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CHINA’S MONEY MOVE/2 VF NET HITS $100M IN QUARTER/4 WWDWomen’s Wear Daily • The Retailers’FRIDAY Daily Newspaper • July 22, 2005 • $2.00 Beauty Three for All NEW YORK — Ralph Lauren, top right, Cynthia Rowley, left, and Jean Paul Gaultier have designs on the fragrance business this fall. Ralph Lauren Turquoise, Cynthia Rowley’s eponymous juice and Jean Paul Gaultier to the Power of Two all launch in September. For more, see pages 6 and 7. U.K.’s Boots Set to Grow Footprint in U.S. Beauty Market By Ashley Moore The company, which controls a product presence in U.S. retail NEW YORK — Boots Group plc, the powerful position in the U.K. partners CVS and Target, and by Y BRYN KENNY U.K.’s leading beauty retailer and a market, straddles the class-mass this fall, Boots beauty items will be maker of premium beauty products, divide in pricing, giving it an offered in 130 stores, up from 32, has targeted the U.S. for major undeniable draw with consumers. which will give it entry into the key expansion. The firm is boosting its beauty See Boots Page 8 PHOTO BY DAVID TURNER; STYLED B DAVID PHOTO BY 2 WWD, FRIDAY, JULY 22, 2005 WWD.COM China Currency Move Seen as First Step By Evan Clark and Kristi Ellis al impact on our business,” said a Wal-Mart spokes- woman, who stressed that the retailer sources WWDFRIDAY WASHINGTON — Economists said China’s decision goods in more than 70 countries. “Prices in our Beauty on Thursday to revalue its currency for the first stores are not going to change anytime soon.” time in 10 years was a step that might signal more The People’s Bank of China, the nation’s cen- GENERAL significant changes in its economic policy. tral bank, said in a statement that the yuan would BEAUTY: Boots Group has targeted the U.S. for major expansion and After months of political and market pressure, be permitted to move up or down 0.3 percent from 1 expects the line to be offered in 130 stores this fall. China abandoned its pegging of the yuan to the the close the previous day. dollar, strengthening it by 2.1 percent to 8.11 for “It’s definitely the beginning of a new policy,” said A second wave of bombings jolted London on Thursday, but appeared to every dollar. The yuan, also known as the renmin- Ira Kalish, Deloitte Research’s global director of con- 2 have little immediate impact on retailing. bi, had traded at a rate of 8.28-to-1. It will now sumer business. “I wouldn’t be surprised to see a 20 China’s 2.1 percent currency revaluation was viewed by economists as a fluctuate against a so-called basket of currencies. or 25 percent revaluation over the next year or so.’’ 2 small, but possibly significant step. Critics of the currency policy, including some Nicholas Lardy, a senior fellow at the Institute Aided by an uptick in June sales and strong results in its outdoor segment, members of Congress, European officials, and tex- for International Economics, a Washington-based VF Corp’s second-quarter earnings rose 11 percent. tile and apparel manufacturers, have argued that think tank, said, “The body language of the state- 4 a lack of currency flexibility had given China an ment seems to suggest there might be additional Reebok International’s earnings surged 70.2 percent in the second quarter unfair advantage and was a major factor in the moves to come.” 4 and the company expects profit gains of 30 percent this year. loss of U.S. jobs and in a trade deficit with China Cass Johnson, president of the National BEAUTY: The multitasking Cynthia Rowley prepares to launch her first that reached a record $162 billion last year. Council of Textile Organizations, said, “It’s not a 6 fragrance under her own name in September. The currency issue has been among several big enough revaluation. Two percent is meaning- points of friction between the U.S. and China. The less. It’s really not going to slow Chinese exports BEAUTY: Ralph Lauren Fragrances hopes to increase its share of the Bush administration has pushed China to better down at all. We don’t know if this is a step or if 7 women’s fragrance market with Pure Turquoise. enforce intellectual property laws and has imposed they’ve done some smoke-and-mirrors thing.” quotas on $1.31 billion worth of Chinese imports. The Bush administration reacted cautiously. SUZY For now, the revaluation isn’t enough to influ- “I was struck by and greatly welcome their Camilla’s Coat of Arms; Lynn Wyatt’s annual Texas hoedown in the South ence retail prices, change sourcing decisions or re- commitment to use market forces to bring the cur- of France; Cecile Zilkha receives French Legion of Honor award. lieve pressure on U.S. manufacturers, experts said. rency into alignment with underlying demand and 16 “It’s a small step in a direction that will lead supply, and that is good for China and good for the Classified Advertisements........................................................................15 them to greater flexibility, but it isn’t going to global economy,” Treasury Secretary John Snow change the dynamic in the apparel industry,” said said at a news conference. “We will want to follow To e-mail reporters and editors at WWD, the address is J.P. Morgan Chase economist James Glassman. this closely and we will want to monitor it as they [email protected], using the individual’s name. “It’s not going to change the appeal of China and move forward with this new mechanism.” WOMEN’S WEAR DAILY IS A REGISTERED TRADEMARK OF FAIRCHILD PUBLICATIONS, INC. COPYRIGHT ©2005 East Asia as a source of production.” China’s currency move came as GOP leaders in FAIRCHILD PUBLICATIONS, INC. ALL RIGHTS RESERVED. PRINTED IN THE U.S.A. VOLUME 190, NO. 16. WWD (ISSN # 0149-5380) is published daily except Saturdays, Sundays and holidays, with one additional However, the revaluation might slow the gener- the House prepare to consider a vote on legisla- issue in June, July and November, two additional issues in April, May, August and December, and three additional issues in al decline in apparel prices that has character- tion that would make it possible for U.S. compa- February, March, September and October by Fairchild Publications, Inc., a subsidiary of Advance Publications, Inc. PRINCIPAL ized the industry for years, said Tom Haugen, nies to file trade cases against China. The meas- OFFICE: 7 West 34th Street, New York, NY 10001. Shared Services provided by Advance Magazine Publishers Inc.: S.I. Newhouse, Jr., Chairman; Steven T. Florio, Vice Chairman; Charles H. Townsend, C.O.O.; John W. Bellando, Executive Vice-President and C.F.O.; Jill president of sourcing giant Li & Fung USA. ure is seen as an attempt to garner support for the Bright, Executive Vice-President_Human Resources; John Buese, Executive Vice-President_ Chief Information Officer; David Orlin, Senior “I don’t think we’ll see prices go up because administration’s Central American Free Trade Vice-President_Strategic Sourcing; Robert Bennis, Senior Vice-President_Real Estate; David B. Chemidlin, Senior Vice-President_General Manager, Advance Magazine Group Shared Services Center. Periodicals postage paid at New York, NY and at additional mailing offices. prices are quoted in dollars,” he said. “Their cur- Agreement. Canada Post Publications Mail Agreement No. 40032712. Canadian Goods and Services Tax Registration No. 88654-9096-RM0001. rency would have to be revalued an awful lot for it Sen. Charles Schumer (D., N.Y.), who with Sen. Canada post return undeliverable Canadian addresses to: DPGM, 7496 Bath Road, Unit 2, Mississauga, ON L4T 1L2. POSTMASTER: to have some sort of impact.” Lindsey Graham (R. S.C.) introduced legislation SEND ADDRESS CHANGES TO WWD, P.O. Box 15008, North Hollywood, CA 91615-5008. FOR SUBSCRIPTIONS, ADDRESS CHANGES, ADJUSTMENTS, OR BACK ISSUE INQUIRIES: Please write to WOMEN’S WEAR DAILY, P.O. Box 15008, North The incremental change, which could ultimate- for a 27.5 percent tariff on all Chinese imports, Hollywood, CA 91615-5008; Call 800-289-0273; or visit www.subnow.com/wd . Four weeks is required for change of address. ly make goods from China more expensive, won’t said, “If there are not larger steps in the future, Please give both new and old address as printed on most recent label. First copy of new subscription will be mailed within four weeks after receipt of order. Address all editorial, business, and production correspondence to WOMEN’S WEAR DAILY, 7 West immediately affect powerhouses like Wal-Mart. we will not have accomplished very much. But 34th Street, New York, NY 10001. For permissions and reprint requests, please call 212-221-9595 or fax requests to 212-221- “We don’t expect the change to have any materi- after years of inaction, this step is welcome.” 9195. Visit us online: www.wwd.com. To subscribe to other Fairchild magazines on the World Wide Web, visit www.fairchildpub.com. Occasionally, we make our subscriber list available to carefully screened companies that offer products and services that we believe would interest our readers. If you do not want to receive these offers and/or information by mail and/or e-mail, please advise us at P.O. Box 15008, North Hollywood, CA 91615-5008 or call 800-289-0273. 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