The Intricacies of the Luxury Landscape

Welcome to the 7th edition of Maximalist! Dive into the ultimate guide, filled with insider insights into the world of fashion, art, real estate, travel, jewelry, and horology.

The world of luxury is never boring, and this week is no exception. Let’s dive in!

Markets

Moncler x Adidas Debut New Collection

Adidas Originals continues its foray into the luxury fashion realm, having previously collaborated with brands like Prada and Gucci. The latest addition to this luxury lineup is the debut collection with Moncler, set to release this week. Initially showcased at London Fashion Week in February, the Moncler x Adidas collection marries Moncler's luxury utilitarian designs with Adidas' urban sportswear style.

The collection introduces revamped versions of the iconic Campus and NMD sneakers, now winter-ready with Gore-Tex bubble padding. Beyond footwear, the collection boasts puffer jackets, vests, shorts, and socks. The designs draw color inspiration from traffic lights and feature prints reminiscent of snow-covered slopes. The collection will launch on October 4th through the Adidas Confirmed app and Moncler's website, followed by a broader release on October 5th at select global retailers. Retail prices are yet to be announced. Read more →

Golden Goose Eyes Milan Stock Market Listing in 2024

Italian luxury sneaker brand, Golden Goose, is considering a potential stock market listing in Milan. The company has chosen Lazard as its financial adviser for this endeavor, according to sources familiar with the matter. Golden Goose, which was acquired by the private equity firm Permira in 2020, is targeting a listing in the first half of 2024. This move comes as other footwear brands, like German premium footwear maker Birkenstock, are also seeking public market listings. Birkenstock is aiming for a $10 billion valuation in its upcoming U.S. IPO.

Golden Goose sneakers, recognizable by their five-point star, retail for over 400 euros ($437) a pair. The brand's CEO, Silvio Campara, has previously mentioned plans for expansion beyond their core product range. The company reported a 21% increase in net revenues in the first half of the year, reaching 276 million euros ($289 million), driven by direct-to-consumer sales expansion and broader regional coverage. The firm's core profit constituted 34.6% of these revenues in the same period. Read more →

Prada Partners with Axiom Space for NASA's Artemis III Spacesuits

Italian luxury fashion brand, Prada is elevating its designs to space. In a recent announcement, Prada revealed its collaboration with Texas-based commercial space company, Axiom Space, to design lunar spacesuits for NASA's 2025 Artemis III mission. This mission marks the first crewed flight to the moon since Apollo 17 in 1972. Prada's engineers will collaborate with the Axiom Space systems team to develop materials and design features that shield astronauts from space and lunar challenges.

Axiom Space CEO, Michael Suffredini, emphasized Prada's technical expertise in raw materials and innovative design, which will ensure astronaut comfort and address human factors often overlooked in traditional spacesuits. Lorenzo Bertelli, Prada Group’s marketing director, celebrated the partnership as a testament to human creativity and innovation.

The AxEMU spacesuit aims to offer enhanced flexibility, protection, and specialized tools for lunar exploration. Artemis III will send the first woman and person of color to the lunar south pole, aiming to deepen our understanding of the moon and our solar system. Read more →

Chemena Kamali Appointed as Chloé's New Creative Director

Following Gabriela Hearst's recent departure, Chloé has announced Chemena Kamali as its new creative director. Riccardo Bellini, the brand's President and CEO, expressed his enthusiasm for Kamali's appointment, highlighting her deep connection with Chloé's legacy and values.

Kamali, a 41-year-old designer from Düsseldorf, has had two previous tenures at Chloé. She began her fashion journey under Phoebe Philo at Chloé, pursued her Masters at Central Saint Martins, and later worked at Alberta Ferretti and Strenesse in Milan. Kamali returned to Chloé under Clare Waight Keller as design director from 2013 to 2016. Subsequently, she joined Saint Laurent, collaborating closely with Anthony Vaccarello.

Kamali's deep-rooted affection for Chloé is evident, stating that her return feels "natural and very personal." Her appointment follows recent industry discussions about the predominance of male creative directors in luxury fashion. Historically, Chloé has been led by several female creative directors, including Stella McCartney, Phoebe Philo, and Natacha Ramsay-Levi. Kamali's inaugural collection for Chloé, set for pre-fall 2024, will be unveiled in Paris this coming January. Read more →

The Intricacies of the Luxury Landscape: Deciphering Market Movements and Price Adjustments

The luxury market, a realm of opulence and discernment, has always been a beacon of aspiration and desire. It's a world where heritage meets innovation, where time-honored traditions intertwine with contemporary desires. Every nuance, from the meticulous craftsmanship of a product to the strategic decisions behind its pricing, paints a vivid picture of the brand's journey and its navigation through the currents of consumer demand and global economics. Recently, two luminaries of this illustrious world, Rolex and Chanel, made significant price adjustments. These independent decisions, while rooted in their unique brand narratives, provide a broader perspective on the challenges, strategies, and nuances of operating in the luxury sector in today's unpredictable market. Adding to this complexity is the broader sentiment in Europe's luxury stocks, which have shown signs of vulnerability amid global economic shifts.

Rolex's Market Realignment

Rolex has recently experienced intriguing price shifts on the secondary market. The secondary market, often seen as a barometer for brand desirability and product value retention, reported a decline of 2.2% for Rolex timepieces in September. This downturn is particularly noteworthy when juxtaposed against the brand's meteoric rise during the pandemic, where prices for Rolex, along with other premium watch brands, soared to unprecedented heights. Factors such as higher interest rates and the cryptocurrency boom played pivotal roles in driving this surge, creating a unique luxury consumption pattern.

However, the recent decline is not merely a market correction or a transient phase. It hints at a broader trend in the luxury watch segment, where entry-level watches and other esteemed brands like Cartier and Omega are demonstrating resilience, if not outperforming their more illustrious counterparts. This shift suggests a nuanced change in consumer sentiment: while the allure of top-tier brands like Rolex remains undiminished, there's an emerging appreciation for value, craftsmanship, and the narrative behind each timepiece.

The global economic landscape has made luxury buyers more discerning. The post-pandemic world, with its economic challenges, has also led to a reevaluation of luxury, with consumers seeking a balance between brand prestige, product quality, and value for money.

Rolex's market realignment also underscores the brand's inherent strength. Despite the price fluctuations, Rolex watches continue to be highly sought-after, often fetching prices on the secondary market above their listed retail price. This enduring demand is a testament to Rolex's legacy, its commitment to excellence, and its ability to resonate with generations of watch enthusiasts.

Chanel's Price Increases… Again

Chanel recently made headlines with its announcement of a strategic price increase for its high-end products in several countries. This decision, while on the surface it may seem like a routine adjustment, is deeply rooted in the brand's understanding of global market dynamics and its commitment to maintaining its esteemed position in the luxury sector.

The price hikes, which ranged from 6–8%, were implemented in countries including China, Taiwan, Thailand, Malaysia, Australia, and Japan. Chanel attributes these changes to fluctuations in exchange rates, a factor that plays a significant role in the pricing strategies of global luxury brands. By adjusting prices in line with currency shifts, Chanel ensures that its products maintain a consistent value proposition across different markets, reinforcing the brand's image of exclusivity and desirability.

However, the backdrop to this decision is the broader global economic landscape. The luxury market, after experiencing a post-pandemic boom, is now facing a slowdown. Economic challenges, especially in pivotal markets like China, have cast a shadow of uncertainty over luxury spending. The youth job market's slump and a general economic slowdown have impacted consumer confidence, leading to more cautious spending behaviors.

Chanel's decision to increase prices, in this context, underscores its confidence in its brand equity. The brand believes in its enduring appeal and the loyalty of its clientele. Chanel's biannual practice of reviewing handbag prices, coupled with adjustments in line with input-cost inflation, is a testament to its proactive approach to market dynamics. That being said, Chanel’s standards of quality have seen a significant drop since the early 2000s, leaving consumers more reserved when it comes to spending over $10,000 on a bag.

There's an emerging narrative in the luxury market. Aspirational customers, those who are on the entry-level spectrum of luxury, are showing signs of tightening their purse strings. This potential shift in consumer behavior underscores the importance of brands like Chanel maintaining a delicate balance: offering products that resonate with their core customer base while also appealing to newer, more price-conscious consumers.

Europe's Luxury Stocks

Europe's luxury sector has recently exhibited signs of vulnerability that have caught the attention of investors and industry insiders alike. This shift, while rooted in a myriad of global economic factors, provides a compelling narrative on the challenges faced by luxury brands in the current financial landscape and their resilience in navigating these turbulent waters.

The STOXX Europe Luxury 10 index has posted its most significant quarterly slide since 2020. A staggering $175 billion has been wiped off the value of those ten stocks since the end of March. Such a decline, especially for an industry known for its resilience and consistent growth, is both surprising and indicative of broader market sentiments.

China's rocky economic recovery plays a significant role in this downturn. As a pivotal market for European luxury brands, any fluctuation in China's consumer confidence or purchasing power has ripple effects across the industry. The slowing growth, coupled with high inflation rates and rising interest rates, particularly in the U.S., further compounds the challenges, impacting global consumer spending and investor confidence.

Moreover, the luxury sector's recent de-rating is a culmination of various elements: the anticipation of earnings cuts, investor positioning, and the looming shadow of rising interest rates. While the luxury "Big 10" index has seen commendable 20% year-on-year growth, its third quarter had the worst quarterly performance relative to the STOXX 600. This decline is not just a reflection of the sector's performance but also raises questions about the European economy's health and the uneven growth outlook for the Chinese market.

Luxury watch brands, despite the current challenges, continue to hold a unique allure. Many specific models from luxury giants like Patek, AP, and Rolex still fetch prices on the secondary market above their retail. This enduring demand underscores the sector's inherent strength and the timeless appeal of luxury.

The Luxury Brand Challenge in Today's Market

Both Chanel and Rolex, with their respective price adjustments, highlight the challenges luxury brands face in the current market. The definition of luxury is evolving. While exclusivity, heritage, and craftsmanship remain core tenets, there's an undeniable emphasis on value, adaptability, and relevance.

Brands are navigating a landscape where consumers are more informed, discerning, and value-conscious. The post-pandemic world has accelerated this shift, with economic uncertainties making consumers more cautious about their luxury expenditures.

Europe's luxury stocks' current trajectory further underscores this sentiment, highlighting the complex interplay of global economic dynamics and brand resilience. While the market presents challenges, the luxury sector's adaptability and timeless appeal suggest a capacity to navigate these uncertainties with grace and strategy.

As the luxury market continues to evolve, brands will need to strike a balance between their storied heritage and the changing demands of a new generation of consumers. The challenge and opportunity lie in redefining luxury in a world that values both exclusivity and accessibility, ensuring they remain at the forefront of luxury and elegance in the eyes of consumers worldwide.

Thank you again for supporting the world of luxury.