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…

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The Next Giorgio Armani?

It’s been an interesting couple of months recently, and my personal journey to style seems to be combining two or three strands of my life.

The things I have learned while writing this blog and delving into the world of style has re-opened some old doors and created some new ones.

Right now I am seriously considering – almost committing – to starting a stylish luxury brand, in a small but serious way.

Last week this process culminated in the hiring of an ex-Dior/Givenchy designer to help illustrate and sketch the new products, and discussion on costs and samples with an Italian textiles factory. The brand concept is in the hands of a UK-based designer. It’s all a little strange and exciting.

Do I have what it takes to do what this man did? I doubt it. But I don’t need to replicate him to be inspired by him.

I’m still not sure this departure will happen, however:-

  • I have the capital
  • I have solid ideas on several aspects of the design and marketing
  • There is a good fit in the family
  • It might just be fun.

The focus would be just one item of accessory clothing initially, but made with the most luxurious materials and careful design elements possible. The timeline is tight – these pieces have to be out for January for the shows and collections. But I think that is doable.

Could I really move from becoming an Armani Man to becoming a Mini Armani?

Your comments welcome.

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.

Details at Giorgio Armani

The Giorgio Armani collar stiffeners shown in this picture came with a shirt I bought a few days ago, and are made of metal, something I have not seen in collars since I bought a uniform from Gieves & Hawkes of No.1 Savile Row in the mid-1980’s. Most people will never even know these are in the collar tips, and yet they carry the branding, stamped into the metal. I like the way that subtle, sometimes hidden details matter at Giorgio Armani; I have spotted several little details in my growing wardrobe that would be under-appreciated if you were not paying close attention.

New Giorgio Armani Fall/Winter Look

Having now purchased several items fom the Fall/Winter 2012 collection, I am starting to see some lines I recognize as purebreed Giorgio Armani. A pair of pants I acquired this week have the classic smooth, flowing fall and soft, gentle sweep of classic Giorgio Armani fabrics and tailoring. This suit from the women’s line displays a wonderfully sleek, organic flow, that makes it look quite reserved, while carefully slicing the air with some sharp little features like the angular quarters, the swooping gorge and the wide button stance. Giorgio Armani clothing looks incredible, and more importantly, it makes people who look like me look incredible.

No Gucci

Gucci, Munich. Gucci is home to some excellent products, but also some hideous monstrosities, many of them in the shoe department. And they are almost all spoiled by the liberal application of quite remarkably ugly logotypes. People who buy Gucci don’t understand style; style isn’t something that needs shouting about, it’s an impression you leave behind. Style doesn’t need a logo to do it’s talking. No Gucci for me, thanks.

Giorgio Armani Details

At the high-end the tailoring of a suit has to be impeccable, flawless. The above detail of a new ready-to-wear Giorgio Armani suit I bought less than a week ago shows the neat, perfect edging of the lining, and the deep lustre of the button chosen, no doubt with great care and thought, to close an out-of-sight internal pocket.