Calling it the largest enforcement action against counterfeit goods on the West Coast, U.S. Immigration and Customs Enforcement said Tuesday that a long-term investigation involving $100 million of counterfeit luxury goods has led to the indictments of 11 merchants and clerks from San Francisco’s Fisherman’s Wharf district. A 25-count indictment charges the defendants with trafficking in counterfeit goods, smuggling and conspiracy. ICE revealed details of the case late Tuesday, after it was unsealed Monday in federal court. ICE said agents seized apparel and accessories bearing fake trademarks of more than 70 brands, including Coach, Kate Spade, Nike, Oakley, Armani, Burberry, Louis Vuitton and Prada. Goods seized included clothing, jewelry and watches, scarves, handbags and wallets, sunglasses and shoes. The investigation by ICE and Homeland Security Investigations agents into the Fisherman’s Wharf retailers started in December 2007 when U.S. Customs and Border Protection officers intercepted a container at the Port of Oakland containing more than 50,000 counterfeit accessories valued at more than $22 million. The seizure gave the agents the information necessary to target a total of eight shops, as well as nine residences and three storage units in the San Francisco and San Leandro areas over the next several months. The 11 defendants face penalties of up to 20 years in jail and a $250,000 fine for smuggling goods, 10 years in prison and a $2 million fine for each count of trafficking in counterfeit goods, and five years in jail and a $250,000 fine for conspiring to traffic in counterfeit goods, according to ICE. The case is being prosecuted by U.S. Attorney Deborah Douglas and is part of the Justice Department’s Intellectual Property Task Force. “To consumers who think designer knockoffs are a harmless way to beat the system and get a great deal, ‘buyer beware,’” said John Morton, director of ICE. “Trademark infringement and intellectual property crime not only cost this country much needed jobs and business revenues, but the illegal importation of substandard products can also pose a serious threat to consumers’ health and safety.” Federal officials have increased their focus on stopping the flow of counterfeit goods into the U.S. In April alone, ICE seized an estimated $260 million of fake apparel, accessories and other merchandise, a record month for seizures. In the first half of 2010, the agency has already initiated 560 intellectual property cases. In fiscal 2009, ICE initiated 806 intellectual property theft cases, up from 643 in 2008. The domestic value of goods seized for intellectual property violations in 2009 was $260.7 million, according to statistics from Customs & Border Protection. Sales of counterfeit goods cost legitimate businesses an estimated $250 billion a year in lost sales and revenues worldwide, and are responsible for the loss of 750,000 jobs, according to estimates from the International AntiCounterfeiting Coalition. read more
Luxury handbag maker Coach says better sales in North America and Asia helped its fourth-quarter net income rise 34 percent. The increase is a sign that Coach's lowered handbag prices and focus on growth in China is paying off. The company says net income rose to $195.5 million, or 64 cents per share. That compares with $145.8 million, or 45 cents per share, last year. Analysts expected 56 cents per share. Revenue rose 22 percent to $950.5 million. Analysts expected $888.9 million. Coach Inc., based in New York, says an extra week in the quarter boosted revenue by $70 million. CEO Lew Frankfort says market share grew in all regions. Revenue in stores open at least a year rose 6.3 percent in North America.
There’s unlikely to be a breakout in back-to-school business when stores report July comparable-store sales on Thursday. Preliminary reports indicate that consumers, content in June to leave their b-t-s shopping for later in the summer, kept procrastinating last month. Evidence is growing that they might need more promotional coaxing to open up their wallets, which could hurt third-quarter margins. “July, with scorching weather and decent traffic trends, should have ensured a solid start to the back-to-school season,” said Brean Murray, Carret & Co. analyst Eric Beder. “Instead, high inventory levels from key players, continued weak economic trends and the consumer shopping later in the season have combined to create what will probably be one of the most aggressive discounting seasons in recent memory, as there are already material price cuts on key categories such as denim and Ts.” Beder said results, particularly in the teen market, were not expected to improve through the b-t-s season, leaving retailers such as American Eagle Outfitters Inc., Abercrombie & Fitch Co. and The Wet Seal Inc. with a glut of inventory or an “unappealing” pricing model. Mike Berry, director of industry research for MasterCard Advisors SpendingPulse, was slightly more upbeat. Although apparel sales slipped 1.1 percent on a year-over-year basis in July, according to MasterCard data, sales at family retailers, a category that includes teen retailers, edged up 3.4 percent. SpendingPulse estimates total U.S. retail sales made by cash, check or credit card. Wary because of the rough-and-tumble action on Wall Street, luxury consumers cut spending last month, driving down jewelry sales 1.2 percent, including a 13 percent dive in high-end jewelry. Excluding jewelry, overall luxury spending was down 0.2 percent, according to Berry. Berry said, “Until consumers see encouraging news over a substantial period of time, they will continue to be skittish.” read more
If you are looking to dress like Madonna from her early days, here you go, oh and you must be a tween. Madonna's new junior's line is exclusively at Macy's, and somehow managed to draw a crowd of mini-Madonna teeny boppers. We can't help but wonder if they even know the songs that made Madonna a legend, and why would anyone feel the need to bring back that style?
Macy’s rolled out the pink carpet for Madonna fans on Tuesday. The performer’s enthusiasts were out in force at the Herald Square flagship for the launch of the Material Girl collection by Madonna and her daughter Lourdes, sold exclusively at the store. But while the collection generated lots of buzz at Herald Square, where all the festivities were centered, in other Macy’s outside New York, it was less of an event and drew fewer shoppers. Nonetheless, the retailer’s executives remain optimistic about the collection, which is being produced by MG Icon, a joint venture of Madonna, her manager, Guy Oseary, and Iconix Brand Group Inc. — which has already paid Madonna and Oseary $20 million for its 50 percent stake, plus earn-outs. So while Madonna and Lourdes won’t make an appearance for the line until Sept. 22, when they meet sweepstakes winners at the flagship, they no doubt were closely monitoring initial reaction. Teens with blonde streaks in their black hair and dark eye makeup, dressed in black tulle skirts and leggings, waited for the Herald Square flagship to open. A line wound its way from Broadway to West 33rd Street. The first 200 customers on line at six Macy’s locations received a bandeau top from the collection and a $10 Macy’s gift card. Taylor Momsen, the face of the Material Girl collection in advertising and marketing, performed an acoustic set later in the afternoon on the junior floor at the Herald Square location. Like her muse, Momsen has sparked controversy lately for her provocative style choices and for smoking. “In my day, we had Madonna,” said a mother attending Momsen’s appearance with her daughter. “We talk about smoking at home and how bad it is for her. No one in our family smokes. I don’t think Taylor influences how my daughter dresses. Everyone makes their own decisions on how to dress.” “This is beyond anything I’ve seen in my career,” said Terry Lundgren, chairman, president and chief executive officer of Macy’s Inc. “We’ve had 700 million Internet impressions since the collaboration was announced. Word of mouth took off and a grassroots” campaign started. “This has such broad appeal.” read more
Luxury for all? Not like it used to be. So-called aspirational customers — who helped lift the luxury category to unprecedented heights during the boom years — seem to be sitting on the sidelines in the postrecession period: still aspiring, but spending less. “The concept of luxury has restricted again,” said Concetta Lanciaux, principal of Switzerland-based Strategy Luxury Advisors, describing a shift in consumer priorities favoring heritage luxury brands or — at the other extreme — masstige retailers. It makes business more challenging for players in the middle and products that “look like luxury but it’s not luxury.” For example, designers’ second brands are “not doing as well as before [People] prefer to buy less, but a little bit higher,” she explained. “There are consumers that overreached, and during the recession they had to go back to a more appropriate spending habit,” agreed Michael Burke, chief executive officer at Fendi in Rome, noting that was particularly the case in the American market, hard hit by the financial crisis. “The market has become more polarized: either it’s entry price or true luxury….The middle has hollowed out. “You either have to be resolutely upscale, or you’re battling it out on prices,” he continued. “[Luxury goods] is not a democratic product category.” Pam Danziger, president of the Stevens, Pa.-based research firm Unity Marketing, said scores of American consumers who reached beyond their means into the luxury sphere during the boom years pre-2008 have since simply “dropped out” because of the recession. Danziger estimates consumers with household incomes in excess of $250,000 — the top 2 percent in the U.S. — spend three to four times more on luxury goods than the next affluent tier, those in the $100,000-to-$250,000 range. What’s more, given a choice between buying the “best of the best” or “better and occasional best,” the richest consumers preferred the latter option in her most recent research. Based on a survey of some 1,200 affluent consumers in the U.S., conducted last month, Danziger is predicting “cautious behavior” even among elite consumers whose “pent-up demand” for luxury goods led to a spree early in the year that is unlikely to continue. Lanciaux also foresees a tougher second half, noting European luxury brands were buoyed in the first two quarters by a “huge restocking,” plus a rise in the value of the U.S. dollar against the euro that has since eased. read more