The Runway vs. Real Life

Earlier today I was reviewing some runway shots from the Armani SS13 Privé collection and it struck me that this is the second time I have seen runway models making Giorgio Armani collections look a bit frumpy. Take a look at the faces of the models in the Paris haute couture show earlier this year to see what I mean (thanks to Vogue Italia for the pictures).

Now I freely admit that not all Giorgio Armani clothing looks great – maybe that is unexpected from someone like me, but even I don’t like every single thing I see on the racks or in the collections, especially some of the more patterned and obvious clothing. But some of those Privé dresses are stunning; just block out the faces of the models and see what I mean.

I noticed this also in the January FW 2013/14 Men’s show photos. And in that case it struck me that the models are too young to be wearing those clothes. The black label Giorgio Armani lines are designed for buyers in the 35-55 range, and yet the models all seem to be about 18-25 – callow youths, to borrow a phrase. I would prefer to see some of those looks, like the one below, being worn by a more solid, mid-30’s model – and I own that jacket, by the way, or maybe one very like it.

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Now in that men’s collection Armani went very sporty, with tightly tailored pants and all kinds of interesting fabrics, textures and closures. But does that mean only the younger models can wear those styles? No. I don’t think some of the younger models can wear these clothes and move in a way that makes them come alive. They don’t have the physical and emotional presence to catapault those outfits into the real world. They look good, but not great.

In contrast, I saw some amazing women’s outfits in the February FW 2013/14 Women’s RTW collection, and in the SS13 RTW line , and in both those cases the models and clothes worked – the styling and line of the models blended with the nature and texture of the clothes. Look back at older shots of Armani models from the 1980’s – again they worked brilliantly, stunningly well.

My – perhaps obvious – view is that there needs to be a marriage of the clothes and the selection and styling of models wearing them, to give the garments the chance to glow and sparkle. I can imagine it is not always easy to get all the elements just right, even if you are a highly detail-oriented designer like Giorgio Armani.

But when it is right, and you see how these clothes were meant to work, they just explode off the page, and you want to have them in the real world, where they can, hopefully, work that incredible, subtle magic on your tired, lumpy, old, broken frame…

A mistake and a lesson at Louis Vuitton

A few weeks ago I had a sudden rush of blood to the head and bought what seemed like a very nice jersey from Louis Vuitton, costing about US$930. It had a small LV logo on the neck, but for Vuitton it was quite discreet.

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But on reflection I decided it was a mistake. After returning home I tried it on a couple more times, and realized that as nice as it was, it didn’t fit the style and direction of the wardrobe I am building.

I therefore decided to return the item – and in doing so discovered LV’s returns policy: no refunds.

Credit notes? Yes.

But refunds? No.

And that policy is clearly written both on the receipt and below the cash register, so you have very little wiggle room if all you can say is “I changed my mind” – which is all I personally had to say.

Firstly I find this interesting, as this policy partially explains Vuitton’s continually stellar and growing revenue numbers – they don’t have refunds, so cash in the bank is cash that stays in the bank, and goods go back on the shelf; other stores do return for refund, although they don’t have to do so, at least under EU law.

Secondly it is a tiny bit annoying, mainly because I blindly spent nearly $1000 without thinking about it more carefully and sticking to rules I defined publicly some time ago.

Lessons learned:-

  1. Stick to Giorgio Armani for clothes, and Prada for shoes, just like you said you would.
  2. Don’t buy anything else from Louis Vuitton unless absolutely sure you want it.

I have since used a large chunk of the credit note to buy a nice shawl as a gift for my mother-in-law, who was very happy to have it. I consider that a save.

Stay tuned for lots of new BAM updates

I have a large backlog of stories I’ve been working on recently, and the next couple of weeks will see new entries on a wide range of subjects:

  • Giorgio Armani and the whole gay thing
  • An excellent visit to Giorgio Armani Florence, both alone and with my sister-in-law
  • Reportage from Milan Men’s Fashion Week, including the Giorgio Armani FW2013 show
  • Details on how to maximize your budget by accessing 40%+ discounts at Giorgio Armani
  • Giorgio Armani’s annual sales & marketing cycle
  • Discussion about fashion seasons shifting as markets in Asia and the Southern hemisphere open up
  • A close-up look at some of the major Armani corporate properties in Milan
  • Shots of various pieces in my personal wardrobe, showing how they work together.

Finally this journal will be moving later this week to an all-new, re-designed, hosted platform, with additional features and faster access.

Lots more to come from Armani Man – stay tuned.

Giorgio Armani Limited Edition Jeans

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I am now wearing what must be the absolute last word in designer jeans, which I bought in Giorgio Armani Florence, where this whole project began just over a year ago. According to the label these Giorgio Armani jeans are not only made from special Japanese denim, which is incredibly soft; and not just top-of-the-line GA – also a special Limited Edition; but they also feature gold-plated hardware. Yes, gold-plated, which may partially explain the $1,125 price tag. I’ve wanted, but resisted, buying Giorgio Armani jeans for a while now, as the latest collections featured a huge metal GA logo on the standard items which reminded me of brash Gucci logos, but after being convinced by Stefano at GA Florence to try them on, I had to buy them. This logo is still a bit bright, but the pants looked and felt so good I could not say “no”. To be honest, as nice as they are, I’m still not sure I like the idea of gold-plated jeans…

My First Giorgio Armani Store-in-Store

A recent comment on this blog pointed out that while Mexico City may not have it’s own standalone Giorgio Armani boutique, it does have a store-in-store within Saks Fifth Avenue in Santa Fe.

Tokyo Ginza is also replete with many luxury-branded store-in-stores in the big department shops like Isetan, Mitsukoshi and Takashimaya. Mitsukoshi Ginza, for example, contains a Giorgio Armani mini-store:-

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This boutique was a small but fairly standard representation of the Fall / Winter 2012 collection, and also contained a small rack of about 15 pieces from the new Spring / Summer 2013 collection. I had assumed that they only displayed a few pieces of a new season as they were being released and shipped slowly, but interestingly the assistant said she had almost the entire collection available, with many more new season pieces not on display, and could bring them out if I wished to take a look.

This again makes me think about the clever retailing policies at Armani stores. At the Ginza stores, all the assistants said that sales “maybe” start in January, while they slowly start to release the new collection in a way that will minimize impact on the current season’s sales. Meanwhile in Europe I know that many stores have already started seasonal pre-sales – in fact I have received email promoting them since about 8 December. I will write about the seasonal sale cycle in the next entry, stay tuned.

Store-in-store is OK, as far as it goes, but it seems a bit cramped and can’t quite achieve the same degree of Armaniesque style and range that you see in, for example, the London store. Having seen this concept in the flesh, I am not such a big fan, but given that Armani has these store-in-stores, it makes me wonder again why the major airports are not a target for the Giorgio Armani brand. Emporio is strongly represented, and you can’t turn your head without seeing Armani cosmetics. But the high end boutiques with a similar range to a store-in-store in airports? No.

A little odd. I will have to figure this out.

En Route to Japan Again

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En route to Japan again, this time for a whistle-stop tour of central Tokyo, leaving snowy Munich airport beneath the wing of a Turkish Airlines flight flying via Istanbul. I may get a chance to see the Giorgio Armani stores in Roppongi Hills and Shibuya, but the main target is the Armani multi-brand store visited once before in downtown Ginza; I want to see what Privé is all about and give the store another chance to win me over.

Giorgio Armani’s €202M Sacrifice

I was recently browsing the 2009 annual accounts of Giorgio Armani S.p.A., exercising those dusty MBA skills, when something in the data jumped out at me.

Maybe it is not obvious to the casual observer, but for a business guy like me a couple of numbers leapt off the page and deserved some more analysis – those relating to the cost of making the goods Armani sells, the raw materials and services.

These high level numbers, which seem to equal 56% of revenue, need a little more interpretation, as they include things like advertising, travel and sales commissions, which throw off a direct comparison with other companies:-

When you dig further into the footnotes on COGS to break this down, and do a like-for-like analysis with a similar company, those numbers really are a very high percentage of the cost base of Armani – 42% of revenues in fact, exactly 50% higher than the percentage cost of Prada, for example, whose COGS are 28% of revenues.

What does this mean? Well, because we look at in common size (percentage), terms, it is clear that Giorgio Armani is either overpaying his suppliers, or making clothing with vastly superior raw materials, at least compared to Prada.

The numbers above and the breakdown below (page 114 in the footnotes) show that Giorgio Armani pays about 30% of revenues for just raw materials alone, and then pays another 12% of revenues on outsourced production services and related costs.

That amounts to 42% of revenues on making the goods. In contrast, Prada pays a total 28% of revenues for raw materials and the same categories of production-related services combined.

This implies that Giorgio Armani is making clothing from better – or at least much more expensive – raw materials, and then spending even more money to have them produced. And in absolute terms, with a business that has €1B lower revenues than Prada, Armani still pays 87% of the absolute COGS that Prada does (€638M vs. €728M).

This naturally has impact on the bottom, profit line. Giorgio Armani makes a pre-tax profit that recently has been in the neighbourhood of 9%, compared again to Prada pre-tax figures of 24%, almost three times higher. If things were in proportion, Armani would pay just €436M for COGS, potentially pushing another €202M to the bottom line, and their pre-tax percentage profit would be very similar to Prada.

As an investor this means I would be buying Prada shares. As a potential Giorgio Armani acquirer like Bernard Arnault I would be basing an acquisition price on today’s profit numbers while secretly licking my lips thinking about cost improvement opportunities. I wonder if this is one reason why Giorgio Armani is reticent to sell? Does he fear that the acquirer will seek to cut costs and impact the quality of his products?

As a customer I am quietly very happy that although Giorgio Armani charges me a lot, the money is going into product quality, not his pocket. Whether by design or by chance, Armani sacrifices profit to make better products. And I can literally feel the difference, as a future story about Louis Vuitton will reveal.