SHANGHAI SECOND SURPRISE ROUND DOLCE & GABBANA NEIMAN MARCUS HOLDS A LOSES LATEST APPEAL FASHION SHOW IN CHINA TO IN $440 MILLION PROMOTE ITS WEB SITE. PAGE 3 TAX CASE. PAGE 2 STAKING ITS TERRITORY Lane Crawford Plots Chinese Expansion By AMANDA KAISER HONG KONG — Lane Crawford wants a bigger piece WWD of China’s luxury pie. The Hong Kong-based retailer is gearing up to open two stores in Mainland China — in Shanghai MONDAY, APRIL 1, 2013 Q $3.00 Q WOMEN’S WEAR DAILY and Chengdu — this year, at a time when competition within luxury retailing is rapidly increasing both on- line and in brick-and-mortar players entering China. Its goal is to add another two to three stores in Mainland China over the next few years. The company, which offers a highly curated and edited selection of luxury and fashion brands rang- ing from J. Crew to Proenza Schouler, currently has a network of three flagships and two home furnishings stores in Hong Kong as well as two units in Beijing. The Shanghai and Chengdu stores will bring a signif- icant number of new brands to China for the first time. The company is planning to open a 150,000-square- foot store in Shanghai in August, which will be its largest, and an 82,000-square-foot store in Chengdu in December. The retailer is investing 500 million Hong Kong dollars, or $64.4 million, in the Shanghai store; it declined to reveal the investment in Chendgu. “Our intention has always been to expand in China. I think the issue really has been a question of how we can sort of nail all of those bits at the right time,” Lane Crawford president Andrew Keith told WWD during an exclusive interview at the retailer’s headquarters here. The sprawling space, reminiscent of an art gallery, houses a ping-pong table employees can use during break time. The retailer, part of the privately-held Lane Crawford Joyce Group, expects to post double-digit sales growth for its most recent fiscal year, which ended March 31. Last year, the company said it posted “record-breaking” revenue of $700 million, with comp store growth of 23 percent. While it’s well documented that the Chinese lux- KIM ury market is showing signs of slowing down, Keith JUNG Sharp Turn SEE PAGE 8 ASSISTANT: A leading look for fall, leather shows its edge with strong, slicked-up Atop the Tower at Hearst FASHION shapes. Here, Acne Studio’s leather and cotton corduroy vest and pants worn with Efva Attling earrings, a Michael Schmidt bracelet and By ERIK MAZA TOUJILINE; Christian Louboutin shoes. For more on the trend, see pages 4 and 5. NEW YORK — Frank Bennack Jr. had some advice for MIKE Steve Swartz. It was 2000 and Swartz was the editor in chief of Smart Money magazine, which he founded eight years earlier after a career that had been on fast- ASSISTANT: forward at The Wall Street Journal. Swartz had joined that paper in 1984 and by the end of the decade was PHOTO the page one editor, a young wunderkind among heavy- weights like Norman Pearlstine and Paul Steiger. At ROSADO; Smart Money, he shook up the dinosaurs of the catego- ry, like Money and Kiplinger’s. Now, Bennack told him, CABIRIA it was time to do something else. BY “He said there are different paths to success. Some people want to keep creating product,” like making new magazines, Swartz recalled in an interview from MAKEUP Hearst Tower. Others built businesses. “It was really Frank who offered me a chance to GROUP; work in corporate management,” Swartz said. WALL He jumped onto the management track in 2001, THE taking the title of executive vice president, Hearst AT Newspapers, the company’s bedrock, and has rap- SEIJI idly risen through the corporate ranks since, ending BY up chief operating officer in 2011, then president last HAIR December. Last week, he succeeded Bennack as only the seventh chief executive officer in Hearst’s 126- year history. Bennack will remain vice chairman of MODELS; the board and chairman of the executive committee. In one leap, Swartz, 51, became a rarity in today’s media landscape: an editorial guy who will become ROZA/TRUMP ceo of a multibillion-dollar conglomerate that spans newspapers, magazines, television and real estate. PHOTO BY GEORGE CHINSEE; STYLED BY KIM FRIDAY MODEL: SEE PAGE 12 2 WwD MONDAY, APRIL 1, 2013 Dolce & Gabbana Fined $440M the Briefing Box ward by Italy’s Internal Revenue the Italian Supreme Court in By LUISA ZARGANI Agency. Dolce and Gabbana, who November 2011 overturned that in Today’s WWD are accused of omitted and un- decision, saying that tax avoid- MILAN — Italy’s Tax faithful earnings declarations, ance, or tax mitigation, on an Commission has fined Dolce & have always denied the charges. earnings declaration is a crimi- “Versace 1997 SD082/083, Edition 1 of 3” from the “Other Gabbana 343.4 million euros, The designers were charged nal offense under the law. Graces” private sale. For more, see page 11 and WWD.com. or $440.2 million at current ex- with alleged tax evasion totaling A separate criminal probe change, plus interest. 416 million euros, or $533.2 mil- into supposed tax irregularities 2013 D. The decision confirms a first lion at current exchange, related at the Dolce & Gabbana Group T L degree sentence in November to the 2004 sale of the Dolce & was part of the case dismissed in 2011, and denies an appeal by Gabbana and D&G brands to the April 2011. Those accusations ad- Domenico Dolce and Stefano designers’ Luxembourg-based dress unpaid taxes of 200 million IMAGES IE’S Gabbana. The designers may still holding company, Gado Srl. The euros, or $258.7 million. T RIS avoid the fine, if they decide to Italian tax police reportedly con- In January, during the ongoing H C F O appeal and wait for a third de- sider Gado essentially a legal en- trial, a former employee of the Y gree sentence. The fine by the tity used to avoid higher corpo- Internal Revenue Agency con- ES T Tax Commission is separate rate taxes in Italy. firmed that the designers paid 90 UR O from the ongoing trial in a Milan The designers were origi- million euros, or $121 million, in /C O courtroom, but both stem from nally absolved of the claims by taxes and fines in 2007 for 2004- RAZI the same accusations put for- a lower court in April 2011, but 07 as part of a separate probe. O D’ E T SAN American Apparel Set to Amend Financing by cents a diluted share. In 2011 point — and Charney and Lea re- Photo By DAVID LIPKE the company lost $39.3 million, main on friendly terms. American or 42 cents. Apparel shares closed down Lane Crawford is gearing up to open two stores in Mainland American Apparel is slated to The new notes are issued at 97 three cents at $2.17 on Thursday, China this year, at a time when competition within luxury complete an overhaul of its credit percent of par value, which means the last day they were open. The retailing is rapidly increasing in the country. PAGE 1 financing this week via a private American Apparel will receive stock has risen from a low of 75 offering of $206 million in senior $199.8 million from the offering’s cents a little less than a year ago. Steve Swartz last week succeeded Bennack as the seventh secured notes. The proceeds from underwriter, which in turn sells The new bond financing chief executive officer in Hearst’s 126-year history. PAGE 1 the offering, which carry an inter- the notes to institutional inves- leaves American Apparel with est rate of 13 percent and come tors. The offering is expected to some additional capital to invest Neiman Marcus Group staged its first fashion show in due in 2020, will be used by the close on April 4, concurrent with in stores and infrastructure. The Mainland China in its latest bid to make more consumers aware specialty retailer to repay and exit the closing of the asset-backed re- company plans to expand its re- of its recently launched e-commerce site there. PAGE 3 its credit facilities with London- volving credit agreement. tail store base by 60 to 70 units based Lion Capital and Boston- Dov Charney, chief executive over the next three to five years, Laura Pomerantz has established her own global real estate based Crystal Financial. officer of American Apparel, de- up from its current count of 251. Additionally, American clined to comment on the refi- E-commerce as a total percent- company, Laura Pomerantz Real Estate LLC. PAGE 3 Apparel has secured a new asset- nancing prior to its closing. age of sales is forecast to grow backed revolving credit facility The 13 percent interest rate to at least 17 percent of its non- Mikimoto Kokichi, the son of a noodle-shop owner, seemed of about $30 million with an un- the company is paying is rela- wholesale revenue, up from 12.4 unlikely to play a role in transforming the jewelry business — or named bank. tively high for a bond, but it al- percent in 2012. influencing fashion, for that matter. PAGE 6 The refinancing lowers lows it to pay off the existing Lion Standard & Poor’s assigned a American Apparel’s borrowing Capital note, which carried an ex- “B-” rating to both the new note The Washington National Opera Ball has been pushed to the costs, extends the maturity date orbitant 18 percent interest rate.