British success story Burberry revealed today that it had hit a stumbling block as the luxury brand issued a profits warning.
In a surprise update, the group said it had been hit by a slowdown in spending across the world.
The darling of the fashion scene had once enjoyed sales growth in double digits, but today it reported that like-for-like sales ground to a halt in the 10 weeks to 8 September.
Chief financial officer Stacey Cartwright said: "In the last two weeks there has been a global slowdown. We have seen this across the board in Asia, the US, Europe and the UK."
Despite its issues, the brand is gearing up for where it will present its womenswear spring/summer show on Monday.
Cartwright said: "We have Fashion Week, and the tremendous new flagship on Regent Street that has just opened -- our largest in the world -- while our menswear-only Knightsbridge store will open in a few weeks. Traffic has been down globally but we will not change tack."
Burberry warned that profits for the full year of 2013 would be at the bottom end of market expectations at about pounds sterling 407 million. Retail sales, including from new stores, were up 6 percent.
The slowdown compares with strong first quarter trading where retail sales had grown by 14 percent.
Luca Solca, luxury brands expert at CA Chevreux, blamed Burberry's reliance on very high-end clothing rather than accessories such as handbags. He said: "Apparel -- on which Burberry is more dependent than other mega-brands -- is softer. In difficult times consumers prefer leather goods and hard luxury accessories as they are more visible and work better as status symbols."
Analyst Kate Calvert at Seymour Pierce downgraded the stock to hold and said: "This news will obviously hit sentiment towards Burberry. However, we still consider Burberry a strong long-term growth story."
The company has enjoyed a remarkable decade with its shares rising fivefold. Today the stock slid more than 18 percent, down 249p to 1125.5p, on the news.
However, Mike van Dulken at Accendo Markets said: "This morning's selling may be overdone, providing a short-term trading opportunity."
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Diamond baubles from Cartier glittering in one window, Louis Vuitton's signature leather bags beckoning from across the street and another storefront displaying ' silk scarves.
Within months this is the scene that will greet visitors to Miami's Design District, as the neighborhood begins its dramatic metamorphosis into the new hot spot for luxury shopping.
Cartier and have just opened their doors. Louis Vuitton will do so on Oct. 19. Hermes and Men are under construction. Right behind that will be Pucci. By the time and the holiday shopping season arrive, there should be 8 to 10 luxury brands lining the Design District's Northeast 40th Street corridor.
These openings are a sign of Miami's ascent as a fashion destination.
"For most luxury brands Miami is one of the top three markets in , along with New York and Los Angeles," said Valerie Chapoulaud-Floquet, president and chief executive officer of Louis Vuitton North America. "The Miami market has grown quicker than the rest of North America."
For decades the Bal Harbour Shops offered the only option for luxury in Miami-Dade County. But no longer is having one store in the market enough for these luxury brands.
"Miami has been under retailed for luxury because of the strength of the local market and the strong growth of tourists coming to Miami," said Emmanuel Perrin, president and chief executive officer of Cartier North America. "This market can support several Cartier boutiques. It was just a question of time before the luxury market evolved. Everyone has been waiting for the right project to come along."
Louis Vuitton and Cartier both left Bal Harbour Shops last summer because the mall didn't have the space for them to expand. The retailers were also prohibited from opening a second store within 20 miles unless Bal Harbour's owners got a piece of the new store's revenue.
Now, Louis Vuitton already has opened another store at Mall and Cartier is assessing the market. It's all part of an unfolding game of musical chairs that ends the monopoly of Bal Harbour, which has controlled the luxury retail market since 1965.
By 2014, developer Craig Robins expects to have 40 to 50 luxury brands spread throughout the Design District, creating a new urban destination for fashionistas. Already committed to the area are about 30 tenants, including , Bulgari, Pucci, De Beers, Zegna, Tom Ford, Burberry and Marc by . They will join the district's original fashion tenants Christian Louboutin, and Martin Margiela.
"We're starting to build critical mass," Robins said. "We continue to find that more and more brands are interested in coming. This is an exciting moment for the Design District. People are going to feel the transition and the power of integrating fashion with art, design and food."
Many of the brands are giving up space at Bal Harbour, which the International Council of Shopping Center recently designated the top producing mall in the world. But they say they don't believe the move will have any negative impact on their business.
"We have made a seamless transition," said Vira V. Capeci, president of Celine. "Our clients have followed us to this exciting location."
Right now, Cartier's name sparkling against the backdrop of a bronze storefront may look a little out of place as the area undergoes a transition. But soon Louis Vuitton will make a dramatic statement across the street with a storefront covered by an original work of art from graffiti artist Marquis Lewis, known as RETNA.
There may be growing pains in this gentrifying neighborhood. Will consumers be willing to spend thousands of dollars on jewelry, handbags and clothes just a few blocks away from some of Miami's more impoverished neighborhoods?
At Cartier a security guard stands close by watching over an offering that includes a rare yellow diamond and a $310,000, diamond-encrusted panther pendant and necklace.
"I like the idea of an urban neighborhood where you have crackheads here and Cartier over there," said Denia Roth, a Miami resident who was lunching this week at Michael's Genuine in the Design District. "The diversity brings everyone together."
The retailers have more freedom to design the look of their stores and open bigger showrooms featuring a wider variety of offerings. Cartier's new store is three times larger than what it had at Bal Harbour.
And these stores are only the beginning. Cartier and Louis Vuitton are among several brands opening temporary locations, until they can design and build flagship stores. When these stores open in 2014, they're expected to be among the brands' largest stores in the U.S. outside of .
"We want to take our client experience to the next level and serve our clients in comfort," Perrin said.
Louis Vuitton felt it was important to get into the Design District early.
"We like to be part of building a story, it's part of our pioneering spirit," Chapoulaud-Floquet said. "We think we're going to be able to communicate with a very different clientele that is younger, more trendy and much more open to art and culture."
Although it's been a year since Louis Vuitton and others started leaving Bal Harbour, operating partner Matthew Whitman Lazenby says same store sales continue to grow -- up 16 percent for the first six months of the year compared to last year.
But Lazenby says his family has had a change of heart about allowing tenants to remain at Bal Harbour and still open a second location in Miami-Dade County.
"You can't deny there has been demand expressed by more than one tenant," Lazenby said. "Miami has reached the point in its evolution where more than one store can be sustained. We are adapting to the marketplace and trying to accommodate the needs of our tenants." ___
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After their two sons headed off to college, Bill and Carolyn Walter thought the time might be right to downsize. Coming from a large, single-family home in , they wanted something smaller with a strong community association to handle outdoor maintenance, and also in the same area of northern Baltimore County.
The house-hunting ended when the two came across a lovely villa for sale in the nearby community of Pebble Creek. Carolyn Walter knew instantly she wanted to move into the traditional home that connected to four others on the street, resembling a row of cottages with deeply pitched roofs and front dormers. The interior design, with meticulous attention paid to details such as two wood-burning fireplaces, wide molding and oak flooring, appealed to her taste for traditional furnishings.
In spite of herself, Carolyn Walter gushed over the great find.
"I told her, 'Don't say you love it so much when I'm trying to negotiate price,'" Bill Walter said, decidedly, but with a smile that indicated the outcome was inevitable.
The Walters, who would be the second owners of the house, paid $410,000 for a two-level, plus finished lower level, 4,000-square-foot home on approximately one-tenth of an acre.
While the home, built in 1994, was in very good condition, the Walters have made several improvements and upgrades since they moved in in 1998. During the past twelve years, the couple added new kitchen appliances, cabinets and granite countertops, hardwood flooring on the home's second level, and a deck. They had the master bathroom renovated.
The couple also added a decorator wall from the entrance to the kitchen. In keeping with the traditional aspects of the interior architecture, Carolyn Walter called upon a construction design company noted for its exquisite restoration, renovation and millwork, SouthFen Inc. to create the paneled wall over the original plain one. The raised panels, Colonial in style, are painted the same shade of eggshell found in the living and dining rooms, with the trim painted a deep shade of wheat. The sight of this angled wall, embellished with three brass sconces, upon entering the hall sets the formal tone for the rest of the home.
"We live in the kitchen and the family room that has two doors out to the deck," said Carolyn Walter.
These rooms, with walls painted a deep shade of Duron's Burberry Red, contrast in a casually elegant style with her vast collection of Delft pottery and porcelain prominently displayed in every room, on every shelf and wall and in every cabinet. From platters to large bowls, houses, urns, plates and even an umbrella stand, the delicately painted blue and white pieces perfectly accent every room's decor and wall color.
The formal elegance of the dining room is enhanced by a crystal chandelier that drops from the 23-foot ceiling. A mahogany suite of Chippendale-style furniture features a double pedestal table that will seat 12 and a china closet filled with a Royal Copenhagen service for eight.
The living room boasts one of the home's two wood-burning fireplaces, while cherry furniture and an entire wall of framed prints depicting various scenes of horse and hound hunts give the room a decidedly English country feel. The look is carried out in the second-floor hallway, where several services of silver sit atop mahogany side tables.
The second-floor bedrooms, especially the master, which is painted soft yellow, have a distinct, manor style achieved with artwork, artfully placed armchairs and benches, needlepoint pillows and rich fabrics on furniture and beds.
The finished lower level follows the same circular flow as the two above it. A library filled with hundreds of books segues to a sitting area before moving to a craft studio and finally, a separate office for Bill Walter.
The couple shares a laugh over the mention of their new home being almost as large as the one they left.
"Yes, but we're close to everything, and the community has strict covenants when it comes to exterior work," Carolyn Walter said.
"And it's maintenance-free. We lock the door and go!" her husband added.
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Making the dream
Dream location: Bill and Carolyn Walter's villa home is located in Pebble Creek, a neighborhood development in Timonium. Though nestled in a wooden area, they are close to the amenities on the York Road corridor.
Dream design: The homes are painted a light khaki and cream color with wooden trim at windows and doors that feature arched transoms. Chunky stone chimneys, stone half-walls, double-car garages and sloping roofs with prominent gables contribute to the traditional design of each house in the row.
Dream element: A large, angular entrance hall presents onto a winding oak staircase that sweeps to the open hallway of the second level. The circular flow of the first floor leads to a rear kitchen and breakfast room. The layout is, Carolyn Walter says, "great for parties. Everyone is comfortable, [and] every room is used."
Punters have donned their tin hats and are feeling defensive today.
Riskier stocks -- including most of the mining sector -- dived to the bottom of the index with Vedanta Resources and Anglo American falling hard.
Revelations of a mining scam in India pushed Goa to place a temporary ban on mining. The state is the country's second-biggest iron ore producer and the news has hit Vedanta Resources.
Vedanta's Indian arm Sesa Goa is currently merging with Sterlite Industries and both have been hit by the ban. Vedanta lost 45p to 957.75p but experts expect the ban to not impact the business in the long term.
Anglo American, down 83.5p to 1918.25p, which is facing legal action in the High Court from African gold miners who claim that health and safety conditions have caused their lung diseases, received a downgrade today. It denies liability. Analysts at cut its price target to 1750p from 1900p.
A cautious feeling swept the City ahead of a German court's ruling on its participation in the planned European bailout.
Defensive stocks were in favour with British American Tobacco leading the FTSE 100, up 47.5p to 3171.5p.
Hopes of progress in the eurozone were crushed as a hurdle emerged in the process to sign off the 's bond-buying scheme, causing European markets to stutter.
The FTSE 100 lost 19.63 points to 5773.57.
Software giant Sage fell 1.9p to 302.45p despite being given a buy rating yesterday by Galvan Research on rumours of M&A activity. Analysts said there was "the distinct possibility that Sage could be a target of German sector peer SAP".
At the bottom of the FTSE 100, luxury fashion group Burberry found itself down 249p to 1125.5p, after a profits warning. The 18 percent fall saw this year's share price rise disappear. Its highest point this year came in April when it hit 1586p. But the fall today prompted some traders to start bottom-fishing and buy the shares.
On Aim, drug discovery company Summit has signed a technology license agreement with US based and its shares gained 0.88p to a healthy 3.38p.
Sefton Resources, the US focused oil and gas group, reported that oil production increased in the first half but it recorded a loss for the period as costs increased. The California and Kansas-focused explorer saw its shares tumble 0.24p to 1.58p. Unlike many other oil and gas explorers, Kazakhstan-focused Zhaikmunai Group has announced it will pay a dividend but its shares lost 0.46p to 9.14p.
There was a bad smell in the air for environmental technology group Aerte. It needs more cash after an order of air disinfection products, that it manufactured and delivered in May, were cancelled by the Chinese buyer.
It found itself at the bottom of the AIM index, losing more than 41 percent, down 0.24p to 0.34p.
The board said it will be "difficult to recover payment for these devices in the medium term and it is no longer expecting to receive further orders from this distributor".
Things just keep getting sexier along Stevens Creek Boulevard.
To the north, diamonds and pearls shimmer at the newly expanded Tiffany & Co. inside a Westfield Valley Fair mall that's gone gaga for glitz.
To the south, 10-year-old Santana Row is bursting with new retail, residential and office projects. There's a new lingerie line at the beefed-up H&M opening this week, a hipper-than-thou Italian coffee joint coming soon, and a high-end rental complex called Misora -- which, for those of you not fluent in Japanese, means "beautiful sky."
With the dawning of Valley Fair's and Santana Row's "resort-style" rental apartments packed with status-hungry scenesters, the Stevens Creek corridor near Interstate 880 may well start calling itself the South Bay's Champs-Elysees. And its denizens and visitors are both fueling and feasting upon the region's ever brightening business climate.
"With the Silicon Valley economy coming around, especially in tech, you've now got 20-year-old entrepreneurs in flip-flops buying Cartier watches," said Valley Fair senior general manager Gavin Farnam, standing near the high-end jeweler, just one in a cavalcade of top-drawer stores settling into the mall's luxury lane. "And it's not just luxury items, but everything. We're at our highest sales level now in the history of the mall."
This bifurcated boom could cause whiplash for passing motorists. With dozens of projects under way at both
sites, a tale of two malls is unfolding to the sound of jackhammers and ringing cash registers.
"This retail expansion is another indicator of the jobs and wage growth helping Silicon Valley lead the rest of the nation out of the recession," said Steve Levy with the Center for Continuing Study of the California Economy in Palo Alto. "And for companies like Apple (AAPL) and (GOOG), employees are seeing their stock worth more, too, so it's kind of a perfect storm, at least within the tech world. People in the valley have more to spend, and that's spilling over into retail."
Santana Row seems to be firing on all pistons as it celebrates its 10-year anniversary next month. Despite initial criticism that the upscale retail-residential complex would suck the life out of downtown San Jose, and naysayers who questioned whether the European-style village concept would ever work, the project now claims design awards and traffic numbers that would make
any shopping mall green with envy.
"It took people a while to sort of get this place," said Collette Navarrette, spokeswoman for the mall's publicly traded owner, . "It was a whole new concept when it opened in 2002 with just 35 tenants and no office space. Ten years later, we have 100 merchants, 403 rental homes and 219 condos, as well as 115,000 square feet of office space."
As Santana Row's residential occupancy rates push 100 percent, Silicon Valley's boom is reflected in real time inside the erstwhile Borders on the faux village's faux main street. This week, the popular Swedish clothing retailer H&M formally moves a few hundred feet down the Row into the closed book store, tripling in size to 27,000 square feet and adding new lingerie, maternity and children's sections.
Lifestyle is the Row's middle name. And with a boutique hotel, spas, wine bars and enough luxury retail to satisfy the most discerning shopaholic, its owners are planning yet another phase of the expansion: They're planning to build a 220,000-square-foot office tower, then fill it with employees who can tap into the smorgasbord that surrounds them. Federal Realty's West Coast president, Jeff Berkes, said the tower is part of the economic evolution under way in the region.
"San Francisco and Silicon Valley are leading the United States through its economic recovery," Berkes said. "We started to see that first in 2009 in the performance of the Hotel Valencia and our restaurants, followed by the occupancy levels and rents we've been able to get for our apartments. Then we saw it in retail. And these are all signs of the confidence people have in the local economy."
While it pretties itself up with new paint, a beefed-up valet station, and even plusher seating in its common areas, Valley Fair is welcoming a roster of luxury stores to a mall that has seen double-digit sales growth every month this year. Along with Cartier, a new Burberry, TAG Heuer and Wolford are joining the family.
With business booming on both sides of the boulevard, the two malls say the synergy between them serves both well.
"Anytime you have retail nearby, it's competition," Farnam said. "But when you have that lifestyle component like you've got at Santana Row, with residential and offices, that brings more people to the area and helps all of us."
Contact Patrick May at 408-920-5689. Follow him at Twitter.com/patmaymerc.
A Tale of Two Malls
Westfield Valley Fair