This past week saw retailers slashing their earnings forecasts as industry challenges — rising inflation, continued supply chain delays, the loss of the Russian market and lowered demand — have continued to pile up. There was also the mass shooting tragedy in Uvalde, Texas, shortly after similar shootings in Laguna Woods, California and Buffalo, NY. Fashion brands responded, and we rounded up what they’re saying and where they’re donating.
Also: The Dolce & Gabbana takeover of Kourtney Kardashian’s wedding led to millions in media value for the brand, and Chanel is on a massive upward trajectory. Don’t forget to check out the Glossy Week in Review podcast with me and Glossy Pop’s Sara Spruch-Feiner, as well as the Glossy Podcast with Jane Win founder Jane Winchester Paradis. – Danny Parisi, sr. fashion reporter
Fashion retailers are slashing earnings forecasts
Gap became the latest American retailer to cut its full-year earnings forecast on Thursday, joining the likes of Kohl’s, Tapestry, Estée Lauder, Walmart and Target, which have all done the same throughout the month.
Gap cited increased costs, particularly in shipping by air and freight, along with much slower demand than anticipated. This echoed the same comments from Gap’s peers like American Eagle, which also projected lower sales for the rest of the year on Thursday.
Sales at Gap over the last quarter dropped by nearly half a billion dollars, compared to the quarter before, from $3.9 billion to $3.5 billion.
As Glossy reported on Monday, the feeling among brands right now is to “plan for the worst,” as the perfect storm of supply chain issues, inflation, an economic downturn and more Covid disruption come together.
Farfetch also slashed its forecast for the rest of the year on Thursday, but it had a different reason. Russia was the third-largest market the company sold to, and based on its growth trajectory, CEO Jose Neves was expecting it to make up an even larger portion of Farfetch’s revenue in 2022. But in March, the company pulled out of Russia entirely. The full effects of that decision will soon be apparent.
For many brands lowering forecasts, strong indicators at the end of last year also led them to have higher revenue estimations for 2022. Gap, for example, forecasted up to $2 in earnings per share at the beginning of the year, far higher than the $1.34 earnings estimated by analysts. Now, the company’s lowered its forecast to 30-60 cents.
In an earnings call on Thursday, American Eagle CEO Jay Schottenstein said, “In hindsight, our plans entering the year were too optimistic.”
Chanel to open new stores
Despite all the trends working against fashion retailers, Chanel always seems to plow straight through them. The French fashion giant’s revenues rose by 50% in 2021 to more than $15 billion, and its operating profits tripled.
Notably, the things that have been a challenge for other brands have been a blessing for Chanel. According to CEO Philippe Blondiaux, speaking to Business of Fashion, Chanel’s frequent price increases helped push its revenue even higher. A Chanel flap handbag costs more than $10,000 now, compared to $7,000 in 2019. That hasn’t fazed Chanel’s customers, though, who bought the style in even higher volumes.
While Chanel still does not sell its core products online and has a smaller store fleet than rival Louis Vuitton — 250 to Louis Vuitton’s nearly 500 — Chanel plans to open a network of private boutique stores available only to its top-spending clients. Those stores will open in 2023, beginning in Asia before spreading to other regions.
Brands respond to the tragedy of gun violence
In the days after the shooting in Uvalde, Texas on Tuesday that left around 20 children dead, the fashion industry’s response was uneven. While some brands like Madewell spoke out quickly and supported specific action, others were more reserved or said nothing. Many brand founders or executives spoke out on their personal social channels instead of communicating through an official brand account.
At Glossy, we cataloged the different responses and have updated our story as more statements, calls-to-action and donations have been made across the industry.
Fashion brands join Don’t Ban Equality
On a related note, 62 fashion and beauty brands, including Lululemon, Patagonia, Goop and Glossier, have joined Don’t Ban Equality, an organization aiming to protect reproductive rights in the U.S. On Tuesday, the brands issued a joint statement declaring their willingness to fight for and protect reproductive freedom. The group has begun running ads across fashion and beauty publications like Vogue and Refinery 29 to garner more support.
From Don’t Ban Equality’s FAQ on its website: “It will be crucial for companies to use their voice and influence to address restrictive social policies and efforts to limit voting so that avenues for countering extreme social policies through normal democratic channels are protected. Morning Consult data indicates that 67% of adults agree with companies speaking out against efforts to limit access to voting for eligible voters.”
A day of action for the organization was initially planned for Tuesday but was postponed due to the Uvalde shooting.
The Kravis Wedding
You’d be forgiven for mistaking Kourtney Kardashian and Travis Barker’s wedding last weekend for a Dolce & Gabbana ad. The Italian brand was given virtually complete control of the event, with every outfit worn by every member of the wedding party from Dolce & Gabbana.
Not only that, several Dolce & Gabbana-branded events led up to the wedding, including a party on a yacht owned by the designers. Launchmetrics estimated that the entire affair earned Dolce & Gabbana more than $25 million worth of media impact.
More details of the uniquely branded wedding can be heard on this past week’s episode of the Glossy Week in Review podcast, along with a discussion of Emily Weiss leaving Glossier and Balenciaga’s recent run of fascinating shows and collaborations under new creative director Demna Gvasalia.