JD Sports Fashion Plc said sluggish innovation at Nike Inc. contributed to a slump in sales at the UK retail chain as consumers look to refresh their wardrobes.

“Nike has been so successful but they just stopped a little bit bringing in new stuff,” said Régis Schultz, JD Sports’ chief executive officer, in a call with reporters Thursday. “At the same time Adidas is doing very well, New Balance is doing very well.”

Shoppers “get bored very quickly,” he said. “If you don’t bring in new stuff, new product, new innovation, new colour, I think the demand is suffering.”

The British retailer is banking on a summer of sports to revive its fortunes, after like-for-like sales in the UK fell 3.1 percent in the final quarter of 2023, according to a statement the same day. Pretax profit for the full year was in line with guidance of between £915 million ($1.16 billion) and £935 million, following a profit warning in January. Shares rose 6 percent.

Weak sales led Nike to announce cost-reduction plans last year, including cutting jobs and simplifying its product lines.

The US sportswear company, which manufactures the popular Air Jordan line of shoes, makes up an estimated half of JD Sports’ sales worldwide, according to a note by Guy Lawson-Johns, equity analyst at Hargreaves Lansdown.

“The future fortunes of JD remain inexplicably linked to Nike’s success,” Lawson-Johns said. “The closeness of its relationship provides the exclusive products and competitive pricing that lures in punters to part with their cash, but it also creates a dependency.”

By Jennifer Creery

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Valentino has named former Gucci designer Alessandro Michele its creative director, the Roman couture house said Thursday.

The designer’s first show for the brand will take place during Paris Fashion Week in September.

The announcement answers one of the biggest questions on the lips of fashion insiders for more than a year: where would Michele, one of the industry’s biggest names, end up after leaving his post at Gucci?

In the end, Michele won’t be headed to fashion’s biggest group LVMH, as many had speculated, but rather to Mayhoola for Investments, the fashion group backed by the Qatari royal family that also owns Balmain and Pal Zileri.

Last week, designer Pierpaolo Piccioli exited Valentino after 25 years at the house, including 8 years its as sole creative director. The brand will not show menswear or haute couture in June.

Stay tuned to BoF for updates on this developing story.

A report by Bloomberg this month is casting fresh doubts on generative artificial intelligence’s ability to improve the recruitment outcomes for human resource departments.

In addition to generating job postings and scanning resumés, the most popular AI technologies used in HR are systematically putting racial minorities at a disadvantage in the job application process, the report found.

In an experiment, Bloomberg assigned fictitious but “demographically-distinct” names to equally-qualified resumés and asked OpenAI’s ChatGPT 3.5 to rank those resumés against a job opening for a financial analyst at a real Fortune 500 company. Names distinct to Black Americans were the least likely to be ranked as the top candidate for a financial analyst role, while names associated with Asian women and white men typically fared better.

This is the sort of bias that human recruiters have long struggled with. Now, companies that adopted the technology to streamline recruitment are grappling with how to avoid making the same mistakes, only at a faster speed.

With tight HR budgets, persistent labour shortage and a broader talent pool to choose from (thanks to remote work), fashion companies are increasingly turning to ChatGPT-like tech to scan thousands of resumés in seconds and perform other tasks. A January study by the Society of Human Resources Professionals found that nearly one in four organisations already use AI to support their HR activities and nearly half of HR professionals have made AI implementation a bigger priority in the past year alone.

As more evidence emerges demonstrating the extent to which these technologies amplify the very biases they’re meant to overcome, companies must be prepared to answer serious questions about how they will mitigate these concerns, said Aniela Unguresan, an AI expert and founder of Edge Certified Foundation, a Switzerland-based organisation that offers Diversity, Equity and Inclusion certifications.

“AI is biassed because our minds are biassed,” she said.

Overcoming AI Bias

Many companies are incorporating human oversight as a safeguard against biassed outcomes from AI. They’re also screening the inputs given to AI to try to stop the problem before it starts. That erases some of the advantage the technology offers in the first place: if the goal is to streamline tasks, having human minders examine every outcome, at least partially, defeats the purpose.

How AI is used in an organisation is almost always an extension of the company’s broader philosophy, Unguresan said.

In other words, if a company is deeply invested in issues of diversity, equity and inclusion, sustainability and labour rights, they are more likely to take the steps to de-bias their AI tools. This will include feeding the machines broad sets of data and inputting examples of non conventional candidates in certain roles (for example, a Black woman as a chief executive or a white man as a retail associate). If fashion firms can train their AI in this way, it can have significant benefits for helping the industry get past decades-long inequities in its hierarchy, Unguresan said.

But it’s not foolproof. Google’s Gemini stands as a recent cautionary tale of AI’s potential to over-correct biases or misinterpret prompts aimed at reducing biases. Google suspended the AI image generator in February after it produced unexpected results, including Black Vikings and Asian Nazis, despite requests for historically accurate images.

Unguresan is among the AI experts who advise companies to adopt a more modern “skills-based recruitment” approach, where tools scan resumés for a wide range of attributes, placing less emphasis on where or how skills were acquired. Traditional methods have often excluded candidates who lack specific experiences (such as a college education or past positions at a certain type of retailer), perpetuating cycles of exclusion.

Other options include removing names and addresses from resumés to ward-off preconceived notions humans and the machines they employ bring to the process, noted Damian Chiam, partner at fashion-focused talent agency, Burō Talent.

Most experts (in HR and AI) seem to agree that AI is rarely a suitable one to one replacement for human talent — but knowing where and how to employ human intervention can be challenging.

Dweet, a London-based fashion jobs marketplace, s employs artificial intelligence to craft postings for its clients like Skims, Puig, and Valentino, and to generate applicant shortlists from its pool of over 55,000 candidate profiles. However, the platform also maintains a team of human “talent managers” who oversee and guide feedback from both AI and Dweet’s human clients (brands and candidates) to address any limitations of the technology, Eli Duane, Dweet’s co-founder, said. Although Dweet’s AI doesn’t omit candidates’ names or education levels, its algorithms are trained on matching talent with jobs based solely on work experience, availability, location, and interests, he said.

Missing the Human Touch - or Not

Biasses aside, Burō's clients, including several European luxury brands, haven’t expressed much interest in using AI to automate recruitment, said Janou Pakter, partner at Burō Talent.

“The issue is this is a creative thing,” Pakter said. “AI cannot capture, understand or document anything that’s special or magical – like the brilliance, intelligence and curiosity in a candidate’s portfolio or resumé.”

AI also can’t address the biases that can emerge long after it’s filtered down the resumé stack. The final decision ultimately rests with a human hiring manager – who may or may not share AI’s enthusiasm for equity.

“It reminds me of the times a client would ask us for a diverse slate of candidates and we would go through the process of curating that, only to have the person in the decision-making role not be willing to embrace that diversity,” Chiam said. “Human managers and the AI need to be aligned for the technology to yield the best results.”

Walmart wants to lure the luxury beauty shopper.

High-end brands such as the skincare line Skinceuticals and hair care line Color Wow, and added services like virtual try-on might feel unexpected for the mass retailer best known for low prices in its enormous hypermarkets it calls “Supercenters,” but Creighton Kiper, merchandising vice president of beauty, says they’re proving popular: “Luxury beauty as a whole will continue to be a focus at Walmart,” said Kiper, adding that it has seen “tremendous success” both in-store and online. Walmart operates over 4,600 stores in the US.

An added luxury push is right in line with Walmart’s evolving customer base, which has steadily begun to encompass more high-income households. In its fourth-quarter fiscal 2024 results announced in February, the company noted that gains with “high income households” in the grocery category (in which it includes beauty products) contributed to its 4 percent net sales growth to $118 billion. Overall sales for the fiscal year reached $449 billion, up 5.6 percent.

Walmart’s premiumisation push comes against a disjointed economic climate. Inflationary pressures have caused some higher-income customers to start to hunt for bargains, which has seen them increasingly turning to low-cost stores like Walmart they may have previously skipped for essentials. But they’ll likely still splurge on beauty while they’re there: even as they shop for cheaper alternatives to everyday items, consumers tend not to trade down on beauty products, seeing them as inalienable, must-have treats. Walmart could use that stickiness; Morgan Stanley estimates that by 2025, Amazon will supersede it as the US’s biggest beauty retailer. And Target, which has carried been first to carry masstige brands like Naturium, Odele and Versed through its own merchandising as well prestige labels Anastasia Beverly Hills and Benefit Cosmetics through its partnership with Ulta Beauty, has taken a different approach, launching a newer private label brand with some cosmetic products priced at less than a dollar.

Hit The Accelerator

Thanks to the success of lines like skincare label Bubble, Walmart has further experimented with indie brands by launching its own brand accelerator, called Walmart Start, in 2023. The first cohort included hair brand Pardon My Fro and perfume line Dossier; the second cohort, announced today comprises skincare label Current State, hair brands Latinus and Kazmaleje and body care line Sundae Beauty.

Accelerators have become a popular way for established big-box retailers to network and build relationships with indie brands without needing to take the gamble of signing them outright. There’s Ulta Beauty’s Muse Accelerator, Sephora Accelerate and Target Takeoff, all designed to identify early-stage brands with potential and get them into the retailer’s owned environment.

“The easy part [about selecting brands] is we’ve got so much data that tells us what customers are looking for…what solutions they’re looking for,” said Kiper. “There’s just so many trends out there…we’re able to kind of marry customer data and industry data trends and then see what type of brands and suppliers are out there that fit that need,” he said, adding that they expect high growth potential from all brands carried.

In addition to the potential of being stocked at Walmart, brands in the accelerator programme also receive education on how to prepare for a successful launch in the retailer’s doors, mentorship and networking opportunities. Kiper said that while cult appeal is important, brands need to have the muscle to be able to succeed at a larger scale: “When we say scale, we’re talking about 500 to 1,000 stores.”

Little Luxuries

Walmart began to experiment with luxury beauty via a partnership with the British premium pure player Space NK in 2022. Dedicated “BeautySpaceNK” gondolas with curated products rolled out into almost 250 stores, while 15 brands including Mario Badescu and Slip were also shoppable online. The partnership has grown; Kiper says it now boasts 275 stores.

It’s also expanding its beauty virtual try-on services, which it developed in partnership with AR firm Perfect Corp. Originally launched with cosmetics in October 2023, it now includes hair colour products that can be “tried on” via Walmart’s Apple iOS app. Over 2,200 products can now be virtually sampled.

Category-wise, Kiper said that hair care and cosmetics still dominate, but that skincare is its fastest-growing segment. He still sees more growth potential in hair care, calling it an “entry point” to beauty: “There’s a lot of room: more problems to solve, more solutions needed, whether it’s washing, care or styling.”

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Online resale may not be the most profitable sector, but it is attracting shoppers.

Last year, the total value of merchandise sold on resale platforms in the US reached $20 billion, up 11 percent on 2022, according to a report published by resale platform ThredUp and analytics firm Global Data on Wednesday. Gross merchandise value is expected to more than double to $44 billion by 2028, outpacing the wider apparel sector.

Over the last few years, companies from Balenciaga to Shein have dipped their toes in the market, with the number of businesses offering branded resale rising from just nine in 2020 to 163 by the end of last year, the report found. Though these efforts are currently largely small-scale, two thirds of brands that already offer resale expect it to make up 10 percent or more of their revenue within the next five years, according to the report.

If this actually happens, it would represent a seismic shift in the market. At present, the platforms leading the resale revolution are under pressure to deliver on profitability ambitions and most brands are still in the early stages of their engagement with secondary sales.

ThredUp’s US business broke even on an adjusted EBITDA basis for the first time in the third quarter and its revenue rose to a record $322 million last year. But the company still recorded a net loss of $71 million. The RealReal reached EBITDA profitability in the fourth quarter for the first time since going public in 2019, reflecting a push to prioritise profitability over growth. Sales in the period were down 10 percent and its net loss amounted to $22 million. Both companies have lost some 90 percent of their value since going public.

Meanwhile, few brands break out details of how resale is contributing to their overall financial performance. One of the few that does is H&M Group, which owns a majority stake in Sellpy, one of Europe’s largest resale platforms. The company contributed less than half a percent to the Swedish fast fashion giant’s net sales last year and has yet to break even.

Nonetheless, resellers are inching towards their profitability goals and a combination of consumer appetite for value products, sustainability concerns and opportunities for brands to reach and retain customers is expected to continue to drive momentum in the market. “Brands are still pretty early in figuring this out,” said ThredUp CEO James Reinhart. “The number of people engaging in resale is growing.”

Regulation is expected to help too, with policymakers in Europe and the US considering legislation that would support the sector’s growth. “It’s going to be critical,” said Reinhart. “There’s a role for governments to create positive incentives for consumers to think secondhand and hold producers accountable for some of the stuff they’re creating.”

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