TheChek News Flow

Tiffany & Co. and Nike released teasers to their social media accounts that confirm rumors of an upcoming collaboration between the two brands.

Call it a meeting of the minds. Speculation that Tiffany & Co. is collaborating with Nike was confirmed Sunday when the two brands released a visual teaser to officially reveal their tie-up.

The teaser was posted to both Tiffany and Nike’s social media accounts, and was also featured in a New York Times ad in the paper’s Sunday print edition. It shows a Tiffany blue shoe box with a Nike swoosh and says, “A legendary pair.”

Rumors around the collaboration began circulating on Jan. 24, when leaked images of a black suede, low-top Air Force 1 featuring a Tiffany blue leather swoosh hit the internet. The images also depict a sterling silver back plate on the sneaker that appears to take visual reference from the jeweler’s classic Return to Tiffany designs.

Representatives for Tiffany declined to comment at this time.

The teaser did not provide any specifics relating to product, but if the sneaker speculation is true — as the teaser’s shoe box may indicate — it would mark Tiffany’s first foray into footwear. In 2005, the jeweler got an unofficial taste of its potential in the category. Then, Nike enlisted Nicholas Tershay, also known as Nicky Diamonds, to design a pair of low-top dunks on behalf of his skater label Diamond Supply Co.

The resulting sneaker — featuring stamped black crocodile leather trim and a silver swoosh set against a backdrop of Tiffany blue mesh and leather — was dubbed the “Tiffany.”

The jeweler did not have any involvement in the design, but the sneaker has been considered a classic and is available for sale on Sotheby’s website for $3,850.

Tiffany has engaged in an increased number of brand collaborations since its 2021 acquisition by LVMH Moët Hennessy Louis Vuitton. The jeweler has teamed with companies including Supreme, Fendi and Patek Philippe, as well as artist Daniel Arsham and The Andy Warhol Foundation for the Visual Arts.

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A WWD study of revenue multiples shows who’s in the lead in a tough market.

Wall Street might not always appreciate the romance of fashion — but if investors are good at anything, it’s poring over the numbers as they figure out just where to put their money.

To gauge the full financial weight of a business, they often look at enterprise value — the combination of all the debt a company has raised and the current value of all of its stock, minus any cash on hand.

That boils a company’s value down to all of the money it’s managed to attract from debt and equity investors, extending that value to any stock that doesn’t float on the open market.

It’s how much you’d have to pay to buy a company at the current stock price and, read as a multiple of sales or earnings, it’s a good way to see who’s up and who’s down.

“The market places a valuation on these companies based on the subsector that they’re in and starts comparing them to each other to decide who’s more valuable and who’s not,” said Kelly Pedersen, partner and U.S. retail leader at PwC.

And just like in the mall, adjacency matters.

So a luxury company coming into the market will, at least at first, get a shot of getting a premium valuation. But it will have to earn its way up to, say, Hermès International, which gets credit for more than 16 euros of debt and equity investment from the market for every euro of sales.

A WWD study of S&P Capital IQ data on more than 100 fashion, luxury, beauty and retail companies showed an investor flight to relative safety, with big designer names and beauty getting top dollar alongside a few growing names still working toward profitability.

Among the leaders were Simon Property Group Inc., Shopify Inc., Brunello Cucinelli, E.l.f. Beauty Inc., Li Ning Co., On Holding, Inter Parfums Inc., The Estée Lauder Cos. Inc., L’Oréal and LVMH Moët Hennessy Louis Vuitton.

That the European luxury players are ranking as at the top of the industry in terms of valuation isn’t a surprise or change.

“The economy takes a dip, but yet luxury [sales] continue to increase,” Pedersen said. “Luxury specifically follows a path of its own, it’s on its own planet sometimes in terms of what those valuations look like.”

The big luxury players — including Hermès, LVMH Moët Hennessy Louis Vuitton, Kering and others — are high-profile, earn big profit margins and are generally very consistent, making more money than most in both good economic times and bad.

For instance, luxury leader LVMH last week reported a 15 percent increase in fourth-quarter revenues and its chief Bernard Arnault expressed confidence headed into 2023 and pointed to signs of recovery in China, which dropped its zero-COVID-19 policies.

“I’m quite confident that the Chinese leaders being very shrewd, they will surely take advantage of the period that is starting to revitalize Chinese growth,” Arnault said last week. “If this is the case — and we’ve seen signs of it in January — then we have every reason to be confident, even optimistic, about the Chinese market.”

LVMH gets 5.4 euros from investors for each euro of annual revenues, giving it a top valuation in fashion, by revenue multiple.

What has changed over the past 18 months is the market’s enthusiasm for newer brands and business models — where growth was enough to get Wall Street moving, costs and profits are now being scrutinized as well.

Pedersen said big investors are asking companies: “What are you doing with costs? How are you thinking about managing costs, not just as a onetime thing, but ongoing?”

In tougher times, investors have less patience.

“If quarter after quarter they don’t see a lot of progress and profitability, at some point you see investors say, ‘This model doesn’t actually work,’” Pedersen said.

The market is having a hard look at companies that were once seen as the next big thing, among them Stitch Fix Inc., which is getting just 20 cents of investment from Wall Street for every dollar of sales.

Instead, the funds investors were throwing at companies looking to be the next big thing are now going toward safer investments.

“Money that was in high-growth newer retail models has moved into multibranded holding companies, businesses that have historically been run very, very well,” said Matthew Katz, managing partner at SSA & Co. “They’re perceived as safer, having more consistent returns to investors as they look ahead to what could be a difficult time.”

Where companies have weaker revenue multiples, many are looking at how to get back into growth mode.

“These companies have been on many folks’ lists for: What’s the market position? What makes them different?” Katz said.

Also stuck in the valuation doldrums are compaines in the middle, between the luxury names still enjoying strong consumer spending and the ultra value names expert at catering to consumers when recession worries spike.

“How do retailers who are kind of stuck in the middle with large real estate footprints, how are they doing to drive growth in this market?” Katz said.

That is something that the established names, like Nordstrom Inc., Macy’s Inc., Fossil Group Inc. and Chico’s FAS inc., still have to prove to the market.

Each is getting just 50 cents or less from investors for every dollar of revenues despite their reach and connections with consumers.

Gen. Minihan shocks Washington by telling his troops to be ready to fight against China.

Honesty is not the default policy in Washington these days, so the political and media classes were jolted this weekend by the leak of a private warning by a U.S. general telling his troops to prepare for a possible war with China over Taiwan in two years. Imagine: A warrior telling his troops to be ready for war.

In an internal memo leaked to NBC News, Gen. Michael Minihan told his troops: “I hope I am wrong. My gut tells me we will fight in 2025.” The general runs the Air Mobility Command, the Air Force’s tank-refueling operation, and he says in his memo that he wants his force to be “ready to fight and win in the first island chain” off the eastern coast of continental Asia. He called for taking more calculated risks in training.

The general’s document won’t be remembered for subtlety. One of his suggestions is that airmen with weapons qualifications start doing target practice with “unrepentant lethality.” Another tells airmen to get their affairs in order. This candor seems to have alarmed higher-ups at the Pentagon, and NBC quoted an unidentified Defense official as saying the general’s “comments are not representative of the department’s view on China.”

But while Gen. Minihan’s words may be blunt, his concern is broadly shared, or ought to be. U.S. Navy Adm. Phil Davidson told Congress in 2021 that he worried China was “accelerating their ambitions to supplant the United States,” and could strike Taiwan before 2027. Gen. Minihan came to his post after a tour as deputy of Indo-Pacific Command. He like many others suggested that 2025 may be a ripe moment for Chinese President Xi Jinping to move. Taiwan and the U.S. both have presidential elections in 2024 that China may see as moments of weakness.

No less than Secretary of State Antony Blinken said last year that Beijing was “determined to pursue reunification” with Taiwan “on a much faster timeline” than it had previously contemplated. Are war-fighters supposed to ignore that message as they prepare for their risky missions?

Gen. Minihan is doing his troops a favor by speaking directly about a war they might have to fight. A recent war game conducted by the Center for Strategic and International Studies warned that, in a conflict over Taiwan, “the scale of casualties” would “stagger a U.S. military that has dominated battlefields for a generation.” Gen. Minihan’s boom operators are accustomed to working in skies the U.S. controls. Tankers would be essential in a fight for Taiwan given the vast distance over the Pacific—and would be vulnerable to heavy losses.

Former naval officer Seth Cropsey explained on these pages last week that America isn’t investing in the ships and weapons stockpiles that would be required to support a long war in the Western Pacific. Such yawning gaps in U.S. preparedness make a decision by Beijing to invade or blockade the democratic island more likely. Preventing a war for Taiwan requires showing Beijing that the U.S. has the means and the will to fight and repel an invasion.

Whatever his rhetorical flourishes, Gen. Minihan seems to understand this, and what Americans should really worry about is that some of his political and military superiors don’t.