The Gospel According to Luca Solca

0:03Hello and welcome to Fashion People. I'm Lauren Sherman, writer of Puck's fashion and beauty memo line sheet. And today with me on the show is Bernstein's Luca Solca. We're talking the best and worst of earnings season from LVMH and Caring to Richemont and Chanel.

0:23Before we get going, I wanted to remind you that if you like this podcast, you'll definitely love Puck, where I send an email called Line Sheet. If you're a fashion person, you get that reference. It's an original look at what's really going on inside the fashion and beauty industries. Line Sheet is scoopy, analytical, and above all, fun. Along with me, a subscription to Puck gains you access to an unmatched roster of experts reporting on powerful people and companies in entertainment, media, sports, politics, finance, the art world, and much more. If you're interested, listeners of Fashion People get a discount.

0:59Just go to puck.news slash fashion people to join Puck or start a free trial. Happy Friday, everyone. Hope you're having a great week. It was one of the slowest news weeks I've experienced during my time here at Puck, which hopefully means that something major will happen soon. But you know, we made the news. It's fine. I can always find something. On Thursday, I did find something very interesting. And thanks to Malik who got a tip and then we investigated it and I shared some updates and changes in strategy over at Laurel Piana. And Malik had some J.Crew intel, but you gotta upgrade to that Inner Circle membership in order to access this information.

1:47That's why it's called the inner circle. Anyway, my question for you is, do you want me to try to figure out the identity of boring.com? It's that anonymous Instagram account, makingfunofstyle.com, you know, who is the cheerleader of the fashion industry. But I love because literally Becca, every single thing that happens, he documents it. It's honestly, he's doing WWD's job. So I'm a fan and whatever you think, I'm pro. but boring.com is kind of the like they say what everybody else is thinking or maybe no one else is thinking and to be it's quite honest it's sometimes almost too honest and sometimes it's just like way too mean um and I don't follow it it if it says something important it surfaces to me so I don't feel like I need to like have that negative energy all the time but if I revealed it I don't want to ruin all the fun for everyone, but at the same time, it's sort of my job to ruin the fun.

2:50So let me know what you think. Also, how great is that W Magazine Giselle cover and spread styled by Brian Malloy wearing Celine, shot by Kareem Sadli? It's so good. I love the shoot. This is what magazines are for, guys. Congrats to Miss Sarah Moonves for being a good editor. Anyway, I think it's okay to say go Knicks at this point. Many of you were interested in my commentary on the Heim sisters and Taylor Swift's homemade merch and their dancer team video. My only comment was that they're annoying. And I would like to say to the Taylor Swift fans out there, the like seven of you that still listen to this podcast in hate, because I've mentioned her a few times in a, I don't want to say negative light, but in a critical light, because everybody should be critiqued, especially artists.

3:38Anyway, honestly, I would have been fine with this whole thing if it was Taylor Swift and Blake Lively. For some reason, the combo of the two, and I really like Haim. I went to see them in concert last year. I listen to their music all the time. I think they're cool. I think Alana Haim's a great actress. There was something about it that was really annoying. And I'm like, I don't want to know what the Haim sisters are going through privately to act like this. Taylor just seemed like she was like, I'm going to do what my cool friends want to do. Someone said like perpetually 15. It's so true. Anyway, it was it was ridiculous.

4:15But there's a reason Danielle Hine did not partake in this. And this is because she doesn't need to do stuff like this. It's just anyway, back to my day job. And let's get going with Luca. Luca Soka, welcome back to Fashion People.

4:31Luca Solca:Thank you very much indeed. Luca, what did you have for breakfast this morning? a glass of milk and two biscuits that sounds good i think you're the first person to ever say they had um biscuits for breakfast um you know because this is a friday show not a tuesday show usually you come on on tuesdays and fridays we ask people what they have for breakfast i didn't know that all right yeah it's very revealing um how are you doing exciting breakfast but uh yeah very very sort of light breakfast. Sounds good. How are you doing? Very well. What about you, Lauren? I'm good. I'm in Los Angeles. I'm going to go to the Hermes show tonight.

5:16And then there's the Xenia show tomorrow. So I am going to go to both of them.

5:25Luca Solca:Excellent. Excellent. What did you think about this quarter and all the results overall? I think that the results continue to be quite polarized from the very good to the not so very good. We continue to see hard luxury ahead. If we look at the jewelry maisons at Richemont at plus 16%, that was a very punchy result, considering that the Middle East was disrupted in the month of March. while some of the soft luxury companies were still very significantly behind. I'm thinking Gucci. But even the leaders there, if I look at the functional leather goods division of LVMH at minus two, and Hermès at plus 5.7%, that was a lot less exciting than what you could find from Richemont.

6:26Luca Solca:So really quite a significant dispersion. Before we get into, I want to go company by company. I, and this is going to run probably the second week in June. Never say, never guarantee Luca because stuff happens and then we move the schedule around. But I am, this is, we're recording this on June 4th, and I'm getting reports from London about there are lines out the door of Chanel for the Metier Dart collection. There are people who had chairs and they're claiming they slept outside waiting to get in. What do you think, like we saw the Chanel results from last year. I'm very skeptical that those results have anything to do with Mattou Blasi's first collection being well received in the market.

7:19I think that the product in Chanel stores was good no matter what. And there's good feelings towards the brand. But next year, the numbers are obviously going to be really good. Do you think that the success of Chanel, like what they talk about internally from what I've been told is that like, this is good for the whole luxury industry, a rising tide raises all ships, and not to like get too excited. But I think this is a singular thing that has nothing to do with the rest of the luxury industry. I'm just curious what you think about the like, really staggering success of these first collections from from Mattu.

8:02Luca Solca:I think Lauren, we're confronting a market, a consumer demand environment which is a lot more stagnant in terms of the people present in the market it used to be a few years ago that we had a huge inflow of new consumers coming in and so you you could to a large extent sell more of the same you could sell the iconic products I think if the game becomes part of selling more and more to existing consumers who have been in the market for a while, then newness becomes essential. Why do I need to part with my money if you're showing the same stuff that I already have in my wardrobe, except it's 50 % or 100 % more expensive.

8:55Luca Solca:And so to some extent, I think what we saw last year in terms of new creative directors coming on board of the major brands is indispensable. The problem is this is not an exact science. Finding the right talent for the right brand is an art, and sometimes it works very well it generates a huge amount of buzz and a huge traffic in store, like in the case of Chanel. And sometimes it doesn't work as well, especially if there's no good match between the brand DNA and what the new creative talent brings to the brand. And I think that we're confronting this sort of very broad set of outcomes at the moment within the soft luxury space.

9:48Luca Solca:One could argue that Mathieu Blaisier and Chanel are a 10 out of 10. Maybe Dior and Jonathan Anderson are a 7 or 8 out of 10. I think that everybody else that we saw, with a very few exceptions, in September and October last year, was below this too. yeah i mean it's interesting because when you think about the tremendous amount of criticism and dissecting of jonathan anderson's work at dior already and the the step-by-step the minutiae of critical analysis of what he has done and and criticism downright criticism. I mean, it is kind of crazy. If you think about what he has achieved, and if Chanel didn't exist, would the sort of sentiment in the industry and the stress around the Dior stuff be less so?

10:55Because there would be nothing to compare it against. And I think Jonathan's kind of remit at Dior is much more challenging than what Mattu had. It's a different kind of challenge. Like Chanel was not in the difficult place that Dior was, but it's interesting to hear you say that you think it was that. I agree with you. I think he's done a really good job given the circumstances, especially. But why do you think the market and the kind of online, because I know you track the online conversation a lot, has been so much more critical of Dior than really any of the other brands, even Gucci, I would say.

11:45Luca Solca:It's difficult to say. Clearly, maybe my own impression for what is worse, when I look at Chanel, I see that what the brand is bringing to the market is both very commercially astute, but also quite true to the brand's DNA and heritage. So there's a very good fit, both with the market and with the brand. I think that when it works a bit less or when it doesn't work at all, the fit is not there. So without necessarily going to the existing examples, but one sort of paradigmatic example of a lack of fit was Sabato De Sano and Gucci. And I think that there, in hindsight, but even just immediately after the fact, you could see that a quite luxury style didn't fit what Gucci is in the minds of people, which is an over-the-top kind of brand with an edge, with a twist.

12:57Luca Solca:And that didn't work well because there was no connection. So I think that maybe when I look at Jonathan's work today, I see that it's very commercially astute. But maybe the purists, those who really know about fashion, like me, like you, maybe, they don't necessarily see the new Dior soul. They don't see the depth that they would want to see. I wonder about that. But maybe that is the issue. Having said that, even if I compare Maria Grazia, she also had a very special way of interpreting the brand. So I think we're borderline in an artistic territory, which is very, very difficult to gauge. I think that for practical purposes, we would be looking at the commercial traction that these new interpretations produce.

14:02Luca Solca:And the feedback we're getting from the market is that Joe is doing fine and is doing a lot better across the world. Yeah. So good enough for me. Yes, it's interesting. I'll get so I think honestly from your from the fashion purist perspective I actually think the challenge is that a it's a hard brand no matter what it doesn't have the depth that Chanel has as a brand but I actually think he's so he's such a thinker it's so intellectual that I appreciate it. The first collection, I was like, I don't like, I love the men's, the women's. I was like, I don't like this. It's too hard. It's not pretty enough.

14:49And he's taken that feedback because other people have obviously given it to him and the clothes have gotten more beautiful, but there's still something, there's like an idea behind it. And I think in the, I think the marketing has been really good. I think the challenges at Loewe, you could have an idea and develop it over, you know, he didn't really break through at Loewe for several years in terms of runway. And when you're that kind of designer, Dior is such a straightforward brand. And Kim Jones and Maria Grazia were very straightforward designers. I was at the Dior outlet in Bistar Village the other day, and there were these bags that had like puffy paint on them in the men's that said, all my friends wear Dior.

15:37Like, can you imagine? Jonathan Anderson would never do that. He's too smart. Like, I'd not - Too brainy, yes. Too brainy, that's the right word. And I think he's doing a good job of commercializing it. And the last, the Cruise Collection was super commercial and he got a lot of bad critical feedback for it, which I think is so interesting because it felt, and I'm in LA right now, and what a lot of people said to me was like, it felt like it had the same spirit or the same, like it's the kind of stuff people want to wear right now. There was definitely stuff that was in conversation with what Matt was doing at Chanel, but it was cooler.

16:20So if you're like too cool to wear Chanel, you would wear the Dior. And I think from the Asia market, it seems like it's good. But yeah, it's a very funny thing that there are other creative director positions that have been appointments that I feel like are more Sabato style

16:46Luca Solca:where you're just like, this is never going to work and you guys need to change it now. like but i remember being on a call with you and one of your colleagues saying that the chinese market was not into sabato and it's never going to work and i was like oh maybe it'll work it's not if it's not going to work it's not going to work right and exactly i don't know that the rule that uh you have to wait for two or three shows still applies today i think if it doesn't work the first show i think chances are it's not going to work yeah and uh and that's it that's it what i think i'm learning from the chanel experience is that things are happening at a much faster pace these days yeah from catwalk to store to social media it's become very very short and so either it snowballs and it becomes a success and it becomes hot or if it doesn't i don't know that um going at it a second time unless you really change quite a significant amount of things is necessarily going to give you a different outcome if you see what i mean that's a good segue into demna and caring and gucci and let's start with them.

18:14I have a piece actually running today on some changes at Caring. Again, this is going to run like a week later, but you all should check it out. It was Thursday, June 4. Gucci is an interesting one. And I don't know if you saw in the cut, Kathy Horan mentioned this. And I had also heard this, that after talking to you at the Capital Markets Day, Demna was incredibly inspired. Because you said something to him about like, what's your silhouette? What's going to be your signature? And he wrote a memo to his team. He was so inspired by you. And I confirmed this. I confirmed this. And Kathy already wrote about it.

19:01I was like holding it for something. But I know that he has shared this with people. So I'm just curious, like, what do you think after the Capital Markets Day, after they're finally hiring executives all that stuff is in the works like gucci has dem has had two runway shows now the it seemed like the new york show was pretty well received the first i thought i think generally it's been like all pretty well received it he has a lot of goodwill in the market, but it's like not sure if it's going to be right. What do you see after hearing Luca DiMeo talk for three hours? What do you think is going to happen there?

19:52Luca Solca:My impression is that there was a lot of talk in Florence about optimization, about organization, about processes, functions, and so on. But what I think I didn't get from that Capital Market Day is a clear idea where Gucci fits today in the social debate, in the cultural debate, and why the Gucci values become relevant again and excite consumers. because nobody is going to a store in our industry to seek a functional benefit. I don't go to buy a coat from Gucci because I'm cold or I don't buy shoes because of their foot. What I want to find is something that resonates in the current zeitgeist that gives me the urge to belong and to sort of look like that and to be like that.

20:59Luca Solca:And I'm not sure that it's yet clear what Gucci has to mean. I think that in the 90s, it was very clear where Tom Ford was taking it. He was embracing the power sax revolution. It was sort of very much in your face. Then Alessandro, 10 years ago, was embracing the LGBTQ drive to set the aesthetics agenda, gender fluidity, and so on. Those were really very important points in the cultural debate at that time. What is that Gucci stands for? What is Gucci's meaning today? And I think to some extent, this is what Demna has to come up with. And I think he was telling me that during this conversation in Florence, that he's working on the idea of confident and flirty.

22:00Luca Solca:But he was also saying that he's at the beginning of this exercise, that La Familia was more than anything an exercise that he had carried out for himself to understand the brand in greater depth. So I think it's still working, to be fair. And maybe, again, contradicting the point that I was making before, maybe it's going to take a bit more time to come up with a clearer and sharper idea of what Gucci stands for. Because, you know, you can cut costs until the cows come home, but the sharp price is only going to sustain where it is and move forward. if you start to see Gucci growing the top line.

22:45Luca Solca:And at the moment, I don't know that this is a guarantee that we'll have it in 26, really. Yeah, it's interesting. I've heard from people inside Caring that they are going long on this and they're going to invest, which is kind of the antithesis of what DeMeo was saying. The whole thing was basically like, if he made a comment, I quoted it, he used some like extremely aggressive word that was basically like if you don't perform I'll cut you I forget what it was um but but I essentially what I've heard is that they're going long and they're investing and they believe in it and and also that and I mean he said this to shareholders last week that it's encouraging I think in the U.S.

23:34in particular the thing that he is really good at is I think he really he has a really good handbag understanding and the team around him there is really really good and Becky Malinsky was on the podcast earlier this week and she said when she went to the Reesey for for the crew show that the bags just looked amazing and I think it's interesting it's the first time I as a consumer have ever been interested in his clothes for me like I've been interested in them because I think he's brilliant and smart and I like looking in them I like seeing people in them but they were never my style whereas his sort of meditation on the Tom Ford stuff I really like it but I think you're right that it's still not clear what it and and also he this is the first designer they've had or i mean successful designer they've had like truly successful that we knew them before so it was like with tom ford and alessandro those were brand new ideas for people they had never seen them whereas we know what demna stands for so when i'm looking at the skirt list here and the dem it's like i see the demna in a lot of it and that's complicated for gucci because you want like you said you want something newness gucci is about newness that there and so that's the tricky thing is like how do you make

25:14Luca Solca:something look new when everybody's already familiar with you yes and i think that you know If you say that the bags have improved significantly, that is going to be a great piece of news because my impression is that going to the stores today gives you a feeling that not very much has changed, primarily because the bags look similar to what Gucci had before, I think, and the accessories in general. I thought that at least from what the feedback I received on what we saw in February, the feedback was a lot better for the fashion than it was for the shoes or for the handbags. And if those improve, then I think that Gucci has more of a reason why to potentially recover.

26:10Yeah. Well, good luck to them. Do you think, I know Gucci is caring and caring is Gucci. When you look at the results, though, are you also looking at what happens with Saint Laurent and Bottega and how important is it that those brands are growing? Do you think that those brands have potential to be much bigger than they are?

26:34Luca Solca:I think Bottega, for sure, has the ability to move further. I think that I don't know that Bottega is necessarily going to be very relevant in fashion I think that in leather goods it could be even more on the front foot I had a sense that this idea of sort of making the stores bigger in order to have fashion in them was again a bit of a cookie cutter approach that maybe works at Gucci but doesn't necessarily work in a specialist brand like Bottega, which is 95 % leather goods and will likely stay that way going forward. So the bigger the stores, the more dilutive they become. I wonder if they should just have more exquisite and better bags.

27:28Luca Solca:That's my layman's viewpoint on Bottega Veneta. In the meantime, they managed to lose to great designers, Daniel Lee and Mathieu Blaisier so you know there's work to do there and the CEO as well has gone I believe that that will be announced soon if it already hasn't been so if by the time this airs I don't want to jinx anything but I'm pretty sure that they made that decision and it's coming out soon so i would expect i would expect i think that uh the whole senior management uh as we could tell from the airtime in florence is uh and must be in transition i think lucas spoke three and a half hours and gave very little uh airtime uh to his team uh probably for a reason so we saw the appointment of a new CEO and alexander McQueen i think that uh that's going to be further adjustments to the senior management are there.

28:41Luca Solca:And I don't think that, again, Rommel's built in a day. These smaller brands are definitely important because they're not so small. I don't know that they will ever break into the Premier League, that they will ever become mega brands. But if they continue to grow, they can definitely help at a time when Gucci is yet in the process of finding its way. Yeah. Okay. We could talk about caring for this whole time, but let's move on to LVMH. And we kind of dug into the Dior of it all. What else do you think about what's happening there? I've heard like market intel that Celine is starting to pick up.

29:21It took a minute, but that it's starting to work. What do you think is obviously Louis Vuitton and its success is the most important element of all of this? How do you think the next three quarters are going to be for LVMH?

29:40Luca Solca:I think that we should see a continuing progression, LVMH, in terms of organic growth in the fashion and the goods division. I thought that the minus two in the first quarter was already quite a good number because there were the Takashi Murakami comparables in the first quarter, And there was also the one-off impact of the Middle East, which we expect to be a lot more muted in the second quarter. So I would definitely be expecting that in the next three quarters, organic growth in fashionable goods turns positive. And that would be a very important signal to indicate that, you know, it's not the end of the world.

30:28Luca Solca:luxury goods will continue to stay relevant and investors and the market have been reasonably and understandably distracted by what has been going on in tech. Goodness me, these stocks are skyrocketing and so there was not a lot of love left for the luxury goods sector. But if we start to see an inflection in organic growth and if we see it in the largest company then this I think could potentially be a trigger for renewed interest from investors and I believe that when it comes to Vuitton there's very little not to like if Vuitton endure work and if there's no Takashi Murakami in the comps. I think that organic growth in the positive is really within reach, and I expect that there's going to be more contributors.

31:28Luca Solca:L 'Europeana, as far as I understand, continues to do extremely well. And what you say about Celine, definitely Celine would be in the top five brands in this division, so this could definitely also help. Yeah, and I think Fendi, I heard that there were like 7 ,000 signups, new consumer emails when she joined. So that is positive. That doesn't sound like a lot, but it's a lot, right? It is, yes. Or a brand like Mount, indeed. The question for me on Vuitton for you. I know that the ship is doing well in Shanghai. Everyone loves the ship. Yeah. Both of those collections don't get, are not well received in the market.

32:20So the Nicola Gessger, it's every season more, Gessger, sorry. I guess you can pronounce it either way, but Delphine Arnault says Gessger, so that's what I'm going to say. But every season, there's more speculation. I think his contract is up next year regardless of like that his time is up and also no one wears the clothes. Why are they doing this? Of course no one wears. I mean people there are billions of dollars in women's ready to wear in that business. They're wearing something whether they're wearing the runway clothes. I don't know. But Pharrell, obviously, pop culture icon. The collections are kind of like no one really has an opinion about them.