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MILAN — Retailers hailed the Milan collections as a commercial bonanza — but at what cost?

With the dollar trading at about 80 euro cents, buyers were forced to bridle their enthusiasm for embellished sportswear, furs and retro-glamour and ask themselves tough questions about the more expensive European designer goods.

This story first appeared in the March 2, 2004 issue of WWD. Subscribe Today.

“The number-one thing we’re asking our buyers to do is convert prices to retail before making a purchase,” said Suzanne Patneaude, executive vice president of designer apparel at Nordstrom. “We have to make sure each item has intrinsic value. Euro strength is a complex subject and every retailer is going to have to become an expert.”

Janet Brown, owner of the eponymous boutique in Port Washington, N.Y., already began hedging a year ago.

“Our dollars are more precious this season — things are still 25 percent more expensive for me,” said Brown, who added she’s also facing an increase in shipping costs and security charges in Italy.

“I am still going to be careful with my budgets this season, and I have to be sure that if I buy it, I’m going to sell it.”

Depending on the hedging policy of their store or the vendor, retailers said they expect retail prices, come fall, to rise anywhere up to the high-single digits. And with the euro projected to gain further strength, Patneaude said spring 2005 is looming as a worry.

So far makers are doing what they can to meet U.S. retailers half way. “We have tried to keep prices stable, and our margins very tight,” said Marco Gobbetti, chief executive of Moschino, who’s leaving to join Givenchy. “With the euro so strong, we cannot pass on all of our cost increases to the customer.”

Marco Franchini, chief executive of Bally, said he, too, kept prices stable. “Our margins will have to suffer this season.”

Ann Stordahl, executive vice president of merchandising at Neiman Marcus, said budgets are set in dollars, not units, so there will most likely be less European merchandise on the floor next season.

Asked if Neiman’s would carry more American designer collections, Stordahl noted most big U.S. designers use European fabrics and face the same price pressures as their continental counterparts.

However, she and other retailers said they would emphasize domestic resources for their contemporary departments.

But the good news is “our customer is responding to exceptional pieces,” said Joe Boitano, senior vice president of designer, rtw, home accessories and children’s wear at Saks Fifth Avenue.

“You have to be really focused on showing unique fashion merchandise. That’s how we’ll strategize our assortments,” he added, noting that Saks’ budgets are up for European collections.

Bloomingdale’s is also honing its strategy.

“We’re not going to add a new line unless it’s meaningful to the Bloomingdale’s customer, and instead of planning double-digit increases in purchases, we might plan single-digit ones,” said Kal Ruttenstein, senior vice president for fashion direction at Bloomingdale’s. “But in the end, we’re not going to cut back on excitement, and we do believe the look of the clothes is more important than the temporary fluctuation of the dollar.”

U.S. buyers aren’t the only ones wrestling with the strong euro. Akihito Naohara, general manager, luxury brand divisions of Takashimaya Co. Ltd., said a weaker yen means the store is buying 10 percent fewer items this season than the year before.

Haru Suzuki, fashion merchandising for Barneys New York in Tokyo, said prices will probably have to be even higher to compensate for the prevalence of high-end materials this season, like fur. “We are being very, very careful, but we have the same budget as last year for the big brands,” she said. Still, the strong euro couldn’t dent enthusiasm for the collections.

“It’s been an incredibly commercial season for us,” said Sarah Rutson, fashion director at Hong Kong-based Lane Crawford. “It’s very attainable, real fashion. We’re actually going to follow the catwalk for a change.”

Janet Brown said designers played it safe, without being boring. “Designers have opened a parachute for themselves — and for customers,” she said, citing wonderful coats by Jil Sander and the return of the jacket.

“We’re surprisingly delighted with the energy and excitement and the individuality of the collections,” said Joan Kaner, senior vice president and fashion director at Neiman Marcus. “It’s a season of the item — beautiful coats at Armani, the dresses at Jil Sander, the great, embroidered shearlings and silks at Cavalli. Fur is everywhere, whether as accessories or scarves or small capelets — there’s so much variety.”

Robert Burke, vice president and senior fashion director at Bergdorf Goodman, said the message was sophistication and a cleaned-up image. “It was no longer in-your-face sex,” he said. “As a result, the collections were more sophisticated than in past seasons but there was no lack of modernity.”

“Milan is definitely fur city, tweed city and glitter city. Our challenge is not to buy the season too retro,” said Ruttenstein. “It’s all about the mix and how to put it together.”

But no one could ignore the fur.

“Almost every designer had a major fur statement, but there was something incredibly pure and refined about Marni’s that made them a standout,” said Scott Tepper, fashion director at Henri Bendel.

Fur is a hairy issue at Harvey Nichols, however. “It’s going to be difficult for us because we don’t buy fur,” said Anne Pitcher, buying director at Harvey Nichols. “There’s still such a reaction against it in the U.K. and we are confident with our policy. We’re going to have to find a lot of fake fur.”

Majed Al-Sabah, owner of Villa Moda stores in Kuwait and Dubai, called the Milan season a “jackpot,” rich in eveningwear and decorated day looks that he said will be perfect for his forthcoming store in Mumbai. “There’s a lot of embellishment, which is what we need, and no more basics. My customers get their basics at Zara.”

Barbara Atkin, fashion director at Canada’s Holt Renfrew chain, noted news in skirts. “The hemline was longer and [designers] were able to make it sexy,” she said.

Standout collections, according to buyers, included: Prada, Miu Miu, Roberto Cavalli, Jil Sander, Giorgio Armani, Dolce & Gabbana, Albert Ferretti, Gucci and Pucci.

Joan Burstein, owner of Browns, said, “I thought Missoni was brilliant and beautiful and going in the right direction, and I thought Marni was delightful. She is going forward, becoming a little more grown up.”

Julie Gilhart, vice president and fashion director at Barneys, said she loved Milan’s eclecticism, in particular the futuristic and historical references at Prada and the minimalist but detail-oriented Jil Sander collection. Her budget is up this season.

“Sometimes I think Milan is just one note, but this time there were a lot of different melodies,” she said.

Michael Fink, senior fashion market director at Saks, summed up Milan as “an eclectic, beautiful week, with wearable, very special clothes and an overwhelming attention to details.”

— WWD Staff

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