Mulberry Group Plc has rejected a takeover approach from Mike Ashley’s Frasers Group Plc and said it’s confident its new CEO can turn around the British handbag maker.

In a move that sets the scene for a potentially heated takeover battle, Mulberry said the 130 pence-a-share offer from Frasers undervalues the company and does not have the support of Singapore’s Ong family, the majority shareholder of Mulberry.

The company’s stock fell more than 3 percent early Tuesday, adding to around a 40 percent decline in the past 12 months. Mulberry has been hit hard by the global slump in luxury spending and it reported a plunge in revenue for the latest fiscal year.

Mulberry said Tuesday that it has no intention of withdrawing a proposed £10 million ($13 million) share issue, which angered Frasers as it said it should have been given advance notice of the capital raising given it owns about 37 percent of the retailer.

The company said the recent appointment of Andrea Baldo, the former boss of Ganni, as CEO and a proposed share issue “provides the company with a solid platform to execute a turnaround and, ultimately, to deliver best value for all shareholders.”

Frasers, founded by the billionaire Mike Ashley, is known for its acquisitiveness and willingness to enter into boardroom battles to wrest control of companies. In the past it has had a number of high-profile battles with rivals including Debenhams and House of Fraser. The company is now run by Ashley’s son-in-law Michael Murray and has been growing its premium offering with upmarket outlet Flannels, as well as stakes in Mulberry and Hugo Boss.

“In the big scheme of British retail, this is small beer,” said Clive Black, research analyst at Shore Capital, but added that Mulberry could potentially benefit from Frasers’ single management team and balance sheet.

Mulberry said it recognised that Frasers is a “committed and important investor” and the board would engage with it on a pro rata participation in the capital raise.

Frasers has until Oct. 28 to either make a formal offer or walk away.

By Deirdre Hipwell and Jennifer Creery

Learn more:

Mike Ashley’s Frasers Group Makes £83 Million Offer for Handbag Maker Mulberry

The Group has proposed an £83 million bid to acquire the luxury brand Mulberry, raising concerns about its future following a recent emergency share placement to address a significant financial loss.

Last week’s China-fuelled rally in luxury-goods stocks is based on unstable foundations, according to Goldman Sachs Group Inc. analysts.

Stimulus measures announced by the economic giant are unlikely to have a positive impact on high-end discretionary spending in the near term, Goldman’s Louise Singlehurst wrote in a note on Tuesday, downgrading Gucci-owner Kering SA to sell.

“We expect a difficult six months ahead for the luxury peers,” the analyst wrote. “The appetite to purchase high-end discretionary goods is dependent upon the health and confidence of the consumer.”

This sentiment was echoed by HSBC Holdings Plc’s Erwan Rambourg, who said on Tuesday that the road to a recovery in Chinese luxury consumption “will be long.”

Despite last week’s gains, a Goldman Sachs basket of European luxury goods makers remains down 16 percent since reaching a peak in mid-March.

Goldman’s Singlehurst is particularly cautious on companies in the middle of a turnaround, like Kering, whose shares have slumped 37 percent this year. While the analyst is positive on Gucci’s plans to reposition its portfolio to a more “evergreen” style, earnings visibility could take a hit.

“In the current market environment where store traffic is depressed and consumer confidence is soft, particularly in China, we see this is a difficult ambition to achieve,” Singlehurst added.

By Kit Rees

Learn more:

Gucci-Owner Kering Slumps to 2017 Low on China Demand Fears

Kering SA’s stock plunged to a seven-year low on Monday, with analysts downgrading the Gucci owner amid concerns over weak demand in China, marking a sharp decline in the luxury sector.

Dockworkers walked out of every major port on the US East and Gulf coasts for the first time in nearly 50 years, staging a strike that could ripple across the world’s largest economy and cause political turmoil just weeks before the presidential election.

The 36 affected ports have the combined capacity to handle as much as half of all US trade volumes, and the closures immediately halt container operations and auto shipments. Energy supplies and bulk cargo won’t be directly affected. Some exceptions will be made to allow for the movement of military goods and cruise ships.

The significance of a work stoppage at every major container port from Houston to Miami and New York-New Jersey depends on how long the strike lasts. The economic loss from the shutdown, which began at 12:01 Tuesday morning Eastern Standard Time, will be between $3.8 billion to $4.5 billion a day, according to JPMorgan Chase & Co.

Shipping congestion resulting from a week-long strike would take about a month to clear, according to Grace Zwemmer at Oxford Economics.

Shares of Denmark’s A.P. Moller-Maersk A/S and Germany’s Hapag-Lloyd AG fell on Tuesday, after both container lines gained more than 11 percent in September.

The International Longshoremen’s Association is seeking higher wages and a rollback of the language on automation in a six-year contract that expired at midnight. Union leader Harold Daggett has for months threatened a strike starting on Oct. 1 if no deal is reached before the deadline. The last time East and Gulf coast dockworkers went on strike was in 1977.

“We are prepared to fight as long as necessary, to stay out on strike for whatever period of time it takes,” Daggett said in a statement posted to Facebook. The last offer from the companies “fell far short of what ILA rank-and-file members are demanding in wages and protections against automation.”

The ocean carriers and terminal operators represented by the US Maritime Alliance, also known as USMX, have accused the ILA of refusing to negotiate since the union called off talks back in June. A strike was all but certain until Monday afternoon, when reports emerged that the White House has been in communication with the two sides over the weekend and some progress has been made on wages.

President Joe Biden, who prides himself on being pro-union, has said the dispute is a matter for collective bargaining and he wouldn’t invoke his authority under national security laws to order dockworkers back to the ports while negotiations continue.

Trade, transportation and retail industry groups have been urging the White House to intervene to limit damage from the strike. Container carriers are preparing to impose surcharges tied to the disruption, raising the overall cost of shipping.

$2.1 Billion a Day

“It would be unconscionable to allow a contract dispute to inflict such a shock to our economy,” Suzanne Clark, CEO of the US Chamber of Commerce, wrote in a letter to Biden on Monday.

“Taft-Hartley would provide time for both parties in negotiation to reach a deal on a new labour contract,” Clark continued, referring to the 1947 congressional act that allows a president to intervene in labour disputes that involved national security.

Estimates from the National Association of Manufacturers show the strike jeopardises $2.1 billion in trade daily, and the total economic damage could reduce GDP by as much as $5 billion a day. NAM President and CEO Jay Timmons urged Biden to force a resumption of operations while negotiations continue.

“The president can protect manufacturers and consumers by exercising his authority, and we hope he will act quickly,” Timmons said in a statement late Monday.

The Teamsters union issued a statement Monday urging the Biden administration to stay out of the dispute. ILA leader Daggett has warned the White House not to intervene, and said if forced back to the ports, dockworkers would handle fewer containers than usual, slowing operations.

The union hasn’t endorsed a presidential candidate, though according to Daggett, former President Donald Trump “promised to support the ILA in its opposition to automated terminals” during a Mar-a-Lago meeting last fall. Neither Trump nor Vice President Kamala Harris has drawn public attention to the strike threat.

“Moments ago, the first large-scale eastern dockworker strike in 47 years began at ports from Maine to Texas, including at the Port Authority of New York and New Jersey,” New York Governor Kathy Hochul said a statement just after midnight.

“In preparation for this moment, New York has been working around the clock to ensure that our grocery stores and medical facilities have the essential products they need,” she said.

Meanwhile, the flow of goods has already been redirected by the threat of disruption. Many importers brought their goods in early or through West Coast ports to mitigate the risk and pad inventories.

Port terminals along the coasts wound down their operations ahead of the midnight deadline, and railroads are also pulling back service.

“The most important thing is going to be for the carriers, shippers and workers to come to terms,” said Transportation Secretary Pete Buttigieg on Bloomberg Television’s “Balance of Power.” “There’s really no substitute for the ports being up and running.”

By Laura Curtis

These days, if you want to sell skincare, you need the claims to back it up.

Claims purport what exactly a product can or should do for the wearer’s skin — the way Tatcha, for instance, says its Dewy Skin cream “instantly plumps with 3x hydration and a dewy glow” or how Drunk Elephant states that its C-Firma Fresh Day serum “noticeably diminishes the appearance of signs of ageing and photodamage.” Usually backed by a clinical study, they “lend [products] an aura of credibility,” said Liz Whitman, a beauty executive who launched a “clinical-grade” skincare brand called Exponent, and are meant to give shoppers an informed reason to click purchase.

They’re especially important today, when beauty consumers are more aware of the ingredients in their skincare than ever before; they want efficacious products, and with that, brands are finding ways to convince customers that their offerings measure up. About 92 percent of consumers say results are their primary motivation for making a skincare purchase, according to figures from Circana.

Where these claims come from, however, is more complicated. They predominantly originate from an invisible constellation of third-party manufacturers, who will perform the tests and produce the white papers as a B2B service. But there is no set standard for efficacy testing, which means that many tests end up with small sample sizes, are done in a short amount of time, and may not include no human subjects at all. When claims can be generated for a couple thousand dollars, brands are less than incentivised to conduct clinical trials, which provide the best results, but the cost of which can stretch into the low six figures.

But the distinction between claims that are backed by cheaply-done studies, and those substantiated with more expensive, rigorous clinical data isn’t always clear, particularly to those they’re intended for.

“Consumers aren’t aware of the differences. It’s not their fault, I’m sure they would, but it’s just all so designed to be confusing,” said Whitman.

A decade ago, it was unimaginable that so many consumers would understand the difference between alpha and beta hydroxy acids. Soon, the smart beauty shopper may demand more from their claims, too. Brands today must navigate how they can put out data they can stand behind while minding the realities of their budget.

What sorts of tests do beauty brands conduct to get claims — and how much do they cost?

The cost of a study depends on many factors: how long it takes, how many people in the sample size, what sort of experts are involved and how they’re measuring the impact on the skin. The intended audience also matters — is it for mature skin, or for newborns? — and the desired result — does it hydrate, or brighten? — until a specific plan is in place. It’s relatively easy to see improvements in skin hydration, for instance, explained Julian Sass, a PhD and cosmetic chemist based in Montréal, while hyperpigmentation is harder to measure.

Sass frequently consults with brands big and small during what he calls the “substantiation process,” and admitted that “a lot of brands won’t do these tests because they’re expensive.” He begins by asking clients, “What do you want to be able to say?” Then he’ll present a range of options tiered by price.

At the highest end, there are clinical studies, which rely on expert supervision and span weeks of observation. For ironclad independent claims on a wrinkle cream, Sass recently worked on a trial of a single product that cost a brand around $80,000. Whitman said that a 4-week clinical test on 30 subjects with before and after pictures cost about $25,000 per SKU; she tested five. They’re undeniably the most valuable for brands and consumers, but because of that cost, they’re less popular. When Whitman surveyed 500 “top-selling, performance-driven” skincare products, she found that less than 20 percent were supported by clinical claims.

Instead, most brands choose to lean on consumer perception studies, which Sass said are “table stakes” in the industry. These studies rely on the reports of consumer testers, and can be performed for less than $10,000 — but are the most susceptible to bias.

“I mostly use these for claims that are not really scientific,” said Sara Jakaj, an efficacy studies specialist for the UK-based testing firm CE Way. “For example, the client wants to claim shiny hair. It’s not something that can be measured.” CE Way doesn’t conduct clinicals, in part because they take too long.

Jakaj will receive samples of a product, cast 20 participants, and take biophysical measurements on qualities like skin’s moisture level before and after the period, for about €1,500 (about $1,700). Some brands may economise by forming sample groups from engaged audience members.

How can brands decide what tests are worth it for them?

The lack of a uniform system means that brands are running all sorts of different tests, and can claim results even if their test is more limited. If a sample size, for example, is limited to a small number of people, that’s usually only disclosed in small print next to an asterisk at the bottom of a webpage.

One brand Sass worked with, for instance, had a “really quick turnaround” timeline of just a few weeks for a clinical test. They did an in vitro study, where a product is observed for a few days in a laboratory to glean information about how it performs on skin, rather than tested on individuals who report back their findings. Sometimes, claims simply rely on tests done on raw ingredients, rather than engaging a new test of their individual product. (“Contains rareberry, clinically proven to…”)

The variety of options and lack of a set standard means that it’s relatively easy for brands to get away with cheaping out on studies. But strong claims are especially useful for smaller brands, who may need to do more to prove their mettle.

Eric Hill, a business development manager who covers health and beauty testing for UL Solutions, has seen the importance of claims rise, especially as consumers move away from megabrands to patronise indie labels. “People have much more willingness to trust in [new brands] than they used to,” said Hill. That is, if they can secure that trust.

For this reason, startups are finding tests to be a worthy investment. Tower28 performed multiple tests to support its collection-wide claim that it’s suited for sensitive skin — the reason founder Amy Liu launched the brand in the first place.

“The thing that matters the most is that your product lives up to the expectation that you’re setting for it,” Liu said. Still, to keep costs manageable, Liu cut a deal with a tester to keep her costs for each in the low five figures.

A legacy brand like L’Oréal-owned CeraVe, meanwhile, has more resources and as such, “every test plan is tailored to each product,” explained Nada Baalbaki, global scientific director for CeraVe. But even they tap third-party help: CeraVe works with a contract research organisations like RBC Consultants, which provides data to several brands under the L’Oréal Dermatologic Group umbrella.

At the end of the day, it’s all in service of proving that a particular product delivers on its promise.

“I’ve tried so many peptide creams,” Sass said wearily, of the trendy plumping ingredient. “Now, I don’t buy them unless they have clinical results.”

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