Tiffany & Co., LVMH’s leading jewellery maker, is planning to downsize a flagship store of more than 12,000 square feet in Shanghai, people familiar with the matter said, as sales of luxury brands plunge in the world’s second-largest economy.

Tiffany, which opened the two-floor store in Shanghai’s Hong Kong Plaza in a high-profile ceremony in late 2019, has decided to give up about half of the space, said the people, asking not to be identified because the deal is private. The brand will vacate the space later this month, the people said, and the landlord is already in talks with potential new tenants.

Both Tiffany and Lai Sun Group, which controls the high-end mall’s landlord, Lai Fung Holdings Ltd., didn’t immediately respond to requests for comment.

Tiffany’s pullback from China’s finance hub highlights the increasingly challenging business environment that global luxury giants have to navigate during an economic slowdown and a property market slump. Shoppers in the country are turning more price-sensitive, looking for bargains either in the grey market or overseas, such as Japan where the currency is weak. That’s triggered significant sales dips for high-end labels, curbing growth and adding pressure to profit margins.

LVMH’s watches and jewellery segment saw its revenue fall 3% in the first half of this year from the year before, making it one of the worst-performing sectors. Profit from recurring operations for this segment fell 19 percent.

Tiffany also asked Lai Fung to lower rent for its Shanghai flagship, one of the people familiar said.

The store, located in Shanghai’s core business and shopping district, features Tiffany’s first Blue Box Cafe in China which is also its third in the world. The store is currently among the brand’s largest in Asia. The cafe will remain after the downsizing, the people said.

The 187-year-old brand has been missing LVMH’s ambitious sales targets after the luxury empire of billionaire Bernard Arnault acquired the jewellery seller in 2021. Tiffany has also seen employee departures recently due to lower commissions than before, with some defecting to competitors and taking some of their loyal clients with them, Bloomberg News reported earlier this year.

The brand is further squeezed by rivals, losing market share to companies including Cie Financiere Richemont SA’s Cartier.

By Bloomberg News

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Tiffany’s Staff Exits Test LVMH’s Turnaround Playbook

Ambitious sales targets and lower commissions for some salespeople have led them to defect for competitors, taking some of their loyal clients with them.

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.

The Nordstrom family has offered to buy its namesake department store chain for $23 per share in cash with plans to take the retailer private for $3.8 billion.

Erik and Peter Nordstrom, the great grandsons of founder John Nordstrom, said they had been exploring ways to take the company private, according to a statement on Wednesday. The brothers formed a group with other family members and a Mexican department store chain El Puerto de Liverpool, which took a nearly 10 percent stake in the company two years ago.

The proposed transaction would be financed through a combination of equity and cash commitments by family members and Liverpool, as well as $250 million in new bank financing. Following the proposed transaction, the company would be 50.1 percent owned by the family and 49.9 percent by Liverpool, which operates 312 stores in Mexico.

The group said the offer represented a 34.8 percent premium over where the company’s shares were trading on March 18, when reports of discussions between the company and family surfaced. Nordstrom’s shares have risen 24 percent year to date through Tuesday’s close.

Nordstrom’s board of directors confirmed it had received the offer and that a special committee that included “independent and disinterested directors” would review the proposal.

Puerto de Liverpool said in a separate statement the proposal represents a new capital investment by Liverpool of at least $1.2 billion, which would be covered in part with its own resources and another part with financing.

By Max Zimmerman

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Nordstrom shares rose 6 percent on the news, giving the company a market value of about $3.3 billion.

Walmart Inc. has its sights set on sneakerheads.

The Bentonville, Arkansas-based retailer is teaming up with sneaker marketplace StockX to offer dozens of pre-verified shoes ranging from Nike Inc.’s Air Jordans and collaborations with Travis Scott to those from New Balance Athletics Inc. and Asics Corp.

Hundreds of items will be available on Walmart’s website next week, and StockX will fulfil and verify the products. The partnership could expand to tens of thousands of products, Michael Mosser, vice president and category lead at Walmart Marketplace, said in an interview.

Shoppers “are looking for this full spectrum of products from Walmart,” whether that’s staples or collectible items, Mosser said, adding that Walmart is experiencing healthy demand for coveted sneakers.

The partnership — the first between Walmart and StockX — is part of the retailer’s efforts to beef up its online business to grab more spending from Amazon.com Inc. and other retail giants. Walmart said last week that it will expand the assortment on its marketplace of third-party vendors to include pre-owned and collectible products, building on its offering of refurbished electronics.

For StockX, it marks its first third-party platform deal, chief executive officer Scott Cutler said in an interview. The Walmart deal will help StockX reach a new consumer base, including customers who may be unfamiliar with the brand, he said.

The secondary market for sneakers has cooled since a boom began in 2021, when the sector became a hot alternate asset that attracted investors and speculators. Resale sites have since flooded with limited-edition sneakers released to the public by brands like Nike, Adidas and New Balance.

Both companies expect to expand into other categories such as streetwear. They declined to disclose financial details of the partnership.

Walmart’s online marketplace has emerged as a growth engine. It is helping the company to broaden its assortment and price points, and offers brands such as Cartier that aren’t sold in the company’s physical stores. Marketplace also adds income for Walmart through related services such as advertising and fulfilment.

Walmart’s online marketplace business, which began in 2009, is still smaller than that of Amazon.com Inc., which started nine years earlier. In 2022, Amazon’s had 2 million merchants selling on its platform. Walmart doesn’t disclose the number of sellers and offers hundreds of millions of items. Both companies offer a vast array of goods, in contrast with Target Corp., which has taken a curated approach to expand its marketplace business.

By Jaewon Kang

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Walmart Takes on Amazon By Adding Pre-owned Watches, Collectibles to Marketplace

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Ginning, blowing, carding, drawing, roving, spinning, weaving, dyeing, cutting, sewing, ironing, shipping and trucking — all the steps it took to turn some cotton bolls into your T-shirt. Those processes also contribute the most to the planet-warming impact of the clothing fibre.

Growing cotton bolls itself sucks up huge amounts of water, pesticides and fertilisers. For all the water you’ll ever use to wash your cotton T-shirt over its entire lifetime, it will have taken 50 times as much water to grow the cotton that went into it. Cotton uses about 2.3 percent of global arable land and accounts for 16 percent for all insecticide sales. And the fashion industry has been forced to reckon with allegations of forced labor and poor working conditions in certain cotton-harvesting regions.

Boston-based startup Galy says its found an alternative that avoids all of these problems by growing cotton in a lab. The company shared an evaluation by environmental consultancy Quantis to show that, at an industrial scale, its process reduces water use by 99 percent, land use by 97 percent and the negative impact of fertilisers by 91 percent when compared with conventional cotton.

Brazil-born Luciano Bueno, chief executive officer of Galy, founded the company in 2019. But cotton has featured in his business life for much longer. “I started selling T-shirts door-to-door just to pay my bills in high school,” he said. His first job at Deloitte involved working for textile companies. His first company Horvath Co., which he founded in 2015, tried to develop sweat-resistant shirts.

But after Horvath got stuck in an exclusivity deal, he took a break and studied entrepreneurship in Silicon Valley. It was during the heyday of fundraising for lab-grown meat startups that Bueno thought he should apply the same idea to cotton. It’s taken Galy a few years, but now the startup has shown enough progress to secure investments from huge cotton consumers: Hennes & Mauritz AB and Zara-owner Inditex SA.

Galy takes cells from a cotton plant, adds them to a large vat and feeds them sugar. After they have sufficiently multiplied, Galy technicians use their genetic understanding of the plant — which has been developed over decades of research — to activate certain genes and deactivate others. The result is the cell transforms and elongates into a cotton fibre.

So far, Galy has only been able to make a few kilograms of vat-grown cotton. If it can make more at scale, the company has big dreams to also make lab-grown cocoa and coffee powders. At its stall at the Breakthrough Energy Summit in London in June, Galy showed off all three products.

Buyers of cotton care about strand length, strength and purity. Galy already has purity given the process happens inside a vat and not in the open. That has helped it secure a $50-million deal with Suzuran Medical Inc. for medical-grade cotton, which Galy plans to supply over 10 years once it starts producing at industrial scale.

For clothing, Bueno says that Galy still needs to improve on strand length. That development will need investments in further research. In an announcement today, Galy said it had raised $33 million from Bill Gates-led Breakthrough Energy Ventures, H&M and Inditex — bringing the company’s total raise so far to $65 million.

Martin Ekenbark, lead of H&M’s circular innovation lab, said that the fast-fashion retailer is seeing a rise in the demand for cotton. “Customers prefer the hand feel of fabrics made with cotton,” he said.

After H&M stopped using cotton from China’s Xinjiang region in early 2021, following allegations of forced labor, it faced Chinese boycotts. H&M and other cotton consumers are keen to find solutions that can produce cotton without these risks.

Inditex has invested in more than 300 startups with the goal of finding new materials that have a lower impact on the environment, a company spokesperson said, and it’s now working with Galy to “enhance fiber quality through various proof-of-concept tests.”

Pound-for-pound cotton is much cheaper than meat and has a smaller market. The global cotton market is about $60 billion and cotton sells for a little more than $1 per kilogram, whereas the meat market is more than $1 trillion. That’s why Bueno’s focus is not just scaling up production, but also doing so at a tiny fraction of the cost of the process used for lab-grown meat.

There are a few things that help Galy. The plant cells only need sugar to multiply, rather than complex growth material used for meat. And given people aren’t going to be eating the cotton, Galy can use reactors that don’t have to adhere to as high hygiene standards.

The hurdles that remain aren’t small. Despite plenty of funding and investor enthusiasm, lab-grown companies have struggled to grow because of the finicky nature of biology and the struggle to sell the products at much higher cost than traditional alternatives. Galy will face the same problem and it’s raising money at a time when climate-tech investments have been shrinking. That’s one reason why Galy isn’t currently facing any major commercial competitors for developing lab-grown cotton.

Peter Turner, a partner at Breakthrough Energy Ventures, points out that Galy’s cotton today is at the same point lab-grown meat was in 2013. That’s when the Dutch researcher Mark Post made a 5-ounce burger that reportedly cost €250,000. That lead to a rapid growth in the number of startups chasing the prize, with funding for the sector peaking in 2021. Galy wouldn’t say what its cotton costs today.

“We fully expect competition to follow,” said Turner.

By Akshat Rathi

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China’s largest jewellery retailer Chow Tai Fook Jewellery Group Ltd. has appointed an executive from LVMH’s fashion brand Loewe to lead a global expansion and boost its appeal to luxury shoppers.

Gabriela Ferreira, who served as general manager for Southeast Asia and Oceania at Loewe, will be in charge of Chow Tai Fook’s push further into Southeast Asia and other markets, the company said in a statement Wednesday. She will focus on enhancing brand desirability and oversee the jeweller’s product mix and sales channels in the region and internationally, it said.

The appointment comes as Chow Tai Fook, a flagship company of Hong Kong billionaire Henry Cheng’s family empire, has revamped its logo and is renovating some 8,000 of its stores in a bid to restyle itself from a traditional gold jewellery retailer into a luxury accessories brand.

The group, which has seen its shares plunge 47 percent this year, is facing increasing challenges from surging gold prices that have curbed demand for its main revenue-generating gold products and squeezed profit margins. A consumer spending slump in China, its biggest market, is further weighing on sales.

An upgraded image could help the brand draw more wealthy shoppers whose spending power remains strong. Top luxury brands like Hermès International SCA and Chanel have remained resilient against the broader slowdown, largely thanks to their focus on cultivating high-net-worth customers. By diversifying into Southeast Asia, Chow Tai Fook also looks to capture the potential of some of the world’s fast-growing tourism and middle-class consumer markets.

The company will look to Ferreira to drive the expansion of its retail network in popular travel retail markets, according to the statement.

Co-led by Henry Cheng’s daughter Sonia Cheng, Chow Tai Fook is currently the largest listed company by market capitalisation in the family’s sprawling business empire. The spotlight on the family has grown in recent months after Henry Cheng, who remains Chow Tai Fook’s chairman, said he was still looking for a successor.

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