FELINE GOOD A PIONEER FORD MODELS SHU UEMURA TEAMS FOUNDER WITH KARL LAGERFELD FOR A MAKEUP LINE EILEEN FORD INSPIRED BY HIS PET DIES AT 92. WWDMILESTONES PUIG AT 100 CHOUPETTE. PAGE 7 PAGE 3 SECTION II SECOND-QUARTER BLUES Weary Retailers Battle Weak Demand, Traffic By DAVID MOIN NO, IT’S NOT Black Friday. But retailers have been discounting like Christmas WWD is coming and the price promotions are expected to take a big bite out of second-quarter profits. The slow-growing economy, inflation, heavy inven- FRIDAY, JULY 11, 2014 Q $3.00 Q WOMEN’S WEAR DAILY tories and lack of hot items on the selling floors have left retailers only slightly ahead of where they stood after a very tough first quarter. Consumers remain largely uninspired, put off by the perpetual lack of fashion innovation, and pinched by high food and gas prices. The crises in the Ukraine and Iraq only further the lethargy. While some analysts, vendors and store executives were looking for pent-up demand to drive business, that hasn’t been the case even as warm weather and price promotions mustered some mall footfall. There’s been some improvement from the first quarter — but that’s not saying much. By June it seemed everything was promotionally priced. Retailers would have preferred to be reordering or “chasing” products rather than having to clear them out to make way for fresh goods. “Traffic is really tough out there,” said Rebecca Duval, analyst at BlueFin Research Partners. “The Fourth of July was more promotional this year. It was 50 to 60 percent off. Last year it was 30 to 40 percent off.” While Duval said stepped-up promotions were driving people to the malls, she noted that high inven- tory levels are a concern for many stores. “Now 40 percent off is just like the table stakes to get shoppers to cross the lease lines,” said Craig Johnson, president of Customers Growth Partners. “Late April was OK and May was OK. But it was like a false spring with a certain amount of pent-up de- mand that really didn’t indicate a lot of underlying organic growth. The false spring started petering SEE PAGE 5 Cole Haan Expansion Takes Global Viewpoint By MARC KARIMZADEH NEW YORK — Cole Haan is kicking off its journey to become a global lifestyle brand. Now owned by Apax Partners, which acquired the brand from Nike Inc. in a $570 million deal last year, the American footwear, accessories and outerwear Baring It All brand is launching a multifaceted strategy to acceler- ate growth, which goes into high gear this fall. The initiatives are wide in scope, ranging from projects With Reveal, the newest Calvin Klein scent, the house is hoping to unveil a around brand ambassador Dree Hemingway, for ex- new olfactory category: a solar oriental. Due in global distribution at the ample, to innovative products and a fresh retail con- cept that sets the tone for Cole Haan worldwide. end of July and in U.S. distribution in September, Reveal could do upward The plan was masterminded by a team of execu- of $150 million at retail in its first year on counter. For more, see page 6. tives, led by chief executive officer Jack Boys, who had previously revitalized Converse as a global life- style brand in his decade there, as well as president and chief operating officer J. Michael Prince and chief marketing officer David Maddocks, both also alums of Converse. On the creative front, Walker MacWilliam, previ- ously a senior vice president for design at Coach Inc., serves as senior vice president and product creative director, while Andy Gray is vice president and brand creative director. Since the acquisition, the team has studied Cole Haan’s business and history with origins as a foot- wear company in the 1870s, though the brand was of- ficially founded in 1928. Boys called it a brand that is “classically inspired PHOTO BY THOMAS IANNACCONE with American-style sensibilities, but because of the SEE PAGE 4 2 WWD FRIDAY, JULY 11, 2014 WWD.COM Burberry Lowers Guidance DIGITAL BRIEFING BOX FOR MORE COVERAGE, FIND US ON WWD.COM, SOCIAL AND MOBILE. price increases, while allowing a quarter of all digital sales. By MILES SOCHA that the company is monitoring “Digital continues to outper- competitors closely and “we tend form,” Fairweather said. “The U.S. PARIS — The currency grinch to be a fast follower. in particular is a market where ON INSTAGRAM has struck again. “We’re controlling what we digital punches above its weight.” can control. We won’t change our She said consumers there are Increasing headwinds from # foreign exchange rates forced key strategies, and continue to particularly “channel agnostic” 15SECONDSWITHALEXBADIA Burberry Group plc to lower its focus on the underlying strength and said its “customer service full-year profit guidance, some- of the business,” she stressed. through digital” represents a what overshadowing a 12 percent Fairweather noted travel re- strong differentiator. gain in same-store sales in its tail would be a focus going for- The company cited a double- fiscal first quarter that analysts ward, with an opening in Hong digit pace across men’s, women’s touted as a strong beat. Kong and relocation at London’s and accessories, notably large “We believe this will be the Heathrow Airport among bags in solid leathers. best soft luxury performance in Burberry’s next moves. Fairweather noted Burberry the quarter,” Barclays Equity “We see this as an opportunity recently trialed a more focused Research said, with Burberry for us,” Fairweather said, while offering of its iconic, made-in- considered the first big European declining to say how many of the Britan trenchcoats — a choice player to report revenues for the 20 to 25 stores planned for fiscal of three styles, three colors and three months ended June 30. 2015 would be in this channel. three lengths — in 30 stores, and “Burberry remains one of the it has “resonated very well with Watch #15secondswithAlexBadia: Our men’s fashion very few luxury companies to our consumers.” The company director reports on the men’s spring collections. Hear what continue to enjoy double-digit plans to roll out the merchandis- Michael Kors and Rag & Bone’s Marcus Wainwright had to revenue growth,” echoed Citi ing strategy to its entire network say about this season’s inspirations. analyst Thomas Chauvet. 12% of directly owned stores. The company recorded a 9 Burberry’s results came ahead percent jump in revenue to 370 BURBERRY’S GAIN IN SAME-STORE of the company’s annual general million pounds, or $622.5 mil- SALES IN THE FIRST QUARTER. meeting today, where it is likely to lion at average exchange rates. hear shareholder discontent over Stripping out the impact of ex- the pay package for Christopher change rates, the sales gain stood Burberry trumpeted double- Bailey, Burberry’s chief creative at 17 percent. digit growth in Asia Pacific and officer who also took on the role But it warned that if the British the Americas in the quarter. chief executive officer last May fol- pound remains as strong as it is Reflecting weaker economies lowing the exit of Angela Ahrendts, today, reported retail and whole- elsewhere on the globe, Europe, who left the company to become sale profit would be reduced by the Middle East, India and Africa head of retail at Apple Inc. about 55 million pounds, or $93.7 registered low-single-digit growth. Fairweather skirted questions million at current exchange, and Fairweather cited lower tour- about the revolt, insisting the that the adjusted operating mar- ist traffic among Russians and AGM was the proper forum. gin would fall from 17.5 percent to mainland Europeans, but no Bailey could earn up to 8.1 mil- about 16 percent. Burberry’s fiscal slowdown among Chinese, and lion pounds, or $13.8 million, per year ends on March 31, 2015. asserted that Burberry’s digital year, including a cash allowance ACHARD During a conference call, chief focus gives it a “point of differ- of 440,000 pounds, or $749,215, ac- financial officer Carol Fairweather ence” in the market, particularly cording to the company. DELPHINE said there was little the company among young consumers. He also received a golden hello BY could do vis-à-vis exchange rates Mainland China and Hong in the form of shares worth up to ON FACEBOOK beyond hedging where it can. Kong registered double-digit 7.6 million pounds, or $12.9 mil- PHOTO “We’re a luxury brand, and we growth in the quarter, with lion. The shares packet is linked Backstage Beauty from Paris Couture Week: need to source appropriately,” Southeast Asia “more challeng- to the company’s performance. “Like” WWD on Facebook and see the looks. she said, responding to a question ing,” Fairweather noted. Bailey’s base salary is 1.1 million about possible offsets, including Burberry now offers a click- pounds, or $1.9 million, and he will changing production sites. and-collect service in 131 stores, also receive a cash bonus, share ON WWD.COM Fairweather also ruled out and iPad sales in-store represent awards and pension contributions. WWD Global Stock Tracker: Follow U.S., China Talk Currency Exchange Rates fashion’s the global economic recovery is should take the initiative to dem- highs and By KATHLEEN E. still in a critical transition point, onstrate to the world that, even lows — a MCLAUGHLIN and the Chinese government does facing negativity and potential daily update not yet believe that it can adopt a alienation in bilateral relations, of fashion BEIJING — The U.S.