Business OF Fashion : Bernard Arnault’s Take On the Metaverse

Bernard Arnault’s Take On the Metaverse
The LVMH chairman said, ‘It’s not our objective to sell virtual sneakers for 10 euros,’ contrasting with rival Gucci’s bullish approach.

Bernard Arnault, the chairman of French luxury conglomerate LVMH and Europe’s wealthiest person, is in no hurry to sell virtual fashion. But he says he is monitoring developments in the space, and is interested in the potential applications of NFTs.

“At present we’re in the real world selling real products. Surely it’s captivating, it’s interesting, it’s fun. But we have to see what the application of the metaverse and these NFTs will be,” Arnault said during his annual presentation to investors. The brands he controls include Louis Vuitton, Dior, and Tiffany.

The metaverse, an umbrella term for an array of immersive online interfaces being developed, and in which cryptocurrency and blockchain typically play a central role, was one of 2021′s hottest buzzwords.

”It could surely have a positive impact on our brands — if it’s well done,” he continued. “But it’s not our objective to sell virtual sneakers for 10 euros. We’re not into that. But there may be more relevant applications.”

That comment seemed like a not-so subtle dig at Louis Vuitton’s longtime rival Gucci, which was been an early mover in the metaverse, selling $12 virtual sneakers on the app Wanna and staging brand activations on virtual reality and gaming interfaces including Roblox and the Sims.

Arnault sounded a note of caution about the metaverse, evoking the early 2000s dot com bubble as a reason not to rush into the virtual space. “That was a bubble that burst. There were all sorts of things cropping up left, right, and centre,” he said. “There were quite a few Facebooks, but only one pulled through.”

Business Of Fashion : Farfetch Is Buying Violet Grey: Here’s Why

Farfetch Is Buying Violet Grey: Here’s Why
The luxury fashion platform sees an opportunity in beauty that has eluded many others.

  • Farfetch announced Friday that it would acquire Violet Grey, the Los Angeles-based multi-brand beauty retailer, for an undisclosed sum
  • The partnership with Violet Grey is the first step in Farfetch’s plan to own a significant portion of the $70 billion luxury beauty market
  • Violet Grey founder Cassandra Grey will join Farfetch as an advisor to its beauty marketplace, set to launch in 2022, and to NGG Beauty, a new beauty brand incubator in the vein of the New Guards Group, the fashion accelerator Farfetch acquired in 2019

Farfetch announced on Friday that it would acquire Violet Grey, the Los Angeles-based beauty retailer known for its expertly chosen range of in-demand brands, in an effort to shore up its expansion into beauty later this year.

The financial terms of the deal were not disclosed, and must be approved by Violet Grey’s existing shareholders, including Japanese conglomerate Shiseido. Violet Grey, which was founded in 2012, generates around $20 million in sales a year and has raised more than $30 million from several investors, according to sources familiar with the business. The source also said that Shiseido and other investors, who helped negotiate the deal, are happy with the high-profile outcome. Both companies declined to comment on those details.

As part of the deal, Violet Grey founder Cassandra Grey will join Farfetch as an advisor to the luxury e-commerce platform’s beauty marketplace, to launch this year, as well as to NGG Beauty, a new beauty brand incubator in the vein of the New Guards Group, the fashion accelerator Farfetch acquired in 2019.

She’ll also become the chair of Violet Grey, which will continue to operate a separate e-commerce site and its physical store in Los Angeles, in addition to joining the Farfetch beauty marketplace. Violet Grey’s new managing director is Niten Kapadia, Farfetch’s current vice president of operations. The rest of Violet Grey’s staff, many of whom live in Los Angeles, where Grey is based, are slated to remain on board.

As with fashion, NGG will develop beauty brands, to be sold on the marketplace alongside other prestigious labels. However, besides Violet Grey, Farfetch will not partner with multi-brand boutiques on its beauty marketplace. (The margins for beauty are far lower than fashion, which means the model — in which Farfetch receives a commission on every product sold — is less desirable for an independent boutique.)

Instead, Farfetch is working with brands that are looking to drive more direct-to-consumer sales, but also crave the exposure that a major retailer offers. Unlike fashion, the biggest beauty brands are still mostly distributed through multi-brand channels, online and off, including Sephora, Ulta and Amazon.

In beauty, there’s also an advertising opportunity, something some of Farfetch’s direct competitors, like Net-a-Porter, have explored in the past.

“We know that beauty advertisers are looking increasingly for channels where they can speak directly to the target audience,” said Stephanie Phair, chief customer officer at Farfetch, noting that many of the brands coming on board are excited by the two-sided offer.

The Violet Grey layer is not so dissimilar to what Farfetch did with London department store Browns, which it acquired in 2015. Browns provided fashion authority and consumer insights into how people were shopping physical luxury retail, and Violet Grey will do the same on the beauty side. Since its founding a decade ago, Violet Grey has gained a best-in-class reputation when it comes to selection. The site’s unique product lineup — from luxe skincare king Augustinus Bader to facialist Georgia Louise Vassanelli cult tools and Embryolisse’s French drugstore essentials — is vetted by a group of industry experts, something consumers like and trust.

“We’ve really been out there looking at the market and understanding what we could do ourselves, build ourselves, and who we could partner with,” Phair said. “Violet Grey absolutely came through as having built an incredible authority in beauty.”

Farfetch could also eventually bring its beauty proposition to China — where it has a stronger footing than many of its western competitors — especially now that the country’s law requiring all cosmetics to be tested on animals ended in May.

While the Violet Grey deal is not likely to have a major impact on Farfetch’s bottom line, the grander beauty play may result in significant growth in the longer term. Like many retail stocks, Farfetch has dipped since its peak of $73.35 in February 2021 after it benefited from a boost in pandemic-era online shopping, and is now trading at around $20 a share after reporting a slowdown in sales growth in its most recently reported quarter. In November, the company said that it expected to end the 2021 fiscal year with positive adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) for the first time. (The company is expected to release its full-year results in late February.)

“We did the best we could to forecast, and what we saw was very high growth faster than anyone,” chief executive José Neves told BoF last year. “We went from hyper-growth to very high growth. That’s all that happened.”

Beauty businesses can scale quickly, and help Farfetch achieve the kind of growth shareholders are looking for. In order to work, however, it will take the right mix — and a large breadth — of brands that luxury consumers care about. Farfetch’s advantage over Amazon, which has spent the last few years building out its beauty marketplace, is that it’s a pure luxury play. For big beauty brands, joining Farfetch may be a no-brainer. For smaller, independent brands, the added costs of distributing the product through a marketplace may make it a tougher decision. Ultimately, the increased exposure will be the big sell.

“All brands — legacy, niche, small, big — are looking for new distribution,” Grey said.

>>> Stoxx 600 Pre-Market Indications

  • Signify (G14 TH) +4.3%
    • Signify Sees 2022 Comparable Sales +3% to +6%
  • LVMH (MOH TH) +3.5%
    • LVMH Posts Record Sales as Shoppers Snap Up Couture, Cognac
  • Kion (KGX TH) +2.1%
    • Kion Raised to Buy at HSBC; PT 100 euros
  • Rio Tinto (RIO1 TH) +1.9%
  • Leonardo (FMNB TH) +1.3%
  • BAT (BMT TH) +1.2%
  • L’Oreal (LOR TH) +1%
  • Vinci (SQU TH) +1%
  • UniCredit (CRIN TH) +0.9%
    • UniCredit Revenue Beats Estimates as Orcel Targets Cash Returns
  • ASML (ASME TH) -1%
    • Apple Gains After Overcoming Supply Crunch, Trouncing Estimates
  • Sanofi (SNW TH) -1%
  • Sartorius (SRT3 TH) -1.1%
  • Nemetschek (NEM TH) -1.2%
  • Symrise (SY1 TH) -1.2%
  • IAG (INR TH) -1.3%
  • Pandora (3P7 TH) -1.5%
  • Delivery Hero (DHER TH) -1.6%
    • Delivery Hero CEO Says No Plan to IPO Dmart ‘at This Moment’
  • Adyen (1N8 TH) -1.6%
  • ArcelorMittal (ARRD TH) -2.7%
    • Shares down 6.2% so far this week

>>> TradeGate Pre-Market Indications

AX:
  • VW (VOW3 TH) -0.7%
  • Daimler (DAI TH) -0.9%
  • RWE (RWE TH) -0.9%
  • Symrise (SY1 TH) -0.9%
  • Deutsche Telekom (DTE TH) -1%
MDAX:
  • Varta (VAR1 TH) +2.2%
    • Apple Suppliers Rise After iPhone Maker’s Revenue Beats Estimate
  • Kion (KGX TH) +2.1%
    • Kion Raised to Buy at HSBC; PT 100 euros
SDAX:
  • Metro (B4B TH) +1.5%
  • Kloeckner (KCO TH) +1.1%
  • Schaeffler (SHA TH) +0.8%
  • Nordex (NDX1 TH) -1.1%

>>> What to look at today - 28th of January 2022

Asian stocks on Friday recovered some of the losses sparked by the Federal Reserve’s pivot to tighter monetary policy, while U.S. equity futures climbed after strong Apple Inc. earnings bolstered sentiment. Japan helped an Asia-Pacific share gauge to rise for the first session in six. China fluctuated as state-run media tried to talk up equities, arguing they offer long-term potential following a slump. But Chinese real-estate developers sank on fresh concerns about the ailing property sector. Contracts on the tech-heavy Nasdaq 100 outperformed after Apple Inc. rallied in extended trading on record sales. European futures wavered. U.S. shares Thursday ended lower in a volatile session, again failing to hold intraday rallies. The Russell 2000 small-cap index slumped into a bear market.  The prospect of receding Fed stimulus is whipsawing markets: global stocks, for instance, have lost over $7 trillion this month. Powell telegraphed a March liftoff and one question is whether the Fed will deliver the first half-point hike in more than two decades. Elsewhere, oil headed for a sixth weekly advance and gold nursed losses. US After Hours AAPL +4.9% headlines bust earnings; TEAM +9.9%, V +4.6%, JNPR +4.3% also higher; HOOD -12.5%, WDC -8.6% lower on earnings; HD +0.6% gets a new CEO

Nikkei +2.09% Hang Seng -0.96% CSI -1.18% Shnaghai -0.92% Shenzen +0.08%

Eur$ 1.1154 CNH 6.3609 CNY 6.3570 JPY 115.39 GBP 1.3411 CHF 0.9298 RUB 77.7969 TRY 13.6316 WTI$ 87.20 +0.69% Gold 1,797.55 +0.01% BTC 37,250 +2.8% ETH 2,450 +0.12%

S&P +0.52% Nasdaq +0.99% EuroStoxx -0.12% FTSE +0.25% Dax -0.37% SMI -0.28%

Macro :
- Goldman Says Crypto Mainstream Acceptance May Not Boost Prices
- Biden Repeats Warning of Mid-February Attack: Ukraine Update
- France’s Macron Gets a Lift as Economy Grows More Than Expected

Keep an eye on :
- A2A IM : A2A Sees EU18b Investments Over 2021-2030, +EU2b Over Prior
- ALV GY : UniCredit, Allianz Strengthen Bancassurance Partnership
- ATE FP : Alten FY Revenue Beats Estimates
- ARAMI FP : Aramis 1Q Adjusted Revenue EU396.2M Vs. EU268.9M Y/y
- AU/ LN / HPQ US : U.K. Tycoon Lynch Ready for Fraud Verdict in Epic HP Court Fight
- AUTO NO : AutoStore: German Court Considers Ocado IP Rights May Be Invalid
- BHG SS : BHG Group 4Q Adjusted Ebit Beats Estimates
- BILL SS : BillerudKorsnas 4Q Adjusted Ebitda Meets Estimates
- BNP FP : BNP $16 Billion Shot Unlikely to Replicate UniCredit’s 11% Leap
- CABK SM : CaixaBank 4Q Net Income Misses Estimates
- CABK SM : CaixaBank, Mutua to Extend Alliance to Old Bankia Network
- CERV IM : Castor Bidco to Exercise Buyout Right for Rest of Cerved Shares
- CINE LN : Cineworld Says Cineplex Submitted Cross-Appeal On Court Decision
- COLR BB : Colruyt Buys Bakery Roelandt Groep; No Terms
- CTPNV NA : CTP Gets 98% Holder Support for Deutsche Industrie REIT-AG Offer
- DHER GY : Delivery Hero CEO Says No Plan to IPO Dmart ‘at This Moment’
- EDF FP : EDF Unions Legal Challenge, Miners on Form: EMEA Resources Wrap
- RACE IM : Ferrari May Stall Ahead of Decade-Defining Strategic Plan, SUV
- FINGB SS : Fingerprint Cards 4Q Oper Income SEK3.9M Vs. Loss SEK326.8M Y/y
- GIVN SW : Givaudan FY Ebitda Misses Estimates
- HAL NA : HAL FY Dividend per Share EU5.70 Vs. EU4.70 Y/y
- IGG LN : IG Group Holder TCMI Offers Up to 15.5m Shares: Terms
- IIA AV : Immofinanz Says CPI Property Bid Price Still Low After Increase
- DEC FP : JCDecaux 4Q Adjusted Revenue Beats Estimates
- JYSK DC : Jyske Hires Bank of America for Handelsbanken Deal, Borsen Says
- KIE LN : Kier to Hire 1,200 People to Support U.K. Projects
- LDO IM : Leonardo Says FY Orders, Rev, Ebita in High End of Guidance
- LOOK LN : Lookers Surges to 2019 High After Block Trades Cross at Premium
- MC FP : *LVMH 4Q FASHION & LEATHER GOODS ORGANIC SALES +28%; EST. +16%
- MC FP : LVMH's Recovery Rate Extends, Adding Scale vs. Peers: React
- MC FP : LVMH Results ‘Astonishing’ Once Again as Even Tiffany Impresses
- NETC DC : Netcompany CEO, COO Buy Shares for DKK50 Million Each
- NDA SS : Nordea Cuts Russian Bond Holdings Due to Conflict, Borsen Says
- OCDO LN : AutoStore: German Court Considers Ocado IP Rights May Be Invalid
- PHNX LN : Phoenix Group Holder Abrdn Offers About 40m Shares: Terms
- QFUEL NO : Quantafuel Offering of 16m Shares Prices at NOK25/Share
- SFER IM : Salvatore Ferragamo FY Revenue Meets Estimates
- SU FP : Schneider Is Said to Plan $1 Billion Telemecanique Sale
- SBBB SS : SBB Buys Odalen Fastigheter for SEK510m
- SEV FP : Suez Shares Suspended Until Delisting Is Implemented: AMF
- LIGHT NA : Signify Sees 2022 Comparable Sales +3% to +6%
- SSABA SS : SSAB Plans New Nordic Production Setup to Help Green Transition
- STERV FH : Stora Enso FY Dividend per Share Beats Estimates
- TEL NO : Telenor Digi 4Q Ebitda Before Items NOK1.55b vs NOK1.69b Yr Ago
- TELIA SS : Telia 4Q Adjusted Ebitda Meets Estimates
- UCG IM : UniCredit Revenue Beats Estimates as Orcel Targets Cash Returns
- UCG IM : Orcel Says UniCredit Withdrawing From Otkritie Due Diligence
- VK FP : Vallourec Signs Preliminary Agreement, Mine Ops Still Halted
- VOLVB SS : Volvo 4Q Adjusted Operating Profit Misses Estimates
- WRT1V FH : Wartsila 4Q Orders Beats Estimates
- WDP BB : WDP 2022 Adjusted EPS Forecast Misses Estimates

>>> Europe ; Brokers Upgrades & Downgrades - 28th of January 202

>>> Up
* Accor Raised to Buy at HSBC; PT 39 euros
* ITV Raised to Overweight at Barclays; PT 160 pence
* Jungheinrich Raised to Buy at HSBC; PT 54 euros
* Kion Raised to Buy at Baader Helvea; PT 108 euros
* Kion Raised to Buy at HSBC; PT 100 euros
* Mediaset Espana Raised to Outperform at Renta 4; PT 7.16 euros
* Neste Raised to Hold at SocGen; PT 40 euros
* Premier Foods Raised to Hold at HSBC; PT 120 pence
* S4 Capital Raised to Overweight at Barclays; PT 730 pence
* SEB Raised to Hold at Handelsbanken; PT 128 kronor
* STMicroelectronics ADRs Raised to Outperform at Baird; PT $62
* Vinci Raised to Buy at Stifel; PT 109 euros

>>> Down
* ABB Cut to Hold at SEB Equities; PT 34.23 Swiss francs
* AB Foods Cut to Sell at Goldman; PT 2,060 pence
* Almirall Cut to Neutral at Exane; PT 11 euros
* Alstom Cut to Neutral at Exane; PT 33.50 euros
* Elisa Cut to Underweight at Barclays; PT 54 euros
* Lassila & Tikanoja Cut to Sell at Carnegie; PT 11 euros
* *Orpea Cut to Hold from Buy by Jefferies, PT cut from EUR138 to EUR43
* PGS Cut to Sell at Pareto Securities; PT 1 krone
* PGS Cut to Sell at Fearnley; PT 1 krone
* PGS Cut to Equal-Weight at Barclays; PT 3 kroner

>>> Initiation
* Daimler Truck Rated New Overweight at Morgan Stanley

>>> Call
* Morgan Stanley Strategists Raise Europe Telecoms Amid Volatility

FT : Turkish lira steadies after tumbling 44% in tumultuous 2021

Turkish lira steadies after tumbling 44% in tumultuous 2021
Savings programme has helped slow selling in the currency, but analysts remain sceptical

Emergency measures announced by president Recep Tayyip Erdogan last month have helped the Turkish lira to post a relatively calm start to 2022 after a chaotic December even as analysts remain deeply uncertain over its outlook.

New government-backed savings schemes unveiled by the authorities — combined with other steps including a multibillion-dollar intervention by the central bank — have restored temporary stability. But few analysts see those fixes as a lasting solution to Turkey’s currency dilemma, given Erdogan’s determination to keep interest rates far below the country’s rocketing inflation rate.

“I see this as electro shock therapy,” said Emre Akcakmak, managing director at Greenwest Consultancy in Dubai. “The patient was about to be lost and now it’s back to life. But did this cure the patient? I don’t think it is a long-term solution.” 

Erdogan’s order for the central bank to cut rates four times, despite rising inflation, sent the lira plummeting in the final months of last year. As it threatened to spiral out of control in mid-December, crashing through record lows of TL16, TL17 and TL18 to the dollar, the president unveiled a state-backed savings scheme aimed at luring Turkish savers back to the national currency.

Interest in the products, which promise to compensate savers who hold lira for any exchange rate losses that they incur, has been limited so far, albeit climbing steadily. As of January 24, TL196bn ($14bn) had been transferred to the new mechanisms out of total banking sector deposits of TL5.4tn, according to data shared by the finance ministry with the Financial Times.

Less than 30 per cent of that shift has been driven by savers switching their dollar and euro holdings into local currency.

Still, the announcement helped pull the lira back down from its historic lows and has been followed by an unusual window of calm. The currency, which lost 44 per cent of its value against the dollar last year, is down just 2 per cent since the start of 2022, according to Refinitiv data. This compares with a fall of about 0.01 per cent for MSCI’s broad emerging market currencies gauge.

Turks’ rush to buy dollars, euros and gold, a phenomenon that puts pressure on the lira, has also cooled. Residents’ foreign currency deposits fell three weeks running in the period up to January 14, according to central bank data.


Uptake of the savings scheme could yet be bolstered by companies, which were invited to join on January 11 and have been offered a tax incentive to take part. Paradoxically, however, overenthusiastic signing-up would deepen concerns about the cost of the mechanism to the state, which will foot the bill for any exchange rate losses.

While Turkish officials have hailed the scheme as a triumph, some analysts believe that the lira’s central bank is still spending the country’s foreign currency reserves on supporting the lira, albeit at a less intense pace than in December, when it burnt through at least $7bn.

Ibrahim Aksoy, an analyst at HSBC in Istanbul, says authorities may be using the proceeds of new regulation, introduced at the start of January, that forces exporters to sell 25 per cent of their foreign currency earnings to the central bank.

Aksoy said that the measure, which bankers say has already come into force, should contribute around $1.25bn a week to the central bank’s reserves based on exports of roughly $20bn in January. But no such increase has been observed.

“The stability in the lira is coming both from the partial, short-term success of the savings mechanism and from the fact that the central bank is probably supporting the lira,” Aksoy said.

Others cite different reasons for the tranquility observed in Turkish markets. A senior Istanbul-based banker, who asked not to be named, said that he had seen a significant push to defend the level of TL13.8 to the dollar — but that he had not seen any signs of intervention in the financial markets over the past week.

He said that “very low” trading volumes meant that “the lira can appreciate even with small ticket transactions compared to the past”. He added that large Turkish corporates complained of facing pressure from authorities to avoid making large foreign currency purchases if possible.

Erdogan, who has enjoyed a small bounce in his approval rating as markets have stabilised this month, has already declared the savings scheme a great success. Speaking last week, he said that it had “skimmed the froth” off the exchange rate, adding: “We do not think that we will experience the return of the excessive volatility that comes from unbalanced foreign currency demand in the markets.”

Central bank governor Sahap Kavcioglu said on Thursday that the government’s “lira-isation” plan would combine with growing exports, investment and employment to bring down inflation that stood at a two-decade record of 36 per cent in December — a strategy that has been met by scepticism from economists given the country’s deeply negative real interest rates.

Analysts warn that a host of factors could disrupt the fragile equilibrium. Guldem Atabay, an analyst at the research platform Istanbul Analytics, said that authorities appeared to be gambling on the idea that a strong 2022 tourism season would bring in sufficient foreign currency revenues to eliminate the country’s trade imbalance, long a source of pressure on the lira.

She warned that impending rate rises by the US Federal Reserve could suck capital out of emerging markets and said that a likely rise in Turkey’s inflation rate in the months ahead could cause Turks to start buying dollars again.

“They think they’re very successful in fighting back the deprecionary forces,” she said. “But I’m afraid it will backfire in the medium term.”

>>> US After Hours Summary: AAPL +4.9% headlines bust earnings; TEAM +9.9%, V +4

After Hours Summary: AAPL +4.9% headlines bust earnings; TEAM +9.9%, V +4.6%, JNPR +4.3% also higher; HOOD -12.5%, WDC -8.6% lower on earnings; HD +0.6% gets a new CEO

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: MITK +10.3%, TEAM +9.9%, CLFD +9.6% (also reinstates and increases repurchase program to $22 mln), BZH +7.9%, NATI +7.5%, OSCR +5.9%, AAPL +4.9%, V +4.6%, JNPR +4.3%, X +2.3% (also authorizes new $500 mln stock repurchase program), ETD +1.1%, BOOT +0.4%, GBCI +0.4%, AX +0.1%, CE +0.1%, EMN +0.1%, HTH +0.1%, WRB +0.1%

Companies trading higher in after hours in reaction to news: PRVB +15.3% (to resubmit BLA application for delay of clinical type 1 diabetes following FDA meeting), MATX +3.2% (adds 3 mln shares to existing share repurchase authorization), OHI +2.1% (authorizes new $500 mln share repurchase program), SMTS +0.8% (announces changes to organizational structure following strategic review), HD +0.6% (names COO Ted Decker as new CEO), PENN +0.5% (receives approval from Louisiana to offer online sports betting)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: HOOD -12.5%, WDC -8.6% (also names new CFO), RMD -6.5%, OLN -4%, NRIX -3.1%, MDLZ -2.2%, SYK -1.8%, FIBK -1.5%, KLAC -1.1%, WAL -0.6%, FICO -0.2%, FHI -0.1%, RHI -0.1%

Companies trading lower in after hours in reaction to news: FIBK -1.5% (announces executive team in connection with closing of merger with GWB), FTCI -0.3% (COO to step down), PII -0.1% (increases dividend), KAMN -0.1% (announces new partnership with Mirion Technologies), TOL -0.1% (co-founder Robert Toll chooses not to stand for re-election to the board), LFG -0.1% (LFG expands commercial partnership with FTS)