📢 “We are in the midst of a cyclical slowdown,” says Bernstein managing director luxury goods Luca Solca. Between the post-Covid euphoria fading to the background, the middle-class consumers under pressure, the effect of higher interest rates and subdued confidence in China, Solca assumes “continued soft landing” in the second half. “We definitely have an easier comparison basis playing for us, but a quick rebound of Chinese support seems difficult to imagine at this point,” he says.
📉 Even LVMH, the world’s largest luxury conglomerate, isn’t immune to the demand slowdown. A challenging environment in China and shrinking luxury demand have truncated the company’s previous run of sales growth in the double digits. LVMH fashion and leather goods sales grew 1 per cent in the second quarter. “[There was] no miracle with the luxury bellwether LVMH; the sector is likely to remain out of favour in the near term,” wrote Citi head of luxury goods equity research Thomas Chauvet.
💵 All in all, Q2 was a mixed bag, with Richemont in line with LVMH: Richemont sales were up 1 per cent in the quarter. Among those bucking the trend were Hermès, which delivered a solid 13 per cent growth, as ultra-wealthy shoppers continued to prove resilient. Consensus expectations for Prada Group (that is reporting its numbers on Tuesday) are a year-on-year increase of 13.7 per cent, including a 5.7 per cent for Prada brand and a dazzling 62.9 per cent for Miu Miu. Moncler Group held up well: the Moncler brand’s revenue was up 5 per cent.
💎 Profitability was at the center of conversations during earnings calls, as it’s complicated to preserve margins with subdued demand. Kering said net profits dropped 50 per cent in the first half of 2024.
EU CALLS FOR HELP WITH SHAPING RULES FOR GENERAL PURPOSE AIS | [SINGULARITY] TechCrunch
👨⚖️ The European Union has kicked off a consultation on rules that will apply to providers of general purpose AI models (GPAIs) — such as Anthropic, Google, Microsoft and OpenAI — under the bloc’s AI Act, its risk-based framework for regulating applications of artificial intelligence. Lawmakers want the Code of Practice to help ensure “trustworthy” GPAIs by providing developers with guidance on how to comply with their legal obligations.
📢 “The consultation is an opportunity for all stakeholders to have their say on the topics covered by the first Code of Practice, which will detail out rules for general-purpose AI model providers,” the Commission wrote. “The consultation will also inform related work by the AI Office, in particular on the template for the summary of the content used for the training of the general-purpose AI models and the accompanying guidance.”
💲 The consultation is a questionnaire divided into three sections. One covers transparency and copyright-related provisions for GPAIs; the second is concerned with rules on risk taxonomy, assessment and mitigation for GPAIs with so called systemic risk (defined in the AI Act as models trained above a certain compute threshold); and the third section deals with the reviewing and monitoring of Codes of Practices for GPAIs.
📊 The call and the consultation on the Code follow concerns that civil society organizations might be excluded from the drafting process. Earlier this month, Euractiv reported that the Commission was intending to rely on consultancy firms to draft the Code, leading to concerns of a skewed process that could favor AI giants.
TWO ARTISTS SUE SEC OVER NFTS BEING CLASSIFIED AS SECURITIES | [METAPHYSICS]
👾 In a landmark legal challenge, two artists filed a lawsuit against the United States Securities and Exchange Commission (SEC) today (July 29) to seek judicial clarification on whether the agency has authority over NFTs.
👨⚖️ Brian Frye, a law professor and filmmaker, and Jonathan Mann, a songwriter known on social media as “Song a Day Mann,” are the plaintiffs in this case. They are requesting the court to specify what actions involving NFT creation and sales might invoke U.S. securities laws. Central to their inquiry is whether artists need to register their NFT artworks with the SEC prior to public sale and if they are required to disclose any risks associated with purchasing their digital creations.
💥 The attorneys representing Frye and Mann have drawn a notable comparison to Taylor Swift concert tickets to underscore their argument. They contend that, similar to NFTs, Swift’s tickets are resold in secondary markets and promoted by the artist herself. Yet, they argue, it would be unreasonable for the SEC to classify Swift’s tickets or collectibles as securities, highlighting the potential overreach of the SEC’s regulatory authority.
🌵 Filed in the U.S. District Court for the Eastern District of Louisiana, the lawsuit seeks declaratory and injunctive relief to prevent what the plaintiffs describe as “unlawful enforcement actions” by the SEC against NFT projects. This legal action reflects a growing apprehension among artists regarding the SEC’s position on digital art.
WHO ARE THE NEW LUXURY CUSTOMERS? WHAT DO THEY CONSUME? [FASHION SYSTEM]
💌 Mercedes Erra, founder of Maison BETC, an agency specializing in brand strategy consulting, and Clément Boisseau, co-founder and CEO of strategy, conducted a study to understand who the customers are that have driven luxury figures up during the Covid crisis. And, by extension and post-Covid, what relationship do these new consumers, initiated or not, have with luxury? -- 🦄 Why did you carry out a study on new relationships with luxury?
🎩 We believe that brands must provide a service to people and therefore reach out to them. To do this, we must address fundamental issues, the relationship with luxury is one of them, insofar as it allows us to position the brands we support. We need to know the most cutting-edge ideas. Hence this study including prosumers. The quality of the study lies in the questions that force us to decide. At the same time, we select a mainstream sample (general public, editor's note) that allows us to analyze what the population thinks, in general. The difference allows us to know whether the consumption trend will continue to rise or whether it will stabilize.
💎 Prosumers are the most proactive and predictive consumers of future consumer or societal trends. We identify them via twelve questions, asked prior to all quantitative studies. These are carried out online by a panelist based in New York. This study represents a sample of 1,800 people: Gen Z (18/25 years old), Millennials (25/35 years old) and Boomers (50 years old and over), including 20 percent of prosumers. We added a filter: these people had to have spent at least two thousand euros on luxury goods per year, over the last two years.
🦄Why were you interested in the relationship that people have with the world of luxury?
💎 This study was carried out in nine countries, which are the biggest luxury consumer countries: China, Japan, South Korea, Saudi Arabia, United Arab Emirates, France, Germany, UK, USA.
🎩 These countries fascinate LVMH, which has understood that luxury consumption is there. We work with almost all the major luxury groups (LVMH, Kering, Chanel, Richemont, L'Oréal, etc.). In fact, it is in our interest to be in step with the evolution of the market. In luxury, 5 percent of people buy 40 percent of the items. These rich or very rich people represent a very particular audience. After Covid, this niche has not really changed, it is just growing a little because there are more and more rich people (see the fortunes made thanks to the Internet).
MIU MIU REVENUES DOUBLE IN FIRST HALF, BUCKING LUXURY SLOWDOWN | [FASHION SYSTEM]
📈 Prada’s red-hot Miu Miu label continues to buck slowing demand for luxury goods, with retail sales nearly doubling in the first half, the company reported Tuesday.
👠 The brand’s first-half retail sales jumped by 93 percent year-on-year, accelerating slightly from 89 percent growth in the first quarter. Flagship Prada brand’s retail sales rose 6 percent, slowing slightly versus the start of the year.
🌐 Overall, growth held steady at Milan-based Prada Group, with net revenues rising 17 percent to €2.55 billion ($2.76 billion).
⭐ Prada’s management team will comment on the results in a call with analysts and investors Tuesday afternoon.
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