INSIDE: AWARDS OVERSTUFFED FASHION THE COUNTESS CFDA PREVIEW WANTS TO KNOCK UP THE STUFFING OUT CATCHING OF FASHION. THIS YEAR’S PAGE 9 WITH AND By NOMINEES Louise J. WWDHONOREES. Esterhazy TUESDAY, MAY 28, 2013 Q WOMEN’S WEAR DAILY Q $3.00 EUROPEAN SPENDING SPREE 2014 M&A Activity Soars RESORT In Jewelry, Fashion COLLECTIONS ber of transactions in 2013, in- By MILES SOCHA cluding more in jewelry to dove- tail with Kering’s purchase of PARIS — It’s a red-carpet moment Italy’s Pomellato for an estimated for mergers and acquisitions. $360 million last month and its Jewelry and designer ready- takeover of Chinese fine jeweler Pretty as to-wear — product categories Qeelin in December. Others also synonymous with Hollywood ce- have snapped up jewelry brands: lebrities — are entering the spot- In March, Clessidra acquired an light for dealmakers, who expect 80 percent stake in Buccellati for a stronger, more varied flow of about $103 million, while Gemfields A Picture transactions this year as Europe’s bought Fabergé in November. main luxury players hunt for new On the fashion front, Kering growth avenues. acquired a majority of London “Moroccan hats “Leather goods and cosmetics designer Christopher Kane in and Impressionist remain high on the list, but the new January; OTB, formerly Only the hot category is jewelry,” said Ariel Brave, acquired a majority of paintings — Manet Ohana, managing partner at Ohana Marni in December, and the Qatari and Monet but & Co., a boutique investment firm fund Mayhoola for Investments in Paris. “And apparel-couture, bought Valentino Fashion Group mostly landscapes.” which was long deserted by groups for $858 million in December. Such were the in their acquisition hunts, is receiv- Ohana noted he expects most inspirations behind ing more interest recently.” transactions this year to be in the Echoing other observers, $50 million to $300 million range. Tory Burch’s resort Ohana predicted a healthy num- SEE PAGE 7 collection, which, in a different turn for the designer, took on a U.S. Presses Bangladesh classically feminine look. apparel industry workers in the Here, her T-shirt and By MAYU SAINI Rana Plaza building collapse on tiered skirt done in faded April 24, causing a global outcry DHAKA, Bangladesh — The ten- for improved worker safety and in- maxi and mini floral sion was palpable here as U.S. creased pressure on major apparel prints. For more resort, Undersecretary of State for Political brands and retailers to take action. Affairs Wendy R. Sherman led a Sherman spoke at the Ruposhi see pages 4 and 5. delegation for the second U.S.- Bangla Hotel here about the timing Bangladesh dialogue. of her visit, but it was her unequiv- The talks began even as there ocal statement on manufacturing in was a citywide shut down called Bangladesh that cheered the repre- by an 18-party opposition coalition sentatives of the garment industry. on Sunday. These shut downs are “We are encouraging interna- often characterized by not only tional investors not to turn their protests but also the burning of ve- back on Bangladesh, because the hicles and bombings. solution is reform, not withdraw- The talks also took place against al,” she said. “Ultimately, success the backdrop of the deaths of 1,127 SEE PAGE 9 PHOTO BY JOHN AQUINO 2 WWD TUESDAY, MAY 28, 2013 WWD.COM A&F Cuts Forecast as Q1 Sales Fall THE BRIEFING BOX liveries. Also, in hindsight, I be- Sales slid 8.9 percent to $838.8 IN TODAY’S WWD By ALEXANDRA STEIGRAD lieve that the first-quarter spring million from $921.2 million a year inventory plan was somewhat low earlier. Analysts expected a 5 cent ABERCROMBIE & FITCH CO. and this resulted in many items loss on sales of $941.7 million. cut its annual earnings forecast which did not have the necessary Impacted by the inventory as it blamed a sharp drop in depth to drive the business.” shortage, overall comparable- Marloes Horst first-quarter sales on a “short- The company is in a better inven- store sales declined 15 percent. is the subject of age” of inventory. tory position in the second quarter By brand, comps at Abercrombie “Model Call” on But Michael Jeffries, the teen with “more depth” in “key items,” & Fitch, abercrombie kids and WWD.com. retailer’s chief executive officer, the ceo said, adding: “I believe that, Hollister Co. fell 13 percent, 5 per- insisted the company is back on cent and 18 percent, respectively. track and improving its speed-to- Higher-priced spring mer- market in order to keep up with chandise and lower product costs fast-fashion rivals. lifted overall gross margin to 65.9 MANAGEMENT Although losses narrowed percent of sales from a year-ago $7.2M MODEL in the quarter, shares of margin of 58.7 percent. Abercrombie tumbled 8 percent A&F’S NET LOSS IN “We are also making good prog- NEXT to $50.02 Friday, even though THE FIRST QUARTER. ress on our cross-functional initia- OF Jeffries vowed to Wall Street ana- tives, which we expect will gener- lysts on a conference call that the ate substantial operating margin retailer’s inventory woes were that’s going to get even better for improvement on a sustainable, COURTESY “largely” behind it. back-to-school and believe it or not, long-term basis,” said Jeffries. PHOTO “We experienced some unan- superb by Christmas.” Still, Abercrombie was bearish ticipated delays in spring due to For the first quarter ended on its full-year financial results, a couple of factors,” said Jeffries. May 4, the New Albany, Ohio- and said it expects annual EPS of Jewelry and designer ready-to-wear are entering the spotlight for “One of which was a function of based retailer registered a $7.2 between $3.15 and $3.25, which is dealmakers, who expect a stronger flow of transactions this year our transitioning to faster reac- million net loss, or 9 cents a di- lower than the $3.49 per share es- as Europe’s main luxury players hunt for growth avenues. PAGE 1 tion times. As a result, it took a luted share, compared with a timate forecasted by analysts and little bit longer than anticipated year-ago loss of $21.3 million, or the $3.35 to $3.45 the company The tension was palpable in Dhaka, Bangladesh, as U.S. to flow in some of our spring de- 25 cents a share. projected in February. Undersecretary of State for Political Affairs Wendy R. Sherman led a delegation for the second U.S.-Bangladesh dialogue. PAGE 1 Abercrombie & Fitch Co. cut its annual earnings forecast as Market Approves of Lafley’s Return it blamed a sharp drop in first-quarter sales on a “shortage” of inventory. PAGE 2 “Lafley is often credited with building out the By EVAN CLARK The names of the presenters at the 2013 CFDA Fashion Awards now-struggling beauty business at P&G and is well PAGE 5 respected internally, even as growth slowed in on June 3 are starting to trickle in. WALL STREET SEEMS HAPPY to have A.G. Lafley the last several quarters of his previous tenure,” back at the helm at consumer stalwart Procter & Schmitz said. “If nothing more, his first task is to Some manufacturers in the “travel goods” category are Gamble Co., but analysts, while bullish, aren’t in- stem share losses and grow P&G at least in line endorsing new legislation that could potentially provide fresh clined to view his first tenure as chief executive of- with global peers, something that hasn’t happened sourcing opportunities. PAGE 6 ficer through rose-colored glasses. in over five years.” “Lafley was terrific....But let’s not be too romantic Jon Moeller, chief financial officer, told analysts Loro Piana has acquired 60 percent of alpaca firm Sanin SA as and rewrite history,” said Citi analyst Wendy Nicholson, on a call Friday that “this change, very simply, re- part of the Italian group’s efforts to invest in the research and who credited the ceo with simplifying the company’s flects Bob McDonald’s decision to retire and the development of the finest yarns and fabrics. PAGE 7 focus on its top 10 brands in its top 10 countries. board’s view that A.G. Lafley was currently the best “However, five years into his post as ceo, [P&G’s] person to replace Bob and build on the momentum E-commerce firms in China are facing major logistics issues momentum slowed, as it seemed that innovation hit that Bob has initiated and led.” with online sales in the Asian country growing so swiftly that a dry patch, the strategy of acquiring big businesses Moeller also said the move wouldn’t lead to “a providers cannot keep up with the demand. PAGE 8 had run its course — post Clairol in 2001, Wella in dramatic change in our strategy or priorities.” 2003 and Gillette in 2005 — and [P&G’s] relative For his efforts, P&G said Lafley would receive Countess Louise J. Esterhazy says that we’re so stuffed with lack of emerging market exposure was beginning to a base salary of $2 million and beginning with the clothes, with food, with technology — with stuff — that we’re like a catch up with the company,” Nicholson said. new fiscal year on July 1 would be eligible for an an- pumped-up helium balloon about to burst. PAGE 9 Investors approved of the ceo switch and drove nual performance bonus of $5 million. He will also the stock up 4 percent to $81.88 Friday, although it’s receive equity grants.