Posted on

Can Luxury Fashion Ever Regain Its Luster?

This is usually a busy month for the luxury industry. Not long after glossy fashion magazines publish their all-important September issues, thousands of retail buyers, journalists and clients embark on a tour of New York, London, Milan and Paris.

Rolling from city to city to attend fashion weeks, they decide the trends that will power a global luxury goods market worth hundreds of billions — in 2019, 281 billion euros, or $334 billion.

Not this year. The ground beneath the industry is heaving under the weight of a pandemic that has caused a plunge in sales, shocked global supply chains and pushed American household names such as Brooks Brothers and Lord & Taylor to bankruptcy.

Those shifts have prompted big questions about the business model of luxury fashion. Should fashion weeks be dismantled and rebuilt? Are cycles of new items every six months still the best approach, at a time when garment overproduction is under scrutiny, restricted lifestyles are commonplace and runway spectacles can feel out of step in a world with different priorities?

Credit…Jeenah Moon for The New York Times

The second quarter of 2020 was the luxury fashion industry’s worst. According to estimates by Boston Consulting Group, global luxury sales are set to contract by 25 percent to 45 percent this year, with industry growth unlikely to return to pre-pandemic levels until at least 2023 or 2024. At a time when many companies are battling for survival, many designers feel they cannot afford to skip an opportunity to show new wares.

So as the latest fashion week season began in New York last week, blockbuster catwalk shows and big crowds were out, replaced with a handful of small-scale or online-only presentations. In Italy and France, some brands have said they plan to host larger physical events, despite having only a handful of international guests, a number of high-profile designer absences and rising infection rates in Europe.

“Showing is not essential. However, sometimes you do need to show what you’re actually creating,” Antoine Arnault, head of communications at LVMH Moët Hennessy Louis Vuitton, told The New York Times on Sept. 9. “There’s a whole economy around these shows. That should not be underestimated,” he added, alluding to the thousands of freelance makeup artists, seamstresses, drivers, security guards and photographers who rely on fashion weeks for a sizable part of their incomes.

Large groups like LVMH, which owns brands including Dior, Louis Vuitton and Fendi, and its rival conglomerate Kering, which operates the likes of Gucci, Saint Laurent and Balenciaga, have been more insulated from the bitter pandemic headwinds than most smaller stand-alone businesses. (LVMH, though, has entered a court battle in an effort to extricate itself from a $16 billion commitment to buy the jeweler Tiffany & Company.)

In its latest quarterly earnings report, LVMH said it had seen a strong uptick in sales in the summer from Asian countries like mainland China, Japan and South Korea, where recent virus rates have stayed low. But sales for its fashion and leather goods unit fell by 37 percent, as international tourism ground to a halt and footfall into global stores was slow to recover. The impact has been even worse for brands in turnaround efforts like Salvatore Ferragamo and Burberry, debt-ridden department stores like Neiman Marcus, and the cash-poor independent brands with large exposure to those types of retailers (many of whom scrambled to cancel and return orders). Most companies are now struggling with a large glut of unsold inventory from the spring and summer collections this year.

“The luxury sector currently has more than double the amount of stock on its hands than it usually would at this time of year, much of which is now unlikely to be sold at full price,” said Stefano Todescan, managing director of Boston Consulting Group. Many brands have been using brick-and-mortar discount outlets or online marketplaces like the Dutch start-up Otrium to try to shift the designer clothes piling up in warehouses.

Mr. Todescan said the brands that fared better this year were generally those that relied on data to gain a granular understanding of where their stock was. This allowed them to move supply from the West to better performing regions like the Asian markets, where huge crowds unleashing pent-up demand for luxury goods inspired the phrase “revenge shopping.”

“The pandemic has further polarized luxury’s winners and losers and accelerated trends that were already underway before the crisis began,” Mr. Todescan added. “Brands like Hermes and Chanel, who never discount, are less trend-led and with product ranges that sell through multiple seasons, have emerged in particularly good shape.”


Credit…Landon Nordeman for The New York Times

China, which was already the fastest-growing luxury market before the pandemic, will become even more vital to brands’ success as North American and European markets remain unpredictable. And everywhere, offline retail has had to go online — and fast — as consumers turned rapidly to digital shopping.

Amazon, whose customers have ordered over one billion fashion items via its mobile app in the last 12 months, has long looked for a way to become partners with luxury names, which had in the past largely rebuffed its advances. Last week, Amazon launched its mobile-only Luxury Stores with one brand: Oscar de la Renta. It said that more labels would be announced in the weeks to come.

Farfetch, the digital marketplace that allows upmarket vendors to sell their goods online, reported last month that it had seen a 60 percent surge in traffic for the second quarter compared with the same period last year — and 500,000 new customers.

“E-commerce represented just 12 percent of luxury sales in 2019. Since then there has obviously been a complete paradigm shift,” José Neves, Farfetch’s chief executive, said. Luxury used to be heavily associated with an in-store experience, he added. But for many consumers in 2020, convenience and safety are now front of mind, prompting many brands to fast-track their digital strategies. “For those who aren’t able to do that, it is going to be a struggle,” Mr. Neves said.

As the industry starts to offer up new looks, TikTok is hosting its own online fashion month for a potential audience of roughly 800 million users, with shows by Saint Laurent and JW Anderson. Expect to see smaller collections with more timeless pieces that can have extended shelf lives if necessary. Demand for evening wear and suits has plummeted now that no one has a reason to dress up, though many brands say they expect people to start buying high-priced items that aren’t sweatpants, despite a severe recession and ongoing layoffs.

With no fixed timeline for a Covid-19 vaccine, it will be hard to predict what customers will want six months from now. But for luxury fashion, the shows must go on.

Posted on

Tiffany’s $16 Billion Sale to LVMH Falls Apart in Face of Pandemic, Tariffs

Last November, LVMH Moët Hennessy Louis Vuitton, the world’s largest luxury goods conglomerate, announced plans to acquire Tiffany & Company, the American jeweler founded by Charles Lewis Tiffany in 1837 and famed for its duck egg blue boxes and diamond engagement rings.

The transaction, worth more than $16 billion, was set to be the largest ever in the luxury sector. LVMH’s chief executive, Bernard Arnault, said that Tiffany would “thrive for centuries to come” as part of his portfolio of premium brands, which includes Louis Vuitton, Dior and Givenchy.

Nine months later, the agreement is in tatters. On Wednesday, LVMH said that it was pulling out of the deal, citing a highly unusual request by the French government to delay the closing as well as the damage caused to the luxury industry by the pandemic. In turn, Tiffany sued the luxury giant in an effort to force the deal through.

Tiffany is now facing several uncomfortable prospects beyond its expensive looming legal battle with LVMH: The deal may eventually be completed, potentially at a discounted price, or Tiffany could remain a stand-alone company looking for a buyer once more, in a much less certain world.

The battle brewing between two of the biggest names in global luxury is one the most prominent examples of the fracturing of deals agreed to before the pandemic devastated retailers. In May, the sale of the lingerie brand Victoria’s Secret to the private equity firm Sycamore Partners fell apart.

Credit…Stephen Speranza for The New York Times

On Wednesday, LVMH said in a statement that it could not complete the deal with Tiffany “as it stands,” citing a request from the French government on Aug. 31 to delay the deal beyond Jan. 6 because of the threat of U.S. tariffs on French goods.

Tiffany, in a lawsuit filed Wednesday in the Delaware Court of Chancery, said that LVMH had breached its merger obligations by excluding the retailer from its discussions about the transaction with the French government. In a securities filing, Tiffany said that although LVMH had informed the jeweler that it had received a letter from the French government, the jeweler had not yet seen an original draft of that letter.

In a call with reporters, LVMH’s chief financial officer, Jean Jacques Guiony, balked at a question about whether LVMH had solicited help from the French government to exit the deal.

“Are you seriously suggesting that we procure the letter?” he asked. But he later added: “It was fully unsolicited. It doesn’t mean that we didn’t do anything after we received” the letter.

The United States has been threatening tariffs on luxury French products in retaliation for France’s taxes on technology companies that have hit U.S. giants like Amazon, Facebook and Google. Uncertainty over the tariffs has complicated the deal market, but it remains unclear what the exact impact to LVMH would be — and whether the tariffs in question would even go into effect.

“Tariffs are political tools that can be flipped on and off with no notice,” said Scott Lincicome, a senior fellow at the Cato Institute, a think tank. “And because we don’t know who the president is going to be in January 2021, that adds fuel to the uncertainty.”

Speculation had been brewing for months over whether LVMH would try to renegotiate its multibillion-dollar deal with Tiffany as the pandemic wrought havoc across the global luxury business and slashed the jeweler’s sales.


Credit…Gonzalo Fuentes/Reuters

The takeover agreement in November had come after months of tense talks between the two sides. LVMH, which had coveted the jeweler for years, was persuaded to raise its offer several times; approval was finally given to a $135-per-share offer, translating to an equity value of around $16.2 billion. Some analysts noted it as a top-of-the-market price.

Still, LVMH initially trumpeted the deal as a coup. The acquisition would consolidate its position as a major player in the hard luxury sector, an industry label given to watches and jewelry products. It would potentially double the size and profitability of its portfolio in that category, which includes brands like Bulgari, Chaumet, Hublot and Tag Heuer, and accounts for roughly 9 percent of total LVMH sales.

Mr. Arnault, long considered the most aggressive and acquisitive deal maker in the industry, was already expanding beyond traditional soft luxury goods like clothing and leather goods. He had overseen a buyout of the Belmond hospitality group in December 2018 for $2.6 billion, and took a majority stake in the German luggage brand Rimowa for $719 million in 2016.

With Tiffany, LVMH would also have gained its most significant beachhead in North America. Few jewelers can claim as much of a hold on American culture as the company, famously memorialized by the book and movie “Breakfast at Tiffany’s.”

Tiffany experienced a rocky road in recent years, with a series of board upheavals as it struggled to turn around falling sales. But under the current chief executive, Alessandro Bogliolo, and the artistic director Reed Krakoff, it has turned its fortunes around, fueled by revamped product offerings and savvy marketing campaigns positioned at younger shoppers. The company invested in a face-lift for its landmark Fifth Avenue flagship store in New York and in greater expansion in China.

Inside Tiffany, the hope was that the deal would leverage LVMH’s presence and expertise in China to help it grow further in that country, where consumers have long powered the growth of global luxury. By becoming a privately held company, the jeweler would also be able to focus on long-term brand building rather than short-term profits and shareholders.


Credit…Vincent Tullo for The New York Times

That was before the pandemic caused demand for luxury goods to plummet, with lockdowns prompting widespread shutting of boutiques and department stores and a flatlining of international travel. According to estimates by Boston Consulting Group, global luxury sales are set to contract 25 percent to 45 percent in 2020, with a slow recovery that could take up to three years.

LVMH said second quarter sales fell 38 percent on a like-for-like basis to 7.8 billion euros, or $9.2 billion, after a 17 percent decline in the first quarter. Tiffany’s global net sales fell 29 percent in the quarter that ended July 31, though that was a considerable improvement from a 45 percent drop reported the previous period. Mr. Bogliolo, the chief executive, said that increased sales in mainland China and global e-commerce had accelerated a return to quarterly profitability.

Despite the better-than-expected results reported by Tiffany, the allure of clinching the jeweler after almost a year of wrangling — and in the face of a gloomy forecast for global consumer spending — appears to have lost its luster for LVMH.

“This turn of events is not totally unexpected,” Luca Solca, an analyst at Sanford C. Bernstein, wrote in a note to investors. “Covid-19 has caused second thoughts on a number of proposed deals and the prices they were agreed at. It seems that this is no exception.”

Tiffany’s lawsuit outlined the crumbling of the deal over the past six months. In mid-March, LVMH sought to renegotiate, according to the complaint. In May, LVMH’s most senior management began cutting off all informal discussions with senior Tiffany personnel, the suit claimed, while in early June, LVMH wrote to Tiffany, citing “the pandemic and the current protests and civil unrest in many cities” as among its concerns in the deal.

Tiffany decided to sue LVMH over frustration that nine months after the agreement, the conglomerate had not yet filed for antitrust approval in the European Union, a person familiar with the deal said.

If LVMH succeeds in walking away from the takeover agreement, Tiffany will probably have to chart its own path without a buyer, given the global uncertainty facing retail.

Michael J. de la Merced contributed reporting.

Read More

Posted on

Can’t Afford a Birkin Bag or a Racehorse? You Can Invest in One

Antonella Carbonaro, a consultant to financial technology companies, saved up to buy her Birkin bag, a luxury tote made by Hermès that sells new for tens of thousands of dollars. Since getting her bag in 2018, Ms. Carbonaro has stored it in her closet, bringing it out only on special occasions.

But when she heard that there was a marketplace to buy shares in other Birkins, including more exotic versions that can fetch six figures, she was in. It is not a lark. Ms. Carbonaro, 30, sees her shares in an exclusive bag as an alternative investment, no different than stakes in private equity funds that invest in a basket of companies.

“This is a visual way to participate in different asset classes that aren’t as accessible,” Ms. Carbonaro said. “Investing in shares of Birkin bags, even though I have one, is getting more exposure.”

She bought 10 shares in a Bleu Lézard Birkin bag that was valued at $61,500 in an offering last year. Earlier this year, she bought 25 shares in a gray Himalaya Birkin. It was valued at $140,000 in an offering in May.

Unlike owning a fractional share of a condominium, she will never be able to use her investment. Shares are traded until the owner of the marketplace sells the asset.

Ms. Carbonaro’s first Birkin investment is trading up 6 percent from the purchase price on Rally Rd., a platform that deals in fractional investments in collectible items. The other one is still in the lockup period and its shares cannot be traded yet.

The market for investing in fractions of items otherwise seen as collectibles — and largely reserved for the wealthiest people — has seen an uptick in interest during the pandemic as people spend more time at home.

Credit…Rally Road

Rally Rd. began by selling shares in exotic cars several years ago but has expanded to art, books, wine and whiskey, memorabilia and Birkin bags.

“In the beginning, it was like equity markets: just safe, blue-chip investments,” said Rob Petrozzo, a founder and the chief product officer at Rally Rd. “Over the past few months, we’ve seen with people being inside, they’ve gotten access to more information and they have been exploring the app more fully.”

He said existing investors on the platform had doubled the number of items they owned shares in. Initial offerings have sold out five times faster than before the pandemic, as new investors on the platform began buying up shares more quickly.

To accommodate growing interest, MyRacehorse, which sells shares in racehorses that are far smaller stakes than those sold by traditional racing syndicates, has partnered with a top stud farm, Spendthrift, to extend the length of the investments. Before, its model had been to sell the horse when it was done racing. Now, investors can participate in the breeding fees, which can be many times any racetrack winnings.

The fractional movement is not limited to luxury items. Fidelity, the mutual fund giant, offers “stocks by the slice” where you can buy a portion of a share starting at $1. And many private equity funds, which have high minimum investments and long lockup-periods, have created mutual fund versions of their funds.

Eugene Olmstead, a retired internet technology executive, said he had 1 percent to 1.5 percent in 11 horses, all bought through his self-directed individual retirement account.

“You’re not going to get a worthwhile return on your investment unless you have a certain percentage,” said Mr. Olmstead, 58. “I’ve done my research, and I’m investing in ones that I think in the long run will give me a decent return.”

Of the 11 horses he has bought shares in, only two are old enough to race. He said both had average winnings of $12,000 a race. He has received some dividends from those races, but said the money was not substantial yet.

“It’s money I don’t need right now,” he said. “It gives me a chance to wait for those returns.”

Another owner of fractional shares in horses, David Falo, 58, compared buying stakes in young horses to investing in companies on private platforms before their initial public offering. “The horse may not do well, or the horse could get injured,” he said, “but it gives you a little thrill along the way.”


Credit…Jeenah Moon for The New York Times

There are many caveats. Trading through Rally Rd. and MyRacehorse are done through apps, which makes buying and selling easier and creates a community. But the apps turn investing into games, as has happened with the stock-trading app Robinhood. That can distort the financial consequences of ill-considered investments.

Compounding the risk, an asset typically bought for personal enjoyment or bragging rights cannot be analyzed the same way that a private equity investment would be.

“There could be return potential, but who knows?” said Jack Ablin, chief investment officer of Cresset Capital. “There’s no liquidity and no control. When do you get your money back? You don’t know. The other is the carrying costs could be high.”

In the case of the shares in the racehorses, expenses like training and boarding are shared just as profits are. “You own full equity in the horse,” said Michael Behrens, founder of MyRacehorse.

Another issue is that buying these assets in slices can mean a person is paying more than she or he might if the person could buy the whole asset, and that could dampen returns or make it hard to resell the asset.

“You’re buying an overvalued slice of the whole,” said David Abate, senior wealth adviser with Strategic Wealth Partners. “If you decide you want to get out of this investment, you’d better understand how the secondary market works.”

The fees are disclosed but baked in. With MyRacehorse, 15 percent of the offering of a horse goes to the company upfront. But each horse is part of an entity that has been registered with the Securities and Exchange Commission.

“This is high risk; I’d never tell people otherwise,” Mr. Behrens said. “We’re not trying to build a platform that says this is going to be a really good asset class. Many horses have been bought for $1 million and never made it to the racetrack.”

As with other alternative investments, buyers are restricted from the selling of these fractions until after the lockup period ends. But when the asset itself — the bag or the horse — is sold is determined by the platform, not the individual investors.


Credit…Jeenah Moon for The New York Times

Jimmy Lee, chief executive of the Wealth Consulting Group, a wealth adviser, questions the notion of buying a passion asset with an eye toward profit. “When it comes to art, you only see the ones that go up in value,” he said. “If someone buys a piece of art for $1 million and it doesn’t go up in value, it’s not going to be sold.”

There are other drawbacks. These marketplaces do offer the possibility of a return on the investment, but they deprive people of the joy of owning a painting or a fast car: having it in your possession. (Although with MyRacehorse, investors can at least go to the track and see their horses.)

“You lose the intimacy of what it’s meant to be,” Mr. Ablin said. “It’s normally an asset you can touch, enjoy, ride in, ride on or drink.”

But many investors in shares seem unbothered by this. Ms. Carbonaro said not being able to touch or hold the bags she had invested in was not an issue for her. “If I had a Michael Jordan rookie card, I don’t think I’d want to touch it,” she said.

John Cochran, who works in sales in Baltimore, has invested in shares of 76 different collectibles including a shirt Mr. Jordan wore in a basketball game, a Muhammad Ali fight contract, a portrait of Abraham Lincoln and a 2006 Ferrari f430 manual.

He said he was happy receiving a photo and some information on the object and was unfazed that he could not hold or touch it. “I like the idea that, just like my stocks, it’s all in an electronic portfolio,” he said. “I don’t have to have the resources to store these things.”

Posted on

Diane von Furstenberg’s Brand Is Left Exposed by the Pandemic

At the end of February, just as the coronavirus was beginning to cast its pall over Europe, an elite crowd that included the likes of Anna Wintour, Jeff Bezos and Seth Meyers gathered in the gilded 19th-century halls of the Ministry of Europe and Foreign Affairs in Paris to watch Diane von Furstenberg be awarded the Légion d’Honneur.

“The woman clothed by Diane von Furstenberg is free in her movement and free to take life in her own hands,” said Christine Lagarde, who wore a red wrap DVF pantsuit while pinning the medal on Ms. von Furstenberg’s velvet dress. She noted that Ms. von Furstenberg, 73, deserved the honor for her service to women’s liberation, for raising $100 million for the renovation of the Statue of Liberty and for what she meant to fashion.

Within four months, the British and French operations of Ms. von Furstenberg’s company had done the European equivalent of filing for Chapter 11 bankruptcy. Just over 60 percent of the corporate and retail staff in the United States, Britain and France was laid off, creditors were complaining vociferously about unpaid bills, and Ms. von Furstenberg was making plans to close 18 of her 19 remaining directly operated U.S. stores. She was transforming her company from one rooted in bricks and mortar to a business focused on the intellectual property value of her brand name, which can be attached to products and e-commerce initiatives.

Her glamorous personal brand had masked the fact that her fashion line had been losing money for years. Her company, like many fashion brands, had been relying on an old business model. When Covid-19 hit and stores were closed, there was nowhere to hide.

“Corona hits someone a lot worse if they have a precondition,” Ms. von Furstenberg said in an interview.

The effects of the pandemic, which has forced retail chains such as Neiman Marcus and J.C. Penney as well as companies like J.Crew into bankruptcy, have reached the designer sector. And Ms. von Furstenberg, who for decades had been the face of American fashion, both as the inventor of the wrap dress and as the 13-year head of the Council of Fashion Designers of America, is suddenly at risk of becoming the most recognizable example of its crisis.

The question is whether she can restructure her business while avoiding bankruptcy in the United States, keeping her name and getting through this period with enough of her reputation intact to become the face of the industry’s recovery. To even create a business model to pass on, as she has dreamed, to a new generation through her 21-year-old granddaughter, Talita von Furstenberg.

Credit…Brittainy Newman/The New York Times

“There’s no shame in admitting you are in trouble,” Ms. von Furstenberg said. “It kills me, but it kills everybody. Every designer is calling me. I want to tell people this happens to everybody.”

But there are plenty of unhappy people, from employees who were let go without severance to unpaid vendors, for whom that explanation may not be enough.

According to Ms. von Furstenberg, the company’s financial problems began around 2015 — just after the 40th anniversary of her wrap dress and the publication of her memoir, “The Woman I Wanted to Be.” She had been thinking about her legacy and, she said, listened to advice that her goal should be “to build a big operating business” by following the luxury brand playbook developed by Gucci and Dior: Open flagship stores on important shopping streets in capitals around the world. Between 2013 and 2015, she nearly doubled her number of directly owned stores.

This move saddled the business with expensive rents and yearslong leases at a time when nimble digital brands were rising. The company was also in creative turmoil, with a revolving door of five designers — one of whom did two stints — in 10 years.

“There started to be a real inconsistency in creative direction, and that got very expensive, because we started losing customers,” said Sandra Campos, the label’s chief executive until she left last month.

The company was kept afloat by the wealth of Ms. von Furstenberg and her billionaire husband, Barry Diller. By 2016, Ms. von Furstenberg said, she realized she had made a mistake and began to pull back on retail, though it was not until 2018 that she hired Ms. Campos as chief executive and a restructuring plan was created.

“This is an emotional business, and emotional decisions get made — and she’s a great believer in all people,” Ms. Campos said of Ms. von Furstenberg. “It’s both a strength and a weakness in terms of making decisions that are smart business for the long term.”

They tried to renegotiate and surrender leases, gradually reducing the losses by 65 percent. Though there was more of a focus on e-commerce, it was still only 20 percent of the business. Sales, which had been about $300 million before the recession, had shrunk to half that, as costs rose.

“I’ve lost an enormous amount of money in the last four years,” Ms. von Furstenberg said.

Still, to most of the world, the privately held label, closely intertwined with Ms. von Furstenberg’s enviable lifestyle and extraordinary biography — the daughter of a Holocaust survivor who married European royalty and a self-made design power who landed on the cover of Newsweek at 29 — appeared to be a success.

In 2010, Ms. von Furstenberg and her family created the DVF Awards to honor the achievements of women like Anita Hill and Misty Copeland, and last year, she started an initiative called In Charge with the aim of creating a networking hub for women.

On Instagram, where Ms. von Furstenberg personally has 232,000 followers, she posted luxurious travel scenes, advice and motivational mantras, along with pictures of herself as a young woman and as a doting grandmother. A succession plan came into focus with the introduction of a capsule collection last year from her granddaughter Talita. Called “TVF for DVF,” it was celebrated at a young-socialite-studded October luncheon in New York’s SoHo neighborhood.


Credit…Darian DiCianno/

But as the pandemic began to hit the retail sector, DVF’s problems morphed into a crisis. In January, as the virus forced a lockdown in China, the company began to postpone payments to vendors, struggling with a major loss of revenue from Chinese consumers, who accounted for 20 percent of the brand’s global sales. As the virus crept across Europe, things worsened. By early June, DVF reportedly owed more than $10 million in store rent and millions more to vendors. The company declined to comment on the matter.

“A turnaround in the best of times takes three to five years, patience and consistency of design and strategy,” Ms. Campos said. “Then Covid hits in the middle of it. You may have to make decisions you would not otherwise have made.”

The company started furloughing most of its U.S. employees in March after closing its offices in the meatpacking district of Manhattan, where Ms. von Furstenberg also maintains a pied-à-terre that overlooks the High Line, the city park she was instrumental in creating.

“Every single thing was considered,” said Ms. von Furstenberg, from Chapter 7 liquidations to Chapter 11 bankruptcy to a sale to a company such as Authentic Brands Group, which specializes in stripping valuable brands of their physical dead weight and applying their names to mass-market products. However, in the end, Ms. von Furstenberg said, she felt only the family could ensure the brand’s legacy.


Credit…Pascal Le Segretain/Getty Images

Ms. von Furstenberg, Mr. Diller and Ms. von Furstenberg’s son, Alex, and daughter, Tatiana — the majority of the company’s six-person board — decided to “shrink everything down and go back to the core,” Ms. von Furstenberg said. They would effectively pare the company to its bones and preserve the brand name until DVF could grow again or Talita took over. More than half the employees have been laid off, many without severance.

DVF struck a deal with a Chinese partner, ZBT Limited, to not only operate all 38 franchise stores in that country, but also handle production, fabric sourcing and development, and manage the relationship with DVF’s longtime manufacturer in China. The remaining stores outside the U.S. are all franchises. Ms. Campos became a part-time consultant after resigning last month. “I couldn’t afford her,” Ms. von Furstenberg said.

DVF’s physical existence in the United States will be limited to the ground floor of its headquarters in the meatpacking district.

If her plan works, it will mark the third iteration of the company, which began in 1972 when Ms. von Furstenberg arrived in New York with her husband at the time, Prince Egon von Furstenberg. Overzealous licensing deals on everything from eyeglasses to luggage marked the end of the original era of DVF. Ms. von Furstenberg distanced herself from the brand, but in 1992, she was lured back to fashion by QVC, and five years later the next stage of DVF began.

Now the layoffs and issues with vendors have put Ms. von Furstenberg in a delicate position.


Credit…Philip Greenberg for The New York Times

On April 13, Ms. von Furstenberg posted a photo of herself on Instagram captioned: “This forced pause is giving us time to think…take advantage of it, to eventually reset…Have a good week and be safe.”

Someone responded in a now-deleted comment that circulated via screenshot among current and former staff: “During this forced thoughtful pause did you come up with any ideas on how your @DVF employees (who were put on furlough with ZERO salary) take advantage of this downtime? Some of us are struggling to pay bills, feed our families and enjoy this time of resetting you speak of.”

Some of the brand’s vendors are still waiting on payments from the fall. Emily Thompson, who owns a flower design company in Manhattan, said she was owed more than $20,000 for the October luncheon held for Talita von Furstenberg’s collection.


Credit…Krista Schlueter for The New York Times

Ms. von Furstenberg said she did not blame Ms. Thompson for being upset, and had every intention of paying what was owed — or at least as much as she could — both to her vendors and her staff.

“We will be as fair as we possibly can,” she said. “The smaller people will definitely be handled. I own it — of course I do.”

She had to, she noted; she is writing a new book, called “Own It.”

She added that what she was doing with the brand was “what I should probably have done a while back,” and that she was feeling increasingly positive about the future.

“I can see the light at the end of the tunnel,” Ms. von Furstenberg said. “But things change from morning to night. So who knows? A big wave could come and we would be swamped again.”

Read More

Posted on

Amazon, Pushing Fashion, Opened Photo Studio as a ‘Warehouse’ Exemption

A large Amazon fashion photo studio in Brooklyn, where models pose in clothing sold on the company’s site, sat shuttered for more than two months as the coronavirus spread in New York.

Then, on May 18, Amazon reopened the studio and later began taking photos with models. It told employees on conference calls that the studio, in the Williamsburg neighborhood, could open under state rules that allowed warehouses and fulfillment operations to operate as essential businesses.

“We are a key part of the supply chain,” a senior manager said, according to one of several recordings of the calls obtained by The New York Times.

There was just one problem: It appears that Amazon was playing fast and loose with the rules.

A few days after The Times asked the state about the open studio, Amazon closed it. A manager told employees that someone in state government had given the company a heads-up that it may need to comply with an unspecified new policy. The studio remains closed.

Photo studios, even those related to e-commerce, were not considered essential and should not be open for business in New York City, said Jack Sterne, a spokesman for the state.

Local governments can fine businesses up to $10,000 for violating the state’s executive order.

An Amazon spokeswoman, Rachael Lighty, said that health and safety were “our top concern.” She said the company continued “to work closely with local health authorities and the city and state of New York to ensure that all of our businesses are operating under state regulations and health guidelines.”

But when pressed, she did not provide more details on whom specifically Amazon had consulted about whether it could open.

Reopening the studio shows how Amazon has pressed ahead during the pandemic, looking to right its operations quickly after the virus initially caught it on its heels. The push to take advantage of its warehousing operations, when physical retailers were closed, was particularly evident in areas where it has long struggled, like high-end fashion.

Sales across the clothing industry fell when the pandemic arrived in the United States, but the open studio gave Amazon access to new products and let it demonstrate its abilities as the demand for fashion returned.

Other fashion photo studios in New York, including that of Moda Operandi, the luxury e-tailer, remained closed last month; its photographers took images of products in their homes. Fashion magazines like Vogue and Elle resorted to Zoom shoots and selfies. A “remote” runway show held to raise money for the amfAR Fund to Fight Covid-19, a research initiative, featured models filming themselves while strutting down their home hallways.

In its calls with employees, the senior manager, Tara Jacobson, rationalized the reopening by arguing that it was helping the fashion industry at a time of need.

The Brooklyn studio largely takes photos for Amazon’s private-label brands and the other clothes that Amazon sells directly to shoppers, said a person involved with the operation, who would speak only anonymously out of fear of retribution by the company. Custom photos help give Amazon credibility with a sector that has long viewed it with suspicion.

Before Covid-19, the studio had about 20 rooms, called bays, partitioned with black curtains. Each had its own setup for lighting, makeup, backdrops and other things necessary to take photos of different models wearing different clothes.

Credit…Calla Kessler/The New York Times

Before Amazon opened the studio in 2013, it shot its fashion images in a warehouse in Kentucky. The new studio, in a former glass factory near the Wythe Hotel, a magnet for Williamsburg’s cool creatives, was part of Amazon’s efforts to woo the fashion industry. The previous year, Jeff Bezos, Amazon’s chief executive, stood next to Anna Wintour, the fashion editor, as one of the co-hosts of the Met Gala. In 2015, the company became the marquee sponsor of New York Fashion Week: Men’s. (It is no longer involved with the event.)

Still, Amazon continued to struggle to build momentum in fashion. The global luxury conglomerate LVMH Moët Hennessy Louis Vuitton has repeatedly said it does not see Amazon as the right partner for its brands, an attitude widely shared by peers, which see Amazon’s “everything store” ethos as the antithesis of the exclusivity they represent.

The health crisis gave Amazon an opening. Last month, Amazon introduced an online storefront with Vogue and the Council of Fashion Designers of America. Known as Common Threads, the initiative has been framed as an economic lifeline for small, independent designers without the resources or infrastructure to get their own collections to market during the coronavirus shutdown. For 20 brands, Amazon is providing much-needed fulfillment services, digital storefronts and other services, all of it fee free.

In return, Amazon gets a cut of sales, as well as the allegiance of the designer fashion world.

Amazon is clearly hoping that by demonstrating it can sell expensive designer products such as the $2,244 ruched-bodice silk spaghetti-strap dress in a Watteau-esque floral print by Brock Collection or the $1,595 top-handle lizard skin handbag by Hunting Season, both offered on the Common Threads store, it can change the minds of reluctant brands.

“The first two weeks we were seeing multiple sales a day,” said Jonathan Cohen, one of the designers in the Common Threads store. While sales have slowed, “it’s been helpful,” he said. “We were left with so much inventory from Covid, and in general from stores that were not paying from before.”

  • Frequently Asked Questions and Advice

    Updated June 12, 2020

    • What’s the risk of catching coronavirus from a surface?

      Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.

    • Does asymptomatic transmission of Covid-19 happen?

      So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.

    • How does blood type influence coronavirus?

      A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.

    • How many people have lost their jobs due to coronavirus in the U.S.?

      The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.

    • Will protests set off a second viral wave of coronavirus?

      Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.

    • How do we start exercising again without hurting ourselves after months of lockdown?

      Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.

    • My state is reopening. Is it safe to go out?

      States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.

    • What are the symptoms of coronavirus?

      Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.

    • How can I protect myself while flying?

      If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)

    • Should I wear a mask?

      The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.

    • What should I do if I feel sick?

      If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.