Prada SpA is renting a 8,000-square-foot store in K11 Musea, a harbourfront luxury shopping mall by New World Development Co., people familiar with the matter said.

Construction work for the two-floor store will begin soon and it’s expected to open early next year, said the people, who asked not to be identified discussing private matters. Rent is likely to be partly based on store sales, some of the people said.

This will be Prada’s first major new store in Hong Kong in years. The group shut its flagship in Causeway Bay in 2020, ending one of the city’s most expensive retail leases with a monthly rent of HK$9 million ($1.2 million). The brand, which at its peak had nine outlets in the city, now operates six, according to its website.

Prada’s communications team in Italy didn’t respond to emailed requests for comment outside of regular business hours. New World, controlled by the family of billionaire Henry Cheng, declined to comment.

Global luxury brands are increasingly returning to Hong Kong’s core business districts, attracted by property prices that are much lower than pre-pandemic levels. In Tsim Sha Tsui, where Musea is located, average rent for stores at major shopping streets is still 45 percent below the 2019 level, according to studies by Cushman & Wakefield Plc.

The city’s high-end shopping malls have accelerated a luxury push to add appeal to the moneyed classes, whose spending remains strong despite years of social unrest and a slowing economy. New World, led by Chief Executive Officer Adrian Cheng, teamed up with Louis Vuitton to host the brand’s first ever fashion show in Hong Kong last year, with the event staged just outside Musea.

Hong Kong’s wealthy residents have provided some stability for global brands against a sales slump in their key market of mainland China. The shopping hub also remains one of the most popular destinations for mainland tourists.

Hongkong Land Holdings Ltd. and tenants including Hermes International SCA  and Louis Vuitton will invest $1 billion to upgrade the developer’s flagship retail space Landmark in Central. Hysan Development Co. is also revamping its Lee Gardens, a group of luxury malls in Causeway Bay, with tenants including Hermes and Chanel expanding their stores.

By Shawna Kwan and Shirley Zhao.

Learn more:

Hong Kong Loses Top Ranking for Luxury Shopping to New York

Covid curbs and restrictions took a heavy toll on the city’s high-end retail sector.

Fashion’s first big Olympics moment came days before Friday’s opening ceremonies, when athletes from around the world took to TikTok to show off the impressive hauls they’d been gifted by Nike, Ralph Lauren, Skims and others. Those early viral videos boded well for brands that are banking on grabbing the spotlight for a moment – or a few moments – over the next two weeks.

Friday’s opening ceremony featured literal boatloads of athletes decked out in uniforms often designed by brands and designers hoping to boost their global profile by outfitting their home team. While the rain sometimes made it hard to see the work of Ralph Lauren, Armani and others, postings by athletes and designers on social media helped fill the gap. At the opening ceremony, Christian Dior haute couture costumed all five featured performers, including Celine Dion in her long-awaited return to the stage.

Now that the suitcases full of branded gear are unpacked, and the medal events themselves have kicked off, brands are more at the mercy of the skill and luck of the athletes they sponsored. This week might belong to Athleta, the “dry land” apparel partner of Katie Ledecky, who will swim in five events, as well as gymnastics superstar Simone Biles, who is favoured to take home gold in the woman’s all-around final on Thursday. The Gap Inc.-owned activewear brand, which reported a 5 percent year-on-year increase in comparable sales in the first quarter after a period of decline, recently launched its first television ad campaign to hype its high-profile partnerships.

Back-to-School Blues

Is your brand getting ready to ramp up marketing for back-to-school season? Too bad, you missed it.

According to Deloitte, parents planned to spend 66 percent of their back-to-school budget by the end of July, up from 48 percent in the same survey five years ago. Amazon is driving the shift, as its Prime Day sale on July 16 and 17 drew bargain-hunting parents. This year, the savings event came a bit later in the month, likely magnifying its impact on school shopping (Deloitte found 48 percent planned to purchase school supplies on Prime Day, up from 39 percent in 2023, when the sale fell on July 11 and 12).

Expectations are low for the category this year, with Deloitte predicting US back-to-school sales will hold steady at about $31 billion. Sluggish spending on supplies and kids’ clothes this summer will add to mounting evidence that consumers, after spending their way through two years of high inflation, are looking for ways to cut back. Surveys by Deloitte and UBS both found parents planned to spend slightly less on their childrens’ school supplies this year, with apparel sales projected to be flat. Higher prices were the most frequently cited reason for pulling back.

Retailers are responding with deeper discounts. Amazon lowered apparel prices by an average 20 percent over Prime Day, compared to 12 percent last year. That is likely to set the tone for the rest of the back-to-school shopping season, with parents holding out for similar deals as the start of the academic year approaches.

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.

PARIS — After years of preparations including the rollout of an unprecedented security perimeter that deadlocked Paris’ city centre, hearts sank across the city Friday morning: It was raining. With so many things that could go wrong at the Paris 2024 Games’ ambitious opening ceremony on the Seine River, rain had not been top of mind.

But the history-making show went on despite intermittent downpours — setting a new high water mark for Olympics openers with an immersive celebration of Paris landmarks and star-studded performances. The spectacle directed by Thomas Jolly romped through French history and culture with a delicate mix of sincere hommage and cheeky deconstruction.

Amid the awe-inspiring scale of the event — which was streamed live on television by 22 million people in France alone — “Who is she wearing?” may not have been top of mind as Lady Gaga, Aya Nakamura, Juliette Armanet, Celine Dion and opera singer Axelle Saint-Cirel each sang at a roster of Paris landmarks.

The answer, however, was Christian Dior haute couture, who provided the costumes for the five of the night’s main performances as part of a major sponsorship deal between owner LVMH and the Paris Olympics.

Dior Costumier

Designer Maria Grazia Chiuri and her teams created a spectacular feather show-girl gown with removable skirt for Gaga’s joyous rendition of a French cabaret classic, “Mon Truc en Plumes” by Zizi Jeanmaire.

Nakamura sang a medley of her own hits and Charles Aznavour’s “For Me Formidable” in a body-sculpting, one-shouldered Dior mini-dress made of gold feathers, while mezzo-soprano Saint-Cirel was dressed up as the French flag in a campy twist on Marianne: she wore a white and red gown, while brandishing a gigantic blue flag.

Armanet sang on a whirling boat, backdropped by a flaming piano, in a look Dior collaborated on with the artist Clara Daguin, whose light-up embroideries flashed to the beat of the song.

The emotional peak of the night came when Céline Dion — who hadn’t performed for four years while battling a neurological condition — returned to the stage singing Edith Piaf’s “Hymne à L’Amour” in a glimmering Dior gown embroidered with thousands of pearls and over 500 metres of fringe.

Dior said the looks would be displayed at its Avenue Montaigne Museum from next week.

Louis Vuitton

Dior wasn’t the only LVMH brand to seize the Olympics spotlight Friday.

Louis Vuitton, the world’s biggest luxury brand, more or less got its own number early in the show, as dancers whirled around on the Pont Neuf and banks of the Seine pushing its signature monogrammed steamer trunks on trolleys. The number culminated in a poetic dance by Guillaume Diop, Paris Opera Ballet’s first-ever black danseur étoile, who wore Louis Vuitton by Pharell Williams.

In a pre-recorded segment, a masked torch bearer parkoured over the Paris roofs and into the brand’s headquarters, where its signature trunks — which are being used to house medals and the Olympic torch — were being confected.

National Teams

The walk-out of each national team in their Opening Ceremony ensemble is usually the fashion highlight of the night. This year, that wasn’t always the case as the delegations’ arrival by boat on the Seine was at times blurred by rain, or hard to focus on amid the landmark-studded backdrop and simultaneous performances.

Luckily for brands, social media has created opportunities to extend the impact of Olympics partnerships, as athletes and designers post about the process for design, fittings and more. Team France’s partnership with Berluti (once again, LVMH) went viral earlier this week as the brand shared a video of smouldering male hurdler Sasha Zhoya at his fitting opting to wear a skirt for the ceremony. Team Mongolia’s badass embroidered deels were another viral success. Team USA looked preppy and gorgeous as ever in Ralph Lauren blazers, while the Italians found themselves looking weather-appropriate (if not very telegenic) in neoprene hoodies from Emporio Armani.

Young Creators On The ‘Catwalk’

Several young Paris labels contributed designs for the spectacle, whose costumes were coordinated by Daphné Bürki. In one number, dancers hoisted up on poles wore costumes by Charles de Vilmorin.

Toward’s the end of the ceremony, a Joan of Arc-like rider cantered down the Seine on a robotic horse to the Eiffel Tower, delivering the Olympic flag while wearing a suit of leathery metallic armour created by emerging Paris designer Jeanne Friot.

The biggest tribute to French fashion at the opening ceremony came in a boisterous number staged on the Passerelle Debilly bridge, where a mock runway show blended ür-serious catwalk strutting with passages celebrating various styles of dance: krumping, vogueing, waacking, ballet. Drag queens and dancers stormed the runway in looks from young Paris labels — Ouest Paris, Weinsanto, Maitrepierre and Germanier.

Paris Opera Ballet’s Germain Louvet pirouetted and leaped down the runway through puddles, flanked by figures from Paris’ queer culture including Drag Race host Nicky Doll and the DJ and activist Barbara Butch.

The sequence was masterful, inclusive, funny and fresh: modern Paris at its best.

Bernard Arnault confirmed he bought a small stake in Cartier owner Richemont, as the chief executive officer of rival luxury conglomerate LVMH seeks to cool speculation about his intentions.

“I know well the owner, Mr Johann Rupert, of Richemont,” Arnault said in an interview on CNBC broadcast Friday. “And we have a good relationship and I told him that I will never do anything against him. That’s clear.”

It’s “a very minor stake,” Arnault said, confirming a report last month by Bloomberg Businessweek that he had invested as part of a broader family-owned portfolio of investments in publicly-listed companies.

News of the shareholding triggered questions around his intentions for the investment. Richemont has a strong defense against unwanted suitors because Rupert, its chairman, controls 51 percent of the voting rights despite owning only 10.2 percent of the capital. Over the past few years, 74-year-old Rupert has emphasised his desire to keep the group independent.

“He’s done something fantastic with Richemont, with Cartier, with Van Cleef and I think he’s independent, he wants to stay independent and I agree completely on that,” Arnault said.

LVMH owns jewellery brands including Tiffany & Co. as well as Bulgari, meaning a takeover of Richemont would likely attract antitrust scrutiny. LVMH’s fashion brands Louis Vuitton and Christian Dior Couture have jewellery lines, too.

Earlier this week, LVMH Moët Hennessy Louis Vuitton SE posted second-quarter results that missed estimates amid a demand slowdown for high-end goods, particularly in the key Chinese market. Arnault is the world’s third wealthiest individual, with a fortune estimated at around $185 billion, according to the Bloomberg Billionaires Index.

By Angelina Rascouet

Learn more:

Op-Ed | Could LVMH Buy Richemont?

Acquiring Richemont would catapult LVMH into a completely different stratosphere to the rest of the luxury industry, writes Andrea Felsted.

Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholders’ documentation guaranteeing BoF’s complete editorial independence.

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Subscribe to the BoF Podcast here.

Background

Sport and fashion have always been a part of Stéphane Ashpool’s life: He was raised watching his artistic parents socialise with designers like Claude Montana in Paris, while simultaneously falling in love with basketball watching the LA Lakers on TV. He followed both of these passions into adulthood, eventually launching streetwear brand Pigalle in 2008 and going on to collaborate with brands like Nike.

“I have as much curiosity for couture as I have for sport kit,” said Ashpool. “I knew I wanted to kind of blend those things spontaneously. I had no clue what it was going to bring me but that’s why I started to put things together.”

This week on The BoF Podcast, Ashpool joins BoF founder and editor-in-chief Imran Amed to share his journey with clothing brand Pigalle and how his unconventional path into fashion led him to designing the French national team’s Olympic uniforms.

Key Insights

• Raised in the Parisian suburbs with his dancer mother and artist father, Ashpool was deeply rooted in the worlds of sport and fashion from a young age. “I had this charming home, and when I went in the streets, I had this more masculine type of vibe. And that was related to the sport I love the most, which is basketball,” he says. “My mother and her friends were dancers, so I’ve been surrounded by a lot of the gay community, people coming from all over the globe, eccentricity, people that really embrace style.”
• Established in 2008, Ashpool’s brand Pigalle was named for the Parisian neighbourhood he grew up in and born with the district’s multi-dimensional spirit in mind. “I didn’t exactly know what I was doing, but what I did know was the best of both worlds. I like to blend, so I have as much curiosity for couture as I have for sports kits,” he shares. “[At the start] we didn’t know how to handle things, to organise ourselves, but the fire was burning. It was really exciting to enter a lane that no one really did before.”
• When Ashpool was approached by Le Coq Sportif to design the uniforms for the French Olympic team, it came with new challenges and constraints, but Ashpool relished this learning experience. “I really embraced it because even though they put you in a frame, if you managed to break the frame even a little bit, you always got more than what they gave you. I made sure I was pushing the boundaries.”
• For young creatives, Ashpool’s advice is simple. “Dream big, but manage your expectations. Create your own lanes, be inspired, but don’t let yourself be someone else. If you start something, you need to finish it. Don’t teach yourself to not finish something. Otherwise, it’s going to enter your DNA,” he warns. “Be nice to people. It works. Be yourself. It works. Be patient. It works.”

Additional resources

This week, luxury fashion’s biggest players reported falling revenues for a second consecutive quarter, underscoring just how far demand for luxury mega-brands has fallen from post-pandemic highs.

Sales at sector leader LVMH were down 1 percent, while Gucci owner Kering’s revenues dropped 11 percent. Last week, Richemont reported sales down 1 percent. Burberry plunged 22 percent.

There were a few bright spots: Brunello Cucinelli, Hermès and Moncler reported double-digit growth in the last quarter. And it’s clear that Gucci and Burberry, struggling to relaunch under new leadership and aesthetic directions, are saddled with specific challenges. But there is little doubt the industry is feeling the heat.

Macroeconomic gloom is part of the problem.

Around the world, sluggish economies have curbed new wealth creation. In Asia excluding Japan, where LVMH sales dropped 14 percent in the last quarter, economic malaise including collapsing property values and youth unemployment has weighed heavily on consumer confidence in the key China market.

Meanwhile, in the US, aspirational consumers have pulled back on luxury shopping amid slower economic growth. According to data released Thursday, gross domestic product grew 2.8 percent in the second quarter, up on the previous quarter, but down from the unexpectedly strong momentum seen at the end of last year. Economists say the US economy remains resilient but lingering inflation and fears of political instability are putting pressure on the consumer “feel good” factor that’s vital to luxury sales.

Shifting consumer preferences, away from physical goods to experiences like travel, are also part of the equation.

But the slowdown in demand for luxury fashion may be self-inflicted, too.

Big luxury brands trade on a carefully constructed marketing image that is powered by a heady collision of heritage — soaked in old European social hierarchies — and modern celebrity culture. Key to the storytelling are artfully made claims to craftsmanship, creativity and exclusivity. But this image is fraying.

In recent years, brands have hiked prices far faster than inflation as they target wealthy clients to protect profit margins. This has not only alienated Gen-Z and middle-class customers, who are key to growth, but put pressure on luxury’s core value proposition as shoppers wonder if luxury brands are really worth it.

The sector’s price hikes haven’t come with corresponding product innovation. On the contrary, the luxury sector is currently suffering from a lack of creativity from the top, with several major fashion houses creatively rudderless or transitioning to creative directors who are less inclined to bold aesthetic bets.

In stores, brands have sought to justify soaring prices with ultra-classic styles that customers know they’ll wear a lot. But this has contributed to a pervasive sense of sameness.

At the same time, reports of diminished quality are circulating online, undermining craftsmanship claims. An Italian probe into the use of sweatshop labour has hit social media, alongside personalities like Tanner Leatherstein, who chops up luxury bags to show how much he thinks they’re actually worth.

Then, there’s the growing ubiquity of luxury brands, which undermines their sense of specialness, though as Bernstein analyst Luca Solca argues, calculating ubiquity is complicated and ubiquity risk, as measured by key styles appearing too often on the street, has grown far slower than sales volumes.

The industry needs to address rising prices. Can it also tune the other side of the value equation and re-energise belief in the creativity, craftsmanship and exclusivity factors that are so critical to desirability?

September may bring further clarity with star designer Alessandro Michele’s first show for Valentino — as well as fresh revelations from the Italian investigators looking into working conditions in luxury’s supply chain.

What do you think? What’s behind the luxury slowdown? And are luxury brands worth it?

THE NEWS IN BRIEF

FASHION, BUSINESS AND THE ECONOMY

The Olympics will commence Friday evening with an extravagant opening ceremony in the heart of Paris. The sporting event, which will run until Aug. 11, has attracted unprecedented interest from the fashion industry. Traditional advertisers like Nike and Adidas find themselves competing in an increasingly congested marketing environment.

LVMH missed analyst target for revenue in its second quarter. The world’s biggest luxury group saw sales rise 1 percent year-on-year to €20.98 billion ($22.76 billion) in its latest quarter, undershooting the  €21.6 billion expected by analysts. Shares were on track for their biggest one-day drop since October 2023.

Kering weakened as Gucci sales fall 20 percent. The group’s first-half operating profit fell by 42 percent year-on-year. Profits are likely to fall by 30 percent in the second half of the year, the company warned, while offering few promises on when its brands would return to growth.

Hermès sales rose 13 percent on continued appetite for high-end luxury. Sales at the French luxury group in its second quarter grew to €3.7 billion ($4.02 billion), a 13 percent organic sales rise. Its growth signals the continued appetite from wealthy shoppers for luxury handbags, even as less affluent consumers pull back.

LVMH’s L Catterton buys stake in outlet landlord Value Retail in £1.5 million deal. The transaction includes interests in nine luxury retail properties outside major European cities including the Bicester shopping village, about 60 miles northwest of London. It will generate cash proceeds of £600 million for developer Hammerson Plc, the seller of the portfolio.

Moncler’s operating profit beat expectations. The Milan-based group, known for its puffer jackets, said its half-year consolidated revenues totalled 1.23 billion euros ($1.34 billion). Sales rose 5 percent in the second quarter, driven by strong growth in Japan and positive performance on the Chinese mainland.

Zegna posts flat organic revenue. Second-quarter sales fell 0.4 percent year-on-year. Revenue growth at its Zegna brand, which accounts for most of the group’s sales, were driven by ongoing robust growth in the US and EMEA region, but fell by a single digit percentage in the Greater China region.

LVMH pledges more vertical integration in response to the Dior manufacturing scandal. The luxury giant said it was unaware of the issues in its supply chain, despite ongoing efforts to increase auditing and monitoring of external manufacturers. “We accept full responsibility for what happened,” CFO Guiony told analysts in an earnings call.

LVMH holds talks on sponsoring Formula 1. Swiss watch brand owned by French luxury conglomerate LVMH Tag Heuer is in talks to take over as the official timekeeping sponsor of Formula 1 motorsports racing, one of the most expensive marketing agreements in sport. Rolex has served as the official timekeeping sponsor of Formula 1 since 2013.

On arrives at the Olympics revelling in the role of upstart. The company has more than tripled the number of athletes wearing its sneakers at the Paris 2024 Olympics since the Tokyo Olympics in 2021, with 66 athletes using the company’s gear across 18 sports including track and field, triathlon, marathon and tennis.

Saudi Wealth Fund offers to boost stake in Selfridges to 50 percent. The country’s Public Investment Fund already owns a 10 percent share in the Selfridges properties and has offered to buy the remaining 40 percent stake for a cash price of £1 million ($1.3 million) from Signa’s flagship property unit.

LuisaViaRoma opens an outpost in New York’s NoHo neighbourhood. The 16,500-square-foot store is the retailer’s first attempt at international expansion since it opened its doors in Florence 95 years ago. It’s also a bid to recapture the retail magic of once-iconic, now-shuttered New York stores like Barneys or Opening Ceremony.

Off-White and Toteme to show at New York Fashion Week. Area will kick off the Spring/Summer 2025 season on Sept. 6. Off-White, which typically shows in Paris, will make its New York debut under creative director Ib Kamara on Sept. 8, while Swedish label Toteme will show on Sept. 10 after having presented in Paris last season.

Paris Fashion Week to include Alessandro Michele’s Valentino Runway debut. Weinsanto will kick off the week on Sept. 23 and Louis Vuitton will round it out on Oct. 1. Chanel will stage its first ready-to-wear show since Virginie Viard’s departure in June and Dries Van Noten is set to show for the first time without its eponymous designer.

THE BUSINESS OF BEAUTY

The Body Shop is expected to emerge from administration. Charles Denton, the former Molton Brown chief executive who leads the consortium that has agreed to buy The Body Shop, said he expects the company to emerge from administration in August. The consortium agreed to buy The Body Shop out of insolvency last week.

Interparfums sales rose 11 percent. The fragrance-maker for brands such as Jimmy Choo, DKNY and Karl Lagerfeld posted second-quarter net sales of $342 million, beating analyst estimates of $339 million. Interparfums’ European operations rose 14 percent, while its US arm grew by 8 percent.

L’Occitane to delist from Hong Kong Stock Exchange. The company is set to exit the public market in August after shareholders voted to approve such a move. Chairman, Reinold Geiger, who owns more than 70 percent of the company’s shares, said the transaction will provide the group with the flexibility to make longer-term business decisions.

PEOPLE

Creative director Peter Hawking exits Tom Ford. Peter Hawkings, longtime deputy of Tom Ford who took over as the brand’s creative director in 2023, has exited the business. A successor will be announced in the “near future,” according to Tom Ford owner Estée Lauder Companies.

Sergio Rossi taps Paul Andrew as creative director. Andrew previously served as creative director of Salvatore Ferragamo, where he was the first designer to oversee all categories for the family-owned brand. Sergio Rossi is owned by China’s Lanvin Group.

Estée Lauder Companies names Akhil Shrivastava executive vice president and chief financial officer. Shrivastava succeeds Tracey Travis, who is set to retire after holding the position since 2012. Travis will remain at the company in a support role until next year.

Nike hires former Salesforce executive in tech division shakeup. Cheryan Jacob, who has previously worked at Microsoft as well, will lead efforts to modernise technology infrastructure as chief information officer for the world’s largest sportswear company.

MEDIA AND TECHNOLOGY

Essilorluxottica confirms Meta interested in stake. CEO Francesco Milleri said the maker of Ray-Ban and Oakley sunglasses isn’t planning a capital increase dedicated to Meta and the tech giant would buy shares on the market if it wants to become a shareholder. He didn’t elaborate on the size of the stake Meta may buy and on the timing of the purchase.

Compiled by Yola Mzizi.