Two good illustrations today of the power of brands, particularly when it comes to fashion: US label Tommy Hilfiger, which we thought was all a bit 1990s, has just been sold for a whopping €2.5bn. And department store chain Debenhams reported that the re-launch of the once-ailing Principles brand - which it rescued from administration this time last year - has boosted first-half sales. As we saw yesterday, when French Connection parted ways with Nicole Farhi to focus on its own-brand lines, bringing labels in-house is a lot better for a retailer's margins...
Debenhams snapped up the Principles brand last year after its owner Mosaic Fashions collapsed into administration. CEO Rob Templeman admits the brand had rather lost its way - but with a little help from designer Ben de Lisi, he re-launched it in 120 Debenhams stores last month. He told the Times today that the focus had been on making it more contemporary, more tailored and above all cheaper - as a result of which it has apparently become 'the single best launch we've ever done.' In fact, he said, 'it's trading its socks off'.
All in all, Debenhams sales were up 1.7% in the year to February - and although like-for-likes were just 0.3% higher, it's one of the few retailers to have grown sales and profits in the last year. Given that it looked like a basket case a few years back, that's no mean feat. In the longer term, Templeman hopes that this focus on in-house brands rather than operating concessions will be much better for profit margins. And although that will probably mean taking a short-term hit while he rebalances the portfolio, so far the signs suggest he's right.
Talking of brands whose best days seemed to be behind them, we must admit we were rather astonished this morning to see that Tommy Hilfiger has just been sold for €2.5bn to US group Phillips-Van Heusen Corporation (great news for current private equity owner Apax Partners, which has apparently doubled its money in five years). Just goes to show what we know, given that we were under the impression that Tommy Hilfiger went out of fashion with Snoop Doggy Dogg. We can only assume that isn’t the case on the other side of the pond - and since this group also owns brands like Calvin Klein, it has as good a chance as anyone of squeezing some more juice out of it. We'll all be wearing chinos again before long.
In today's bulletin:
EU embarrasses Government by slamming deficit plan
Slasher Voser continues his shake-up of sluggish Shell
Debenhams sales up after returning to first Principles
Public sector has 22% of workers - but 37% of employment appeals
MT talks to GGR's Gill Riley