Why Luxury Still Can’t Find Its Way Out of the Slump

0:07Hello and welcome to The Debrief from the Business of Fashion, where each week we delve into our most popular BLA professional stories with the correspondents who created them. I'm executive editor Brian Baskin. And I'm senior correspondent Sheena Butler-Young. Most of the major luxury groups have reported their first quarter results, and the numbers are not pretty. LVMA's reported lower sales in its fashion group, which includes Louis Vuitton and Dior. And Caring hasn't made as much progress turning around Gucci as hoped. Even Hermes, which never seemed all that affected by the luxury slowdown saw its stock have its worst day ever after reporting slower sales growth than expected.

0:44This was supposed to be the moment when big luxury got its act together, and instead the industry seems more adrift than ever. What is going on? Today, we're joined by BOF correspondents Mimosa Spencer and Robert Williams to talk about why luxury is finding it so hard to shake its slump. Hi, Brian. Hi, Sheena. Thanks for having us. Thanks for being here. Robert, let's start with you. Luxury brands have been reporting weak sales and a lot of the problems they talked about earlier this month for quite a while now. I mean, why did this set of results in particular seem to be such a surprise to everyone?

1:18I think there were some surprises in the results, mainly that the impact from the conflict in the Middle East was more muted than anticipated. It was quite significant. We saw like a 2 % drop in fashion sales at LVMH, and they said that it probably would have been closer to flat versus still falling if there hadn't been this conflict in the Middle East. So it was material for them. But so far, most of the companies have said that, you know, the impact of this has not spilled over to other regions that have been holding up well, like the United States. But where there's been maybe a bit more surprise is that people within the fashion bubble have been feeling really optimistic that all of this change in terms of new creative directors taking over lots of brands, there had been a lot of optimism in terms of how that could translate to sales.

2:11And I think over the past few months, and then what was really confirmed in these numbers, is that what that can do for a company is pretty limited, especially in isolation. Mimosa, anything to add there? I mean, you've been covering luxury fashion for quite a while, but you're new at least to BOF, relatively speaking, and to our little corner of the fashion bubble. I'm curious if that rings true to you. I mean, did it feel like the perception when you talk to people in the luxury industry is different than when you talk to ordinary consumers or Wall Street analysts? Yeah, I think to Robert's point, there was this kind of feeling that finally things were going to turn the corner.

2:51There was so much excitement about these new designer debuts in September, and it felt like there was something building. The end of the year wasn't so bad. And it was kind of similar to the year before when, you know, the Christmas holiday season wasn't so bad. So we entered a new year thinking, OK, maybe this is when luxury will turn the corner. There was also those images of the frenzy at the Chanel stores, which was a direct result of, you know, this new designer and new excitement. So it's been really interesting to see how the industry started getting a bit of its mojo internally back. But then when that didn't translate to sales, there was definitely some disappointment.

3:32Investors tend to look at here and now and, you know, they want to see the results right away. You have to remember, of course, that it's going to take time for a lot of these new styles to come into the stores. We're still very early days, but there's been so much hype and excitement around these creative resets that I think a lot of investors were expecting some earlier results. Well, let's talk about that because with LVMH, this was really apparent because they did say that there's been this really positive reception to Jonathan Anderson at Dior. And those designs were showing up in stores around the start of the quarter.

4:09And yet there seems to be a disconnect where it didn't translate into that sales bump that I guess people were hoping for. I mean, why is that? Yes, you're right that LVMH did say there's been a really strong response to newness. They wanted to really reassure investors that even if the numbers still looked pretty lackluster, the steps they've been taking in terms of revamping the lineup of designers and the products they're putting out, they feel like that is getting traction. I think what's just a bit more worrying and where the overall narrative has felt a bit gloomy in the past few weeks is that it seems like big, bold changes to try to get your mojo back, as Mimosa put it, at some of these brands, that the result of that is more of like treading water or stabilizing versus actually like reigniting growth.

5:04And I think the biggest concern right now is not whether the luxury industry can weather this storm. Most of the big companies are quite resilient or have stopped losing ground nearly as quickly as they were the past couple of years. And yet no one can really see where the growth is going to come from. Is this still a growth industry? And what will the industry look like? How will it operate if it's not growing anymore? are kind of the big questions that are starting to be asked. Can I jump in and say the China market has been key to all of this? And there are a lot of questions about what kind of growth we'll see from China in the future, if it's going to be growth or not.

5:47And that's been one of the big focuses. That was one of the reasons for a lot of investor excitement. Some were starting to think that maybe China will turn the corner and we'll get some of that growth back. But the question is whether the kind of growth we saw in the past will actually come back. It seems like it takes a lot more work for a luxury brand to actually get good results in China. Will the Chinese spend in the same way that they did in the past? Or are they going to start looking more to their local brands, to looking to experiences? There's a bigger question about whether there's a structural shift in the kind of luxury spending we'll see in the future.

6:26I think there's no other brand that's probably an example of this whole growth quandary than Louis Vuitton. I love what the CFO of LVMH said on the call, saying that we, the quote is, we need not enter into collective anxiety about Vuitton because if we look at the brand, it's been leading in all key markets for many years. Let's talk about that growth thing a little bit more, because how realistic is it when you have these big luxury conglomerates and these big brands that have been growing the way that a Louis Vuitton is that investors should expect this constant, constant growth? Like at some point, where does that growth continue to come from?

7:00Well, I think that the hope and the investment case for a lot of these brands for a long time has been that it's a virtuous circle. that the bigger these brands get, the more they have to invest in growth, the more they can invest in having the best stores, the sharpest and most innovative designs. And I think in the previous cycle of growth, I think people were quite astonished at how far Louis Vuitton could go, how quickly they went from being a 10 billion per year brand to a 20 billion per year brand was really quite astonishing. I think every time people have expected them to kind of run out of mountains to climb.

7:37They've found some new initiative, whether it was, you know, buying the world's biggest uncut diamond and using that as like a huge visibility and communications operation to like shine a spotlight on their new high jewelry arm, which then they, you know, did grow into a proper business. You know, I think they've been very good about doing things that felt like these huge flashy initiatives to make you talk about a brand whose product offer is quite stable and quite classic at the core with these monogrammed bags that are really just these go-to staples of the luxury industry. And then they were also kind of building these new product lines at different price points for people that have maybe kind of graduated out of those more obvious purchases.

8:20I think now the recipe is a little bit under strain there. Cecile kept saying, you know, don't worry about Vuitton. We're not worried about Vuitton. But usually they're so not forthcoming about this. And they usually wouldn't even choose to comment on a lot of the things that she was talking about. So it made it sound, I was like, you do sound kind of worried, you know, coming out guns blazing about how everything's amazing. I was not worried about Louis Vuitton before, but I really am now. Dude, don't you worry, Brian. I feel bad. I feel like she recently stepped up as the CFO and she is really, really sharp.

8:56But in that, you know, public facing communications role. This is one of her first earning calls, I think, you know, maybe the sixth time that she's done this on her own without anyone else from the top leadership team. And I hope she doesn't, you know, feel too much like she stuck her foot in her mouth by choosing to be quite transparent about what they're thinking about Vuitton, because in the end, it did kind of have the opposite effect. You know, I think LVMH would be very happy for the story to still be Dior because Dior is, you know, their second biggest and most profitable brand, not the first.

9:28And they have taken big steps to turn it around. So, you know, how's the turnaround going at Dior? Is it coming along faster or slower than expected? That's a much more manageable narrative for them than for there to actually be, you know, any scrutiny or concern on Louis Vuitton. What can be said for Louis Vuitton is that it has been extremely resilient through this slowdown. They grew extremely fast. And when the other brands that had grown very fast during luxury surge in 2022, 2023, the other ones when, you know, when that surge was over, they really retreated quite a bit. Louis Vuitton has managed to kind of stabilize and defend its position quite a bit.

10:05But ultimately, the industry is looking to this brand to create a market for itself, to find new avenues for growth. We're used to seeing, you know, no matter what bad thing happened in the economy, whether it was, you know, the yellow vest protests in France or whether it was a war, a conflict, the coronavirus. We were used to seeing Vuitton really triumph above that. and now we have this crisis in the Middle East that they're saying is actually a bit more contained than anyone would have thought and yet Louis Vuitton is still not managing to go and kind of create a market for itself. And it's also tricky because they'll often give you a little bit of guidance about how Vuitton is doing and how Dior is doing compared to one another because they're the heavyweights of this big division and this time I thought they veered on contradicting one another They're like, oh, no, no, Dior is in line with the division.

11:00Oh, but so is Vuitton. Usually you have a little more distinction between the performance of one or the other, but they couldn't, like you said, Robert, about the narrative. It's a bit trickier this time. Well, I think they were worried about the narrative on Vuitton kind of fading. And one of the analysts said something kind of based on the assumption that it was doing less well than the other brands in the group, that it was underperforming the group. and you know they didn't tell him that he was wrong they just said factually we never said that which was kind of a which i i wasn't sure how to take that as a steer was that to say like it's not underperforming or is that almost like you know a confirmation to say like we haven't told you that but you know with not without saying that it was wrong so it was all like a bit much to parse.

11:52There was one genuine bit of good news in these results, which was watches and jewelry, which again and again has proven so resilient, even as fashion has faltered. Mimosa, you're our jewelry expert. Tell us, why is this one corner of luxury continuing to outperform? Yes, well, I would just say within watches and jewelry, you want to be careful because watches are actually the business of not doing quite as well as jewelry. Again, lumped together for reporting reasons is very convenient. Jewelry is doing a very good job right now at grabbing all the market for high value goods that people want to treat themselves that don't seem like overpriced handbags that will lose their value.

12:38Jewelry is seen as having an investment value, whether that's true or not, you know, to be whether the gold value of your investment pieces is going to hold is another story, but it's how people perceive it, right? So jewelry prices haven't gone up in the same way that handbags have gone up, handbag prices, because a lot of the luxury brands during the post-pandemic boom kind of took advantage of this raised appetite for treating oneself and raised those handbag prices up so high that they got close to jewelry prices. And when you look at keeping the value of something over the long term, jewelry seeming a little more obvious.

13:17Although they made that case, right, that a handbag, they made that case, right, that a handbag was also an investment and that was going to appreciate too. That's true. They did. But not all of them have stood that test. The other thing is, you have to remember this market, there's a, so jewelry market is quite fragmented still and branded jewelry, jewelry with a brand name on it is still, it's a growing realm right now. And And Cartier, which belongs to Richemont, has really been at the forefront of this jewelry boom. And an interesting thing that Richemont has been very careful about raising prices in the past few years.

13:57A lot more conservative about the fashion brands when it comes to raising prices. And they've been taking the long view, very slow and steady, and really focusing on specific designs that they just keep marketing the same designs over and over. so people become very familiar with them. And this strategy has really paid off. They're also careful about not flooding the market with too much stuff, which some could say that the fashion brands perhaps were guilty of. And yeah, I think this is something to keep an eye on because LVMH is trying to grab a lot of that. Bulgari and Tiffany are still doing very well at Kering.

14:39Kering has a smaller brand, Boucheron, and under the new direction of Luca di Mayo, they're really going to focus on investing more in promoting this jewelry brand, which has done quite well. So I would say keep an eye on jewelry because everyone's woken up to the fact that it's outperforming the rest of the industry. So as everyone muscles in on this space, let's see how that evolves. I was just going to say at LVMH specifically, I don't think that we got as much visibility on how much Bulgari is still driving the business in the watches and jewelry sector, whether if that's just because it wasn't what we were talking about as much more or because it is or isn't.

15:22That's not clear. I think the brand is still doing quite well, but they were sharing a bit more about Tiffany than usual. They said that the shift to fine jewelry, which Tiffany means not silver jewelry, had been going quite well, and that now it's, you know, more than 60 % of sales is coming from fine and from high jewelry. And so the share of silver in that business, I think it's getting smaller. But I think, you know, they're managing it quite well in the sense that they're not acting like it isn't a silver brand or like they don't have these amazing, desirable silver products. And I think someone who is a slightly less wealthy luxury customer who wants to treat themselves or buy a gift, you know, they're finding things in that silver category.

16:08And then people with a bit more money are willing to be upsold there into the fine jewelry and the high jewelry. So kind of Tiffany's strength, I think, is it really can span a really broad range of price points. And I think they're seeing a huge success with that.

16:25We'll be back with more of The Debrief right after this.

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19:19So why don't we switch gears to caring and talk about Gucci a little bit. So sales at Gucci down 8%. How would both of you, and I'll start with you, Robert, characterize where we're at with the turnaround at Gucci? Obviously, Luca DiMeo came in from the auto industry, much heralded, a lot of people watching what he was going to do and executing this turnaround. Where are we now? Well, for Caring overall, I think it was an interesting quarter in the sense that Gucci, the numbers were still disappointing relative to what the market was hoping for. and the numbers were still disappointing overall that they haven't really returned to growth was a bit of a disappointment for some considering that they're coming off of a couple really weak years in terms of growth.

20:03I think people were hoping that they could turn a corner a bit more quickly and with a bit more speed than others. But they have stopped losing market share to LVMH, which is an interesting point. You know, that's been their biggest rival for a long time. And now since a couple quarters, even if Gucci has been underperforming, you know, the group is struggling and is sluggish, but at the same scale, same velocity as LVMH. So that's kind of one hopeful sign there. At Gucci, what's happening is that kind of the products are starting to trickle in from the La Familia collection he did in September.

20:43And then he had his show, which was much more focused and directional and, you know, this big fashion moment that they've done in February. You know, I think where we are on this turnaround is that the jury's still out for a lot of people about whether or not this creative is going to be the right creative for this brand. But what Luca de Mayo is telling people, you know, meeting them in Florence isn't just, you know, that they have a more global strategy for Gucci beyond what we've already seen, which is something Dimna and the people on the business side have been saying that, you know, these are each just one moment, one touch point, one part of my vision is something that they've been really, you know, insisting on ahead of like their cruise show in New York, which might have a quite a different flavor than what they showed in February.

21:32That's going to be in a couple of weeks in May. Not vanilla ice cream, but spicy. That was my favorite quote, Robert. He said it was, Gucci is not vanilla ice cream. It is spicy. So maybe we'll see spicy. Yeah, I think spicy. Well, I mean, that's the tricky part with Gucci is that people want that really stable, giant business where everyone can buy something that you get from the vanilla ice cream, but then they still needed to have that spice factor. And so I think, you know, they saw that show in February, I think for many was a bit too spicy for many. There's still a lot of debate on, you know, what this turnaround is going to look like and how quickly it can take off.

22:12But what they're saying now, and I think it was really smart, is DeMeo is saying, you know, on the one hand, there's all these moving pieces. And he said one thing that sounded really quite tough in terms of when you have all the CEOs and designers in the room. And he said, well, for me, an organization chart, it's always in pencil because you never know when you're going to find someone whose talents are better suited to a certain challenge. And so that's a pretty tough message to give in front of that audience. At the same time, he said that what Gucci has suffered from the most in recent years is instability and too frequent change.

22:51So I think they are quite determined to make it work with the creative and with the team they have in place rather than changing if they don't get exactly the right feedback at the right moment. And I think that is a smart way to approach things. I think the role of the creative director has been really big at Gucci. And it kind of just the fashion part of Gucci really drives the narrative there, which at such a big luxury brand might not be totally sustainable. So they might need to find the way to let it still be spicy, but a more adapted strategy to a brand that big might also be to say, we're going to make do with, you know, and the creative is going to be just one part of what we do.

23:34I have a spicy question to follow up on that, which is if that's the plan, why would you put Demna in that role? This is a really good question. Demna is a fascinating designer. One thing you have to realize is that he has an uncanny ability to put a finger on the pulse. At Balenciaga, when the COVID crisis was just exploding and lockdowns were about to start and nobody knew where the world was going, he showed this crazy show with red blazing skies and the audience was seated in bleachers that were sinking in water. And it was this crazy kind of dystopic view. And that was what people were feeling.

24:15And then when people came out of lockdowns, he came up with this crazy idea where he sent, he put everybody, brought everybody together in this big theater and showed them a Simpsons film and turned the catwalk into a red carpet event where people were walking in. And it kind of turned everything on its heads, but people were laughing. I'd never seen all these, you know, very uptight fashion people all of a sudden were, you know, belly laughs. and so happy to see one another. I just wanted to say with this is that there's something about his shows and his way of capturing what people are feeling and putting it out there in a way that I haven't seen with other designers.

24:53Another thing he did is he sent models out on the streets and filmed them to the music of, you know, sunglasses at night and just people walking down the street. It was a time when people were locked down and they couldn't get out. And again, that was something that resonated with a broad amount of people. So I would say, let's watch this space because maybe he has an idea of what we're going to be interested in in the future. I mean, I would say don't underestimate him because it's hard to explain. You know, sometimes people look at people outside of the fashion world and look at these fashion and say, OK, that's a little weird.

25:30I can't imagine wearing that. But when you start seeing things on the street, you start seeing other brands kind of copying them and perhaps not as exaggerated. But he has a way of pushing the conversation forward when it comes to design. I didn't mean that to question his talent. I think those are excellent points. I guess my question for both of you is more, does that kind of talent play nice with an auto industry CEO who talks a lot about speed and efficiency? I think it certainly can. And we've seen that at many brands. And I'm curious if this particular pairing feels like it has that potential to channel that creative vision into a global luxury business.

26:12You know, at their strategy day on Thursday, they had Demna stay and speak and chat with analysts and investors, honestly, for like hours at the lunch break. And then again at the cocktail party, I had never seen a listed group, you know, let investors or the financial markets have access to their creatives and creators before. You know, when Debna showed up that morning, I was expecting him to get up and give some sort of three minute speech and then peace out and that they trusted him to, you know, stay on message and that he was going to be able to, you know, help the narrative with investors by having access to him and what he's thinking about and what he's planning to do versus wanting to kind of really contain that.

27:00I thought that was a really strong signal in terms of what he's able to do and how adaptable he is. I think what's important is that he is a creator and not just a curator. We see the sociological aspect in his work, the way he documents street style and street fashion. And you might think that he's someone who's just kind of styling it, who's putting it together. but he also really has this clear vision that drives fashion forward, that drives the narrative forward. And I think, you know, you could see like the makeup and the hair and makeup at the runway in February was so strikingly different than what's been seen as like conventional good taste and what is in, in the past few years.

27:44And, you know, he's putting his finger on, you know, what can be next. And I think that's going to be an important part of the puzzle at Gucci. I just think the question that will remain to be seen is how well they can build a structure around that to kind of get that magic from having that vision, but then also kind of build something more stable that can support it behind. So I want to talk about Hermes a little bit as well. We saw their stock drop as much as 14%, I think, on the day of the results. And for the longest time, they have been the invulnerable brand in the luxury sector. Are we buying there's a true slowdown taking place?

28:26It feels like there's probably more, I believe the word I would use is benign reasons for this. Maybe, you know, tough comparables, maybe inventory stuff. What's really happening there? Is Hermes really on a slowdown or is this just a temporary blip? Those are good questions, Sheen. I mean, that's exactly the right way to look at it. This is a brand that has been on such a roll that, you know, having one quarter where it's still outperforming everyone else, but just, you know, slowing more than people were expecting it to. I think there's plenty of reason not to be very concerned because of this.

29:04You know, they move in a situation like the conflict in the Middle East that does can have a very material impact for them because they're not going to just like start shipping, you know, their most expensive and best handbags from one store to another, you know, just to get it to another market to make the numbers that quarter to prevent having a slightly weak quarter. I think that if they know that the demand is still somewhere long term, that's still a viable product. If the store manager still wants to have that bag to sell to a client that's on their roster once things reopen or once that client is back to whatever country they might not have been able to get back to yet because of everything that's going on with air traffic, I think those things could really show up in their numbers.

29:56I think the question is just going to be, you know, how long can they continue to outperform in all of these other categories beyond the core handbags, you know, where they have such a controlled, scarcity-driven model. You hear so many reports from people that collect those bags about, you know, the stuff that they bought that they felt like they were either openly told to buy or that they felt like they needed to buy in order to get offered the bag they want when they want it. That was a reflection of how much demand there was for those items. If people are starting to, you know, pull back a little bit, it's not going to show up in the handbag sales at first.

30:39it would actually show up maybe in the other categories in the quarters to come. I would add that something to keep in mind about Hermes, everyone's so surprised at how long they've outperformed. And, you know, we have in our minds that this is the brand that always outperforms. But remember that when there are booming times for the fashion brand, Hermes underperforms. So this is something, you know, Hermes is one of these kind of slow and steady wins the race. They've been going better than slow and steady in recent years. And there are a lot of questions about whether this designer renewal at places like Chanel and Dior could perhaps take some of those super wealthy customers buying the really fancy handbags.

31:22But remember, Hermes' tight control over their supplies also means that they're not going to grow at crazy fast levels when things go really well. So, you know, they increase production 6 % a year. That's been the same for years and years and years. So for them to come down from this really fast growth in the past few years, I feel like some of that can be kind of a natural adjustment as well to a change in the cycle. So it sounds like we're not buying the whole Birkin fatigue narrative. I'm not not buying it. I it's like it's how much fatigue will there need to be? I think that there is some Birkin fatigue.

32:07I think there are some customers who live in some cities who move in certain social circles, who are seeing these flagship bags a lot more than they used to. And perhaps to an extent that they could seem less cool, less desirable. I think the question is how much Birkin fatigue would you need before that really shows up in the numbers? or becomes a problem for Hermes. And I think the answer is quite a lot, which means they have a lot of time to push on other levers. You know, we see Hermes as this extremely traditional company in a lot of ways, because they have these idiosyncratic processes and ways they do things that they kind of stick to the Hermes way.

32:48But they have made bold moves before to make sure that people perceive them as innovative and creative when it's needed. And so, you know, when they brought on Martin Margiela to relaunch the ready-to-wear and to kind of get themselves, you know, a credible slot on the fashion calendar, and then when they hired Jean-Paul Gaultier to succeed him, you know, these were bold moves that kind of speak to their ambition to not just surf on, you know, that deep well of demand, not to surf on those waiting lists. So I think there are some signs of softening, some signs of Birkin fatigue, but they have a lot of time to kind of adjust their strategy as needed before that's going to translate to the numbers, I think.

33:31And we have Grace Wells Bonner's collection coming in January. If I buy another Birkin, I don't know what I'm going to do with myself. I'm so fatigued of all of my Birkin bags, I just have to say. Well, that sounds like a good problem to have. I'm really excited to see what's going to happen with the Grace Wales Bonner launch in January. I think if they proceed as thoughtfully, deeply, and rigorously as one might expect them to, especially with how long they've given her for onboarding. I think they announced her hire back in October or November, and she's not going to show until over a year later.

34:07They've really given time to cook something up that I think is going to be quite exciting. And when you think about all of their different factories, supply chains, craft techniques that they could deploy to make sure that that collection hits, the sky's the limit. And so I'm pretty excited to see what happens on that. I think if the numbers on the fashion and apparel side continue to slow down, there might be eventually some more questions about the strategy on the women's wear side. You know, how they can kind of create the excitement to keep growing that after a few years where that was just a phenomenal success for them.

34:49The haute couture launch is slated for some time by the end of this year or next year is what they've applied, I think. Right, Mimosa? 2027 is what they're saying now. But yeah, that's another big opportunity. And it's nicely spaced as well with the Grace Weld Bonner debut. You know, they've got something in the pipeline in this kind of longer term vision, like you were saying. Speaking of Birkins, where does the aspirational shopper fit into this equation? I mean, some might say one indication of their MES quote unquote slowdown is that maybe they're not speaking to an aspirational shopper. Maybe that's what's hurting them.

35:26I'm sure that's probably not true. But where does the aspirational shopper actually fit into all the equations of luxury right now? Well, that's been one of the big questions at Dior and Chanel and Gucci, for example. And these brands are so big that they do need volumes as well. to keep their businesses growing or to make them grow. And so far, we're seeing that these designer resets are resulting in bringing people into the stores. A lot of these brands have bulked up some of the entry-level products. And sometimes, you know, even if they seem expensive, one analyst put it to me this way, he said, it doesn't matter if this perfume seems crazy expensive or the Louis Vuitton lipstick prices were kind of wild in some people's eyes.

36:14The thing is you get people back into the stores. That's the most important thing is to get people coming in and looking and seeing what there is and pushing that door open because then you can pivot to sneakers or well, maybe not sneakers, but new shoes. Shoes have been a big item for attracting more aspirational customers. So I think that one of the big areas where these brands are focusing on is giving people newness so that they come in and check out the stuff in the stores. There's also, you know, I think that the brands have made a bit less progress than people might have wanted to see about reactivating aspirational shoppers, but where they have been really strong the past few months, I think is signs that they're reengaging their core customer, whoever that may be relative to who that brand is.

37:07I think at Chanel, you see this renewed momentum in terms of well-to-do women with big executive jobs in their late 30s, 40s, and 50s, who I think is a core audience for them that had faded, and now they are back in stores. And maybe instead of buying a bag, they're actually buying ready to wear. So that's a huge shift and very interesting at what scale that's happening and how long it continues remains to be seen. But I think they've done a really good job of saying, who should be a core customer for us and how can we reactivate them? I think Louis Vuitton with their 130-year campaign, with all of these images of the monogram, it's the 130-year anniversary of the Louis Vuitton monogram.

37:52And I think they've done a really good job spotlighting their most classic bags, their most, you know, iconic pieces with the monogram so that that core young executive customer who, you know, I think maybe they didn't want to be so much the first luxury bag for secretaries and first people getting an office job anymore. And that's part of why they raised prices so much. But I think they've started to kind of wake that customer back up at maybe a slightly more mature price point and stage in their career and life. And so they've, you know, they kind of have decided who is our core customer and they're focusing their efforts the most on that.

38:32And then aspirational, I think is just going to be as Mimosa says, maybe perfumes, lipsticks, scarves, Burberry is doing a lot around scarves, but, um, you know, that all of those shoes for less than five or 600 bucks, I don't think we're seeing that come back anytime soon. Mimosa, Robert, thank you so much for joining us today. This was great. Thanks for having us. Thanks so much, guys. Please be sure to check out Mimosa and Robert's luxury fashion coverage on businessoffashion.com. And I would particularly recommend that you read Robert's latest high margin newsletter, Caring Strategy Reveal Examined, which is up on the site right now.

39:11These and other stories are available to be of professional subscribers only, and you can find all links in the episode notes. You've been listening to The Debrief, produced and edited by Olivia Davies, Angel Nemov, and Eric Bria. I'm Sheena Butler-Young. And I'm Brian Baskin. We'll be back next week with a new episode. Thanks so much for joining us, and be sure to follow us wherever you get your podcasts.

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