. “It sharpens our focus in that we know there are areas in the short term where we haven’t executed as precisely as we would’ve liked. As good as we are, we can be even better by hyper focusing on our most compelling growth opportunities.”

Adidas’ ceo Kasper Rorsted, who came from Henkel, on his first quarterly call with investors last month was still feeling out the role as an activewear ceo, and only sparingly used sports talk.

“Reebok is today well-positioned to become the best fitness brand.…But at the same time, we have to be realistic,” he said. “Reebok is growing slower than Adi-das and our competition. And we’ve seen no growth in North America in the past three years. And lastly, the profitability is

significantly below the group average. It’s time to get back to the gym and redouble our efforts on Reebok.”

That’s more analytical than the

full-throated half-time rally preferred by Under Armour’s chairman and ceo Kevin Plank.

“We have punched above our weight for a long time and that has been a central theme of our success,” he told investors in October. “That’s not going to change. We compete in an industry that is mea-sured by a few very high standards. We’re measured by the innovative product we bring to consumers, by the strength and relevancy of our brand, by the talent of our team, and of course, by the financial results we deliver.”

Shortly after, at the WWD CEO Summit, he described the white board in his office that he uses to help solidify the company’s culture with sayings, including, “I don’t have to be right, I just want to win.”

And to do that, he’s willing to go toe-to-toe with anyone.

Asked if he read Nike cofounder Phil Knight’s book, “Shoe Dog,” Plank said he hadn’t yet, but recalled an anecdote that serves as something of an analog to the prefight psyche out.

“Every year I used to write a holiday card to the founder of our chief compet-itor,” Plank recalled. “Dear Mr. Knight, you don’t know who we are, but you will someday.’ I didn’t think they got there, but I did it out of spirit. Then in 2007 or so, he said somewhere that he got the cards and they pissed him off.”

Leading an activewear company is a sport of its own apparently.

business

Activewear CEO’s Rally SupportersKevin plank

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december 22, 2016 11

● As trends come quickly to the mass market, the drugstore company is ready to pounce on emerging brands.

by faYe brookMan

CVS Pharmacy is betting big on beauty.

The powerful drugstore chain with more than 7,900 retail doors is doubling down its beauty assortment.

Its biggest play is in emerging cosmetics and skin care brands — especially lines to attract Millennials. CVS is mixing in names including Wunderbrow, Nip+Fab and Organic Doctor in a bid to attract beauty enthusiasts. Additionally, CVS has created its own masks to offer Korean beauty to shoppers.

Rolling the dice on newness could be the lifeline drugstores need to compete with specialty doors such as Ulta Beauty and Sephora.

Front of store sales at CVS account for 25 percent of sales, with beauty including hair and personal care is estimated to produce at least half of that sum.

During CVS’ recent analyst day, Helena Foulkes, president of CVS Pharmacy, said the chain will continue to add more space to higher profit front end categories such as beauty. She noted health and beauty items produce 1.7 times more profit than many other front-end categories.

Emerging brand names dominate CVS’s beauty direction. “We have a lot of new. In cosmetics alone, more than 2,800 products launched this year,” said Alex Perez-Tenessa, vice president of merchan-dising in beauty and personal care at CVS Pharmacy. Much of CVS’ sales growth during the year, in fact, came from smaller, trendier brands.

The quest to discover up-and-coming products is fueled by consumer wish lists. “We felt we needed to be there to respond to that demand. Yes, we need to carry her all-time favorites, but we want to be the place where customers come to find the latest innovations at afford-able prices to find her future favorites,” Perez-Tenessa explained.

Industry observers said the need to add fresh logos puts pressure on established drugstore brands. “All beauty retailers need new, new items for their customers to find, discover and enjoy. This comes at the expense of older items that now are deemed less attractive to Millennials and more adventurous beauty users,” said industry consultant Allan Mottus. “CVS and other drug chains need to experiment with their planograms or lose share to Ulta and Sephora.”

CVS is being proactive. Every inch of square footage is carefully gauged to ensure the right mix. Moving the sales needle are hip and trendy lines shoppers discover online or on social media sites. Displacing older brands with less rele-vance clears the path for products that resonate with CVS shoppers.

CVS is apparently on to something: Results from an elevated store environ-ment in 400 stores produced not only a 2.5 percent increase in overall sales, but a notable 4 percent in beauty. The company said there is the potential to scale-up resets in 3,000 stores over next several years.

The speed to market of prestige con-cepts is quicker than ever, thus giving CVS an equal opportunity to hit upon hot trends as department stores. The indie brands aren’t tied to release windows that once dominated the beauty landscape. “Mass is getting items faster. The gap between the pace of innovations between prestige and mass is lessening,” Perez-Te-nessa confirmed.

Furthermore, CVS is positioned to incubate growing lines, Perez-Tenessa observed, because of convenient loca-tions, a burnished new beauty service program, an elevated store experience and its personalized approach gleaned through its ExtraCare loyalty program. “We can give smaller brands the capabil-ities they need to reach the right custom-ers who will love them,” he said.

The chain has employed several tactics to make its store more relevant to shop-pers, particularly beauty enthusiasts.

After discovering its beauty consul-tants’ time was often tugged by the need

for housekeeping, Perez-Tenessa and his team tweaked the program. Now, its experts only goal is to service shoppers. That includes new tools such as iPads to allow them to tap all the available technol-ogy to feed information to shoppers.

From a physical standpoint, CVS is installing Trend Centers right at the entrance to the beauty department to aid in shopper discovery of what’s new.

One illustration of the type of product CVS will position on that display is Wun-derbrow. Perez-Tenessa said CVS is the only U.S. physical chain to offer the brow gel, which allows women to fill, define and shape eyebrows with natural-looking color in under two minutes. This month, CVS shipped it to 500 locations with another 2,000 scheduled in 2017. Priced at $22, Wunderbrow offers CVS a chance to get higher register rings and cash in on the brow craze.

“We saw customer demand for brow solutions,” Perez-Tenessa explained. “The brow category is on fire in beauty right now,” he added noting celebrities have fueled the flame. The numbers prove him correct. Brow category sales soared 32 percent for the 52-week period ended Oct. 30 in multiunit doors, according to IRI to $226 million. It was a category dormant for years.

Michael Malinsky, cofounder and presi-dent of Wunderbrow parent of KF Beauty, shared the enthusiasm calling CVS’ new beauty look “impressive.”

Wunderbrow is just the beginning of a new beauty push at CVS. Over the next few months, the shelves will be reconfig-ured including shrinking some standby drugstore brands. On the plus side for those legendary brands is that they are grabbing up the hot brands via acquisition to help them “buy” innovation. A case in point is L’Oréal’s purchase of NYX or Unilever’s buy of Dollar Shave Club.

Among the lines stocked or being added at CVS are Skinfix, NYX, Ahava and a Kylie Jenner favorite, Nip + Fab.

Also, CVS has created its own brands for categories where it felt the need. To wit, under its exclusive Beauty 360 logo, CVS is rolling out Korean-beauty inspired

masks. CVS’ Makeup Academy MUA continues to be a powerful traffic pulling line and its relatively new Enlite is gaining fans. Also CVS maintains its Nuance collection, which was freshened earlier this year.

Additions to CVS’ proprietary Skin+-Pharmacy skin care include serums. “That brand really speaks to our commitment to health,” Perez-Tenessa added.

He’s also expecting big results from advanced skin technologies, which are featured in CVS’ Derm Skin Care Centers. The chain added 700 more of its revved up Derm Centers last year and doubled its product assortment. The synergy will wellness and beauty will be visible he said as prebiotics roll out to the drugstore portfolio.

In the pipeline is the addition of For-mula 10.0.6 — a chemist created line for troublesome skin — along with Organic Doctor, an organically certified range from the U.K. with on trend ingredient stories such as snail gel and coconut oil.

Physical changes are also under foot including a new front and center fixture where emerging brands will star. There’s also a nail bar highlighted by Essie Gel Couture in about 1,500 stores with more on tap. Beauty on the Go is a high-im-pulse fixture near the checkout with trial sizes of desirable beauty brands in 4,000 doors.

While health and beauty products comprise less than half of CVS’ front end now, the company intends to push that to 80 percent. “We will be laser focused on higher growth, profitable business,” Foulkes told financial analysts.

These efforts coalesce in what Perez-Te-nessa believes is an experience encourag-ing a rediscovery of drugstores. “When we look at where we are growing, it is with Millennials and beauty enthusiasts, and we have brands that appeal to them like NYX and Skin Fix. They are discovering how much fun it is to shop our channel.”

CVS is also a leader in omnichannel efforts and offers curbside delivery from front end categories including beauty in 4,000 doors and is piloting a delivery program.

● gibson, who counts Angelina Jolie and Debra Messing as clients, is moving his business in a different direction.

by alliSon collinS

Hairstylist Ted Gibson is closing his name-sake New York salon, effective Wednesday.

“It is really about the luxury experience and what’s really happening in our world is that luxury experience is changing,” said Gibson, who charges $1,500 for a haircut. People are “looking to go with something that’s a little bit more intimate when they’re paying that top dollar.”

The 13-year-old, 2,500-square-foot space in Manhattan’s Flatiron district is a victim of not just changes in the luxury space, but changes in the salon space as well. The Millennial attitude has taken a particular toll, with multiple walkouts from hair-stylists. While it used to be important for up-and-coming stylists to align themselves

with a big name until they were established themselves, the Millennial generation uses social media for that, frequently using booth rental salons, which are also taking hold in New York, to run their businesses. At Gibson’s salon, the first walkout — 11 peo-ple — happened six years in. The second was four years after that, and the latest — five people — was in September.

“It’s hard for a small business to take that kind of hit,” said Jason Backe, Gib-son’s husband and business partner. But all those walkouts caused the pair, who immediately then focused on auditions for Gibson’s Artist Team and presenting at Intercoiffure, to realize that a shift was necessary. “That’s what started the pro-cess for us to think differently about ‘what is Ted Gibson salon,’” Backe said.

“Gen X before, career was one of the top priorities in their life — they lived to work,” Backe said. “If you didn’t have a great career it meant you’re not a success-ful person. One of the biggest shifts with

Millennials is they work to live. They want to be able to create their own schedules…the way that they work is different. If we want to be attractive to that generation, then we need to be inspiring to them.”

While the Flatiron location is closing, Gibson and Backe are still focused on the rest of their business lines — including a not-yet-launched product line, for which they are looking for investors, that con-tains actual stardust — powder from mete-orites. They will also continue the Ted Gibson Advanced Academy and working with Gibson’s artistic team, which travels for hair shows and with celebrities.

And those Hollywood jobs are still rolling in — recently, he’s tamed the locks of every-one from Anne Hathaway to Angelina Jolie to Lupita Nyong’o and Gabrielle Union.

The shuttering of his Flatiron loca-tion does not signal the end of Gibson’s salon career, he said — and he plans to open a different salon concept in mid-2017, in a to-be-determined Manhattan

neighborhood. The existing location had 16 stations and six sinks — a future one would likely pare that down to three to five chairs, Gibson said.

“Our whole idea of an 18-20 chair salon is kind of like a dinosaur,” Backe said. “We want to be ahead of the curve.”

“It’s really about a boutique kind of idea,” Gibson said, adding that the W Hotels and other boutique operations that were more curated may serve as inspira-tion for a new outpost.

“We see it all over in every industry in the world — everyone is trying to come up with a new idea to run their businesses, and as leaders in the salon world and the beauty world, we are hearing what’s hap-pening,” Gibson said, “and we’ve got the balls to do something,” Backe added.

“We want to take the next level of luxury in a salon experience to the next level,” Gibson said. “And we want to be leaders in our industry for helping our industry redefine what that means,” Backe said.

beauty

Hollywood Hairstylist Ted Gibson Closes Salon

beauty

CVS Aims to Lure Beauty Enthusiasts

12 december 22, 2016

● Online sales, steep promotions and tough competition have experts worrying over retail bottom lines.

by Maghan McDoWell and vicki M. Young With contributionS

from Sharon eDelSon

A later-holiday turn to fashion might prove to be too little, too late for the retail bottom line given steep promotions and a surge in last-minute online sales that is likely to help drive e-commerce sales for the season to more than $90 billion.

“Apparel is finally starting to kick into the traditional holiday business you expect to see,” said The NPD Group’s chief industry analyst Marshal Cohen, not-ing that apparel was the only category to outperform during the sixth week of the holiday season, which ended Dec. 10.

Since then, trends have been seen as good, but not great.

“Technology is boring and that favors the apparel business,” Cohen said. “Apparel usually does well early and it does really well at the end of the season. This year, it got a late start due to weather and the absence of trends. The ath-leisure movement costs a lot less than sports-wear. We’re seeing product going out the door at lower prices, aggressive discount-ing and an absence of driving trends.”

Just how drastically retailers cut prices will help determine their profits for the season. Cohen said teen retailers have panicked, “department stores are getting

a little nervous and luxury retailers are looking a little nervous.”

According to NPD’s tally, apparel was up only 1 percent for the sixth week of the holidays and challenges abound with sales signs blaring about 50 percent dis-counts and online merchants staying in the game longer as they push quicker and cheaper delivery.

According to Adobe, this year’s online sales have reached almost $80 billion since the beginning of November, with predic-tions that the holiday season will rake in as much as $91.6 billion.

That’s an overall increase of more than 10 percent from a year earlier, with the growth rate accelerating over the past week. The last-minute digital shoppers are getting a boost this year on shipping costs, which were down 10 percent from Dec. 16 to Monday compared to 2015 figures.

“We’re seeing higher-than-expected growth rates later in the season,” said Tamara Gaffney, who is principal analyst and director at Adobe Digital Insights. “This points toward people increasingly taking advantage of expedited shipping and the ability to click and collect in-store.”

On the mobile front, smartphones have brought in almost $17 billion and tablets almost $8 billion, together driving 49 per-cent of visits and 31 percent of purchases.

Harper Reed, head of commerce at Pay-Pal-owned Braintree, which powers and automates online payments, said he sees marketers taking advantage of a range of options to catch consumers wherever they can.

“I see e-mail as one of the key points of

messaging that many retailers have,” he said. “E-mail is like the weird uncle who gives you good gifts on Christmas; it’s old, it’s weird, but it works really, really well.”

Marketing through e-mail is just one element in what Reed calls contextual commerce, meaning selling to the cus-tomer when and wherever they are. Reed said retailers are mentioning other ways to buy in their e-mails, through venues such as Facebook Messenger.

A recent L2 report found that fashion brands have begun taking advantage of the shift among consumers toward social media and the mobile web, but that there was room for improvement. L2 said only 11 per-cent of brands offer e-commerce options on Facebook and Instagram, while 64 percent have added “Shop Now” or “Learn More” buttons to their Facebook pages.

Macy’s ran a number of video ads on Facebook and Instagram tailored to a mobile viewer that encouraged people to show content using a specific hashtag, and directed those who “engaged” with the ads to Macys.com. Tiffany & Co. created a film with actress Elle Fanning with 30-second spots on Facebook and Instagram, in com-bination with other immersive Facebook ads, including ads and link posts to various product categories. Lowe’s and Ikea both used Facebook Live for holiday campaigns.

Analyst Dana Telsey at Telsey Advisory Group said, “Online sales are the wild card” this year.

She noted Super Saturday this past week-end got off to a sluggish start due to the snowstorm in the Northeast, although the malls were packed by the afternoon and

traffic on Sunday seemed to be average.Midweek in Manhattan, there were

shoppers and browsers along Fifth Avenue, but not all were carrying shopping bags.

A spot check at the Lord & Taylor flag-ship found there weren’t many browsers in the handbag section, while some were looking at the apparel sections on the sec-ond, third, fourth and fifth floors.

Most of the store’s sales activity seemed to be in the second-floor shoe area, where cold weather was driving interest in winter boots. There was a rare sale for select styles of Ugg boots.

Although there was a 20-percent-off discount — provided the item one wanted to buy wasn’t on the list of exclusions — if one had a coupon for scanning, prices seemed to be higher than over the weekend. One Lord & Taylor branded crewneck cashmere sweater style was on sale for $69, but could have been purchased for less a few days ago due to special pricing for Super Saturday.

Jeff Edelman, director of retail and con-sumer products advisory services for RSM and a retail and apparel analyst for more than 40 years, was at the Short Hills Mall — known for its mix of high-end retailers — in New Jersey Wednesday morning.

“It’s quiet here. I’m surprised. I expected it to be a lot busier, and I’m also surprised at the markdowns that I’m see-ing,” Edelman said.

He was at the mall over the weekend as well and said Bloomingdale’s had mark-downs at 40 percent off over the weekend, but now those discounts were cut back to 30 percent off.

“Prices were lower over the weekend. It looks like they cut back. They were more aggressive over the weekend,” he said.

Edelman said margins are beginning to be an issue for retailers.

“I don’t think they will be making their margins,” he said. “I originally thought that margins would be under less pressure than a year ago because inventories were lower. From what I’m seeing, my read is that stores are getting a little antsy.”

business

Holiday Margin Worries Arise as Retailers Cut Prices

September, and Herrera wants the court to stop Kim from joining until April. Kim’s and Garcia’s first collection for de la Renta would be for fall 2017, which would be shown during New York Fashion Week in February.

Carolina Herrera Ltd. released the fol-lowing statement Wednesday, “Carolina Herrera is pleased the court today granted a temporary restraining order that upholds the non-compete agreement we signed with our former senior designer. As the court ruled, the non-compete agreement was fair and plainly worded. At all times, Carolina Herrera was faithful to the letter and spirit of our agreement, and we will continue to ethically and forcefully protect our business interests. Our focus remains on continuing to intro-duce new collections that embody the spirit of timeless elegance and refinement for which Carolina Herrera is known.”

A spokesperson for de la Renta declined comment.

But Herrera’s suit makes juicy reading — and does not hide plans to “transition out” the 77-year-old designer and replace her with a younger creative director. The suit comes at the end of a year when Herrera has been celebrating the 35th anniversary of her fashion house.

According to the suit, Herrera chief executive officer Francois Kress in July offered Kim, who the suit says was then a

vice president of the house, a salary of $1 million to become senior vice president of design of the Carolina Herrera brand. Kim allegedly turned the job down, though, and left to join de la Renta.

Kim and Garcia had been hired as consul-tants at Herrera in October 2015, joining that company after Kim left de la Renta, where she had been employed for 12 years working directly with the late de la Renta himself. Her final job there was design director.

Sources said while de la Renta exec-utives were not concerned about Kim’s joining Herrera, even as a consultant, there was some worry that she had worked so closely with the late designer himself for so long and had deep knowl-edge of the house’s aesthetic. While Herrera and the late de la Renta were personal friends, there has long been a business rivalry between the two fash-ion houses. Herrera’s is much larger, approaching $1 billion based on the successful fragrances developed by her parent company Puig, although de la

Renta has a more recognized apparel and accessories business.

An affidavit filed with the suit by Kim’s lawyer Neil Capobianco says that at the end of 2015 and in early 2016, she started having talks with the House of Herrera about becoming creative director. Based on the promise that Herrera herself would be “transitioning” out of that role, the affi-davit says, Kim “agreed to give it a try.”

Her start date was to be Feb. 29, 2016.Capobianco declined comment Wednes-

day, but the affidavit filed on behalf of Kim says that once she began working at Herrera, she realized that “nobody had informed Ms. Herrera that she was being transitioned out and that Ms. Herrera intended to run CH as if she were the creative director. According to my offer letter, I was supposed to be reporting to CH’s president and chief executive officer Francois Kress. However, I soon learned that Ms. Herrera frequently took charge, without objection from Mr. Kress. Indeed, in a ‘Fashionista’ article published February 26, 2016, Ms. Herrera is quoted as saying, ‘The creative director is myself. They [Laura and Fernando] are coming to join me.”

Sources said Herrera expressed that same sentiment to many people, often describing Kim and Garcia as “consul-tants” while she was the main designer of her brand.

Kim’s affidavit said that she tried to “work around the tensions inherent in a surreptitious transition plan,” but realized the conditions were “untenable and unworkable” and resigned on July 8. She offered to work out her three-month notice period, but Kress turned the offer

down and said Kim and Garcia did not have to come into the office any longer. A letter from Kress reproduced in the affi-davit states that, and Kress signs off with “have a nice weekend.”

“At this time, Mr. Kress informed me and Mr. Garcia that Carolina Herrera (the per-son) did not like our designs for the upcom-ing show [for spring 2016] and that she felt she could finish the collection in a way that was appropriate for her brand. In fact, Carolina Herrera said to me at that time: ‘Nobody knows you and nobody knows that you are here. I am more famous than you and have more powerful friends.’”

The affidavit says that Herrera did substantially change the designs. It also states that Kim told the Herrera company that she was leaving because it would not make Garcia co-creative director “and because CH would not agree to support Monse’s development as a brand,” adding that Kim “did not feel that this was a posi-tive environment for creative input.”

News of Kim and Garcia joining de la Renta broke in early September and five days later Kress sent Kim a letter invoking the six-month non-compete agreement.

The Herrera suit claims that the brand has lost business since Kim’s departure and that the fall collection shown during New York Fashion Week in February has been a dud at retail.

The suit contends Kim was a “unique employee” who is “very adept at creating designs that are what commercial clients are interested in stocking in their stores,” adding that the resort 2016 collection Kim helped design was “the most commercially successful ever in its 35-year history.”

Carolina Herrera Sues Oscar De la Renta continued from page 1

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● The delivery company is gearing up for millions in packages to be returned.

by arthur ZacZkieWicZ

Just in time for the “holiday gift returns season,” UPS said it formed a strategic alliance with inventory management tech-nology firm Optoro “to enhance its retail reverse logistics services.”

UPS is also a recent investor in Optoro.“The alliance will provide retailers and

manufacturers with a one-stop solution to optimize the transportation and dispo-sition of returns and excess inventory,” a spokesperson said. “This is especially important as retail returns volumes rise

with the continued growth of global e-commerce.”

Separately, UPS said its National Returns Day is set for Jan. 5. The com-pany expects holiday shoppers will use UPS to return more than 1.3 million pack-ages to retailers, e-commerce sites and manufacturers. “More than 5.8 million packages will be returned to UPS during the first full week of January 2017,” the company added.

Alan Gershenhorn, UPS’ chief commer-cial officer, said the company is “here to help retailers and manufacturers simplify returns management and unlock the full value from their reverse logistics pro-grams.” And he described the alliance as “an excellent complement to UPS’

existing portfolio of retail services that optimize the flow of goods, information and funds.”

Tobin Moore, cofounder and chief exec-utive officer of Optoro, said, “Retailers are facing a growing number of challenges, with the rise of customer returns being one of the most prominent, totaling over $260 billion in value annually in the U.S.”

Regarding the deal with Optoro, UPS said its “joint reverse logistics solutions combine UPS’ operational and logistics expertise with Optoro’s software platform that maximizes recovery value and reduces environmental waste.” On that last note, UPS said a core goal of the alliance is to “minimize the impact that returns has on the environment.” Sustainable practices

are a high priority for both companies.In 2015, UPS was cited by Corporate

Responsibility Magazine’s 100 Best Cor-porate Citizens, and it is also on the Dow Jones Sustainability Index. At Optoro, the company garnered a Circular Economy Award by the World Economic Forum this past year. The tech company also won the U.S. Chamber of Commerce’s 2016 Corpo-rate Citizenship Award for Best Environ-mental Stewardship.

UPS said it recently invested in Optoro via its “Strategic Enterprise Fund.” The company said terms of the deal were not disclosed. “Investments made through the UPS Strategic Enterprise Fund help the company better understand new technol-ogies and develop new business models in the rapidly changing retail business environment,” UPS said.

Optoro, founded in 2010, describes itself as a technology company “that helps retail-ers and manufacturers manage, process and sell returned and excess inventory.”

● WWD visited the Roosevelt Field Mall the weekend prior to Christmas, to observe what shoppers were wearing and buying.

by MiStY White SiDell

NEW YORK — Glancing at the accessories worn and purchased at the Roosevelt Field Mall in East Garden City this past weekend, it was clear that the center’s mass of consumers prefer what’s practical and versatile — or trendy and cheap.

While high-end market experts from retailers like Bergdorf Goodman and Matchesfashion.com feel that accessories are veering in an embellished, individual-ized direction, the same could not be said of what was observed Sunday afternoon at the mall. Out in full force for last-minute gifts and to avoid rainy, windy weather conditions, shoppers were largely dressed in leggings, sweatshirts and Ugg boots or Toms slippers. Cross-body minibags and wristlet styles appeared to be the most popular purse styles.

With brand boutiques and department stores marked down at up to 50 percent in the crux of the holiday shopping sea-son, budget-conscious shoppers appeared to gravitate toward necessities rather than novelties.

Judging from the styles displayed on shelves and racks, it would appear that neutral tones and simple shapes were the most popular. More luxe merchandise (such as Vera Bradley’s leather collection), directional shoe designs (platform disco heels from Saint Laurent and rhinestone flats by Valentino at Neiman Marcus) and novel embellishments (sequined Saffi-ano bags at Michael Kors) comprised the majority of markdowns.

The busiest stores seen were Hollister, Alex and Ani and Pandora — all of which attracted a queue, sometimes a dozen people deep. Shoppers lined up at Alex and Ani told WWD they had already put mer-chandise on hold for fear that it would sell out, and were simply waiting to pick it up.

The shoe department at Macy’s was flooded with eager shoppers, spreading

salespeople’s attentiveness rather thin. The store’s footwear merchandise was largely neutral-toned and practical — either versatile day-to-night styles, or flats. Booties with a curt heel remained popular. Tables with more trendy styles — like velvet

platform sneakers by Steve Madden — were less trafficked.

Macy’s in-store Louis Vuitton boutique was packed with shoppers eyeing mono-grammed canvas and checkerboard “Dam-ier” handbags and wallets. The store’s

merchandise veered toward simple shapes and monogrammed classics, rather than more forward-thinking and higher-priced designs by the house’s creative director for women’s, Nicolas Ghesquière.

The shoe chain Journey’s was heav-ily promoting Converse Chuck Taylor high-tops, with a window display rack of brightly colored editions. The design has been making the rounds on Japanese style blogs — particularly in the bubblegum-pink colorway — and teens in the store appeared to be feeling a similar mood.

While trainers, such as performance styles by Asics, appeared to be popular among mall shoppers, the sneaker depart-ment at Nike’s store was very quiet. The Coach store also seemed subdued, with many of the shoppers polled saying they were unaware of the brand’s repositioning under creative director Stuart Vevers.

Novelty treatments like hologram foils, sequins and fur pom-poms were seen at Coach, Robin’s Jeans and the Bari Lynn pop-up at the mall’s Urban Space market. While perhaps popular with a fashion-for-ward shopper, it was solid matte leather styles by those brands that were the most widely received. That said, Hot Topic’s pseudo-renegade teen audience appeared to appreciate anime caricature backpacks.

Providing a counter to this more beige preference, costume jewelry in various trendy fabrications remained popu-lar. Stores like Alex and Ani, as well as Accessorize and Claire’s, were mobbed with shoppers grabbing fistfuls of chokers, kitschy stud earrings, and bangle bracelets.

aCCessoRies

The Mall Report: Neutral Accessories Continue to Find Favor

business

UPS Inks Deal With Optoro

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Jovan Adepo on Building ‘Fences’The actor talks Viola Davis and playing Cory Maxson in Denzel Washington’s interpretation of August Wilson’s Pulitzer Prize-winning play.

imagine you're auditioning for Denzel Washington's adaptation of "Fences," the Pulitzer Prize-win-ning play by August Wilson. You have an in: Viola Davis, who's already been cast, is your mentor. You decide to do one of two things: A, work your connections and ask Davis to put in a good word for you or B, nail the audition and win over Washington without telling Davis of your interest in the part. Jovan Adepo went with option B.

Born in Oxfordshire, England, Adepo grew up in Waldorf, Maryland. He studied political science at Bowie State Univer-sity and moved to Los Angeles after graduation to pursue a career in screenwriting. A family friend from church encouraged him to get into acting and put him in touch with her sister, who just so happened to be Emmy-, Tony- and Academy Award-winning actress Davis.

"There’s something to be said that you have access to some-one, but you just choose not to use it," Adepo, 28, says. "I think so often people go quick to that nepotism. ‘I should be OK, my cousin’s a producer, I can get into the movie.’ How about audition, earn the part and feel confident in knowing that the director felt you were the right person for the job versus hiring you because you know somebody? And let’s just be clear: Denzel’s not hiring nobody [if he] doesn’t want to."

In an industry where who you know can be the difference between landing and losing a role, Adepo continues to rely on hard work, something he learned from Davis. "[Viola] had to work hard to get to where she is," he says. "She put down the ground work, so she wasn’t gonna give me anything. Serious. Her and her husband Julius were very,

very passionate about hard work and about really developing that craft. They definitely made sure that I was in the right mind-set that I needed to be in, but it was more of an ‘alright we gave you the tools and the direction, go out and get it and maybe we’ll see you.'"

While still auditioning for "Fences," Adepo would go to Davis' house for dinner and talk about everything but the film. In turn, Davis hardly mentioned it

until Adepo officially got the part. She called him to congratulate him.

Adepo plays Cory Maxson, teenage son to Troy, played by Washington, and Rose, played by Davis. In his desperate attempts to assert his identity, Cory butts heads with his father, who enlists his help in building a fence in the backyard of their Pittsburgh home. Cory wants no part of the fence — but he does want Troy's approval.

"That’s the aspect of a young American boy or just a young boy period," Adepo says of his character. "That’s why it’s import-ant for so many people to get to hear August Wilson’s material because people are quick to say, ‘This is exclusively about the black culture.’ It is in that that’s what the setting is, that’s what the story’s about. But I think the values and the experiences that these characters are going through in this family relate to the universal."

"Fences" brought Adepo to Pittsburgh for the first time. "When you’re on set and you’re in a community like the Hill [Dis-trict] — we shot in the Hill, exact neighborhood that the story takes place — there’s a strong sense of community and they take pride in their neighborhood," he says. "All the neighbors know each other and everybody knows everybody’s gossip because it’s small. Denzel, one of the biggest

stars in the world, comes into town, everybody knows about it and they’re ready. They got lawn chairs outside, sitting outside the gates when we’re coming on set to work. They’re always bringing food from their house to come feed you."

Both Washington and Davis have received Golden Globe nominations for their roles. Adepo isn't sure he'll be able to attend the awards show due to potential scheduling conflicts, but he's keeping a watch on awards season in general.

"I have a huge stack of screeners and I cannot wait to get home and finish watching all these movies," he says. "I’ve always been a fan of movies well before I got involved in the indus-try. The magic that it brings and being able to, I guess, escape your troubles, escape whatever is going on in life and getting to live in this moment and in the story and live in the lives of these

characters. This year in partic-ular, like the last few, has been really interesting as far as the diversity, as far as the eclectic content that’s been coming out."

Adepo already has a couple of projects to look forward to in the new year. The third and final season of HBO's "The Leftovers," in which he plays Michael Murphy, comes out in 2017, as does an untitled project by Darren Aronof-sky, in which Adepo has a role. It's apparent from his tone that he's excited about both of these, but there's also a hint of anxiety.

"I’ve seen such great material and now I’m more picky with the type of jobs that I take because it’s gotta be there," he says. "There’s an old theater saying, ‘If it’s not on the page, it’s not on the stage.’….You gotta have some type of standards as far as the jobs that you take and the roles that you take on."

"Fences" is out in theaters on Dec. 25. — alexa tIetjen

Jovan adepo

a still from “fences” showing Jovan adepo as cory maxson and

denzel Washington as troy maxson.

Jessica Alba, Rick Caruso Host Ladurée Opening at The GroveThe two hosted the opening party for Ladurée’s first West Coast location.

Jessica alba and The Grove owner Rick Caruso teamed up to celebrate the opening of Ladurée at the retail center on Tuesday night. "They've been packed since they opened on Saturday," said Caruso, who was counting on a holiday season debut for the restaurant and bakery. "Ladurée is one of the all-time great Christmas gifts," he said.

On the lawn out front, guests including Kelly Sawyer and Jamie Patricof, Richard Stark, Johnny Hallyday, Brigette Romanek and Alana Hadid nibbled pastries and hors d'oeuvres beneath a canopy of white lights and an enormous Christmas tree.

"I like that it's my friend's joint," said Alba, referring to Pierre-Antoine Raberin, who runs Ladurée's U.S. operations with his wife, Elisabeth Holder-Raberin. "I can go in there, like, 'Yo, this is my friend's place,'" she said. Even though the pastry shop is now local, Alba said she'll probably still buy the boxed macarons at the Paris airport.

"You can't not buy them when you're there," said Sawyer, adding that Ladurée has also supported her kids' charity, Baby2Baby. "We did a tea for some of the kids here on Monday and you should have seen their faces light up," she said of the festive, pastel-colored setting and artificial snow.

Revolve cofounder Michael Mente also stopped by, taking retail pointers from Caruso and doing some last-minute Christmas shopping. "I wish I could find the perfect gift and buy 10 of them. I'll probably end up on Amazon," he said – clearly not thinking that Caruso is the owner of a brick and mortar shopping center.

Guests crossed the brick pathway to check out the new store, but most were drawn back outside by the music and lights. Indeed, the Los Angeles opening, the first for the company, was the only party that Holder-Raberin has ever held outside. "You could only do something like this in Los Angeles in December," she said. — marcy meDIna

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16 december 22, 2016

Fashion Scoops

Memo Pad

French LessonsHe’ll always have Paris — even during cruise season. Karl Lagerfeld is to parade his next cruise collection for Chanel in the French capital, reaffirming his attach-ment to the city and its importance for fashion, WWD has learned.

Chanel confirmed May 3 as the date of the show, but has yet to disclose the venue or other details.

Lagerfeld and Chanel recently privatized the Ritz Paris and staged three shows for the Métiers d’Art collection, a pre-fall range of ready-to-wear embel-lished by the specialty couture ateliers that Chanel owns. He dubbed it “Paris Cosmopolite” to evoke a time when elegant women from the world over converged on the mythic Place Vendôme hotel, established in 1898.

The Rue Cambon house has been a pi-oneer in staging itinerant shows and has taken its cruise collection as far afield as Seoul and Havana and its Métiers d’Art collection to Dallas, Edinburgh and Salzburg. Lagerfeld typically uses each

destination to exalt a facet of the house’s lore — or to invent a new chapter.

But Paris remains a key font of inspiration for Lagerfeld, whose Métiers d’Art effort for Chanel in December 2015 was themed “Paris in Rome.” Staged at Cinecittà film studio No. 5, it boasted a transporting black-and-white streets-cape that elicited a strong emotional tug as the show fell only weeks after the deadly terror attacks in cafés and concert halls that sent Paris reeling, spooking tourists.

Paris mayor Anne Hidalgo hosted a lunch for top editors during the most recent fashion week and solicited suggestions to lure visitors back. Among the ideas was for French houses to scale back destination shows and bring their elite audience of press and clients to Paris.

A growing number of European hous-es treat fashion as a movable feast, with Max Mara recently parading its pre-fall and a one-off capsule range in Shanghai.

Dior said Tuesday it is heading to Los Angeles for its cruise show on May 11. It

will be Maria Grazia Chiuri’s first effort for the resort season. — mIleS Socha

On the Up And UpUlla Johnson is in growth mode.

The Brooklyn-based designer known for her relaxed, bohemian clothing and accessories has revamped her web site and will open her first flagship in Febru-ary in Manhattan’s NoHo neighborhood.

Johnson, who launched e-commerce in 2014, wanted her new site to empha-size storytelling and ease and conceived the redesign in collaboration with RoAnd-Co design studio. “One of our biggest challenges was to try to communicate the tactile [nature] of our brand online. Our brand is so much about hand-feel, touch and story,” she said. “So how could we tell that in a flat medium? It was bring-ing the story of the product, the travel, the partners and weaving communities that we work with into the sales experi-ence as much or as little as the customer

wants to explore it. We tried not to over-whelm with information. It’s a process of discovery, and you can explore the story of the season, the brand, the travel and other components to the development of our products if you choose to….It’s not forced down your throat.”

Another important function: a stream-lined checkout process: “This idea of ease is [central] to my line,” Johnson said. “We’re all super busy and we want to be able to find things we’re looking for. In addition to that, we made sure that it was accessible on mobile. I’m always online shopping in the back of an Uber.” The site also offers free U.S. shipping and interna-tional shipping for the first time.

Since launching her business in 2000 — and growing exponentially after a three-year department store exclusive with Barneys New York, which recently came to an end, though her collection is still stocked there — Johnson has expand-ed her line to include footwear, handbags, scarves and other accessories. Her label will launch on Net-a-porter in January with a resort collection.

“We’ve had an incredible amount of growth at wholesale,” Johnson said. “And we felt that the next stage of growth for the brand should be our own retail [outpost]. Online, we saw that people were really buying into some of the new categories we were introducing — soft suiting, shoes, underpinnings. A lot of these things weren’t available at our retail partners, and we saw that there was pent-up demand.”

Johnson’s upcoming 1,200-square-foot flagship at 15 Bleecker Street, slated to open in late February, will have a residential feel, housing exclusive items from the collection, from homewares and jewelry to designer collaborations. “This sense of a personal touch is important to our story and to what people come to us for,” she said. “Bringing that into the retail experience has been preeminent for us. We worked with all of the same teams that I worked on for my house, bringing custom-made furniture and fixtures sourced from Europe into the space. The context around the clothes and the brand is important.” — KrIStI GarceD

Observing The ObserverJared Kushner appears to be ready to pick up sticks and move to Washington, D.C., with his wife Ivanka Trump to become an adviser (either officially or unofficially) to his father-in-law, President-elect Don-ald Trump, and there’s at least one piece of Manhattan he wants to shed before he goes: The New York Observer. According to people familiar with the matter, Kush-ner has been quietly shopping the storied paper to potential buyers.

A potential suitor for the media prop-erty had been rumored to be National Enquirer-parent company American Media Inc. AMI declined to comment, however, sources close to the firm expressed skepticism that the company is a potential buyer.

The Observer Media chairman and chief executive Joseph Meyer (who, notably, is also Kushner’s brother-in-law) denied speculation the property is for sale, saying: “As one of the fastest-grow-ing businesses in all of digital media, we are constantly being approached by

potential investors and partners.”Insiders surmised that Kushner wants

to unload the Observer, which recently ceased printing its salmon-pink weekly edition, so that he can focus on his bud-ding political career. Kushner bought the paper in 2006 for $10 million with dreams of becoming a media mogul. He began slowly changing its mission, focusing it more on digital stories and volume, and less on its trademark New York-centric storytelling, which was steeped in media, arts, culture and real estate reporting under longtime editor in chief, the late Peter Kaplan, who left the paper in 2009 (and later joined WWD parent Fairchild Media) over disagreements about deep cuts in the editorial staff.

It could not be determined how much Kushner is looking to get for the now digital-only property.

One reason AMI has been floated as a possibility is because throughout the presidential campaign, the National Enquirer was a pit bull for Trump, publish-ing several stories that were positives for the president-elect, including a smear piece on his primary rival Ted Cruz about an alleged extramarital affair and an

item suggesting that Cruz’s father was somehow involved in the assassination of former president John F. Kennedy. In typical Enquirer fashion, neither was true — which did not stop Trump from repeating them both on Twitter and on the campaign stump.

Moreover, it recently came to light that AMI reportedly agreed to pay $150,000 to a former Playboy centerfold for her story recounting her affair with Trump a decade earlier. The story was then killed by the publisher, which, in addition to own-ing the Inquirer, also owns Radar Online, Star and OK, among others.

Pecker’s Enquirer was also one of the few publications that endorsed the Republican candidate; another was — not surprisingly given his familial ties — Kush-ner’s Observer.

More evidence of Trump’s cozy relationship with AMI, which may suggest acquisition interest, is based on the fact that the president-elect and Kushner are friends with AMI chief executive officer David Pecker. Trump has lauded the Enquirer for its reporting on the John Edwards scandal and he has taken to Twitter—which means it must be import-ant—to praise his friend.

“Time magazine should name David Pecker of American Media to be its top guy…but they are not smart enough to do that!” Trump tweeted in 2013.

There have also been rumors that Pecker was promised an ambassador job by Trump, but AMI denied those reports.

Pecker’s ties to Kushner have been slightly less obvious, although when the Observer shuttered its print edition it was revealed that subscribers would either receive a refund or get Pecker’s Star Magazine. The bizarre offering was proof point of a closeness between Pecker and Kushner.

Indeed, while readers are usually of-fered some kind of alternative magazine option or a refund when a title shutters, the publications normally have similar readerships.

Setting aside the election, the Observ-er had a more liberal, New York-centric bent and less of a tabloid flavor. Again, the fact that readers would be offered the option of receiving an AMI-owned magazine may have stoked “baseless” rumors that the publisher had interest in the Observer, a source noted. — alexanDra SteIGraD

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