AFP

Italian designer Alessandro Michele on Wednesday left Gucci, where he has overseen a surge in sales at the fashion powerhouse since 2015 but seen his star fade in recent seasons.

“Gucci today announces that Alessandro Michele is stepping down as creative director of Gucci,” said French conglomerate Kering, which owns the Italian house.

It said he had played “a fundamental part in making the brand what it is today through his groundbreaking creativity”.

Michele, in the same joint statement, said: “There are times when paths part ways because of the different perspectives each one of us may have.”

Kering said Gucci’s design office would “continue to carry the direction of the house forward until a new creative organisation” was announced.

Industry bible Women’s Wear Daily earlier on Wednesday said Michele was quitting after being asked to orchestrate a creative revamp to restore the brand’s lustre.

With his bookish chic looks and vintage mashups that harkened back to the 1970s and 80s, Michele helped turn the once-flagging house into a white-hot success, drawing in a new generation of fans with his anti-establishment veneer.

Michele also joined a handful of other designers by announcing in 2021 that the number of annual shows would be slashed from five to just two, saying that “clothes should have a longer life” and that his future collections would be “seasonless”.

Sales also got a boost from 2021’s Ridley Scott-directed “House of Gucci” film with Lady Gaga and a host of Hollywood A-listers.

But enthusiasm had begun to wane among industry insiders, according to WWD, with Kering CEO Francois-Henri Pinault eager for a quick change at the helm.

Pinault wished the designer a “great next chapter in his creative journey”.

“The road that Gucci and Alessandro walked together over the past years is unique and will remain as an outstanding moment in the history of the house,” he said.

Financial analysts at the brokerage firm Bernstein said earlier in a research note to clients: “Gucci is suffering from brand fatigue and Alessandro Michele has been doing the same thing for the past seven years.”

“Institutional investors appear to agree that a new approach is needed to relaunch the brand,” added analysts at Royal Bank of Canada.

The Black Friday kickoff of the holiday shopping season is expected to bring especially deep discounts in 2022, but one challenge will be finding consumers confident enough to spend.

Grinding inflation in the world’s biggest economy in recent months has cast uncertainty over this year’s festive season, which kicks off the day after Thursday’s Thanksgiving holiday.

A year ago, retailers faced product shortfalls in the wake of shipping backlogs and Covid-19-related factory closures. To avert a repeat, the industry front-loaded its holiday imports this year, leaving it vulnerable to oversupply at a time when consumers are cutting back.

“Supply shortages was yesterday’s problem,” said Neil Saunders, managing director for GlobalData Retail, a consultancy. “Today’s problem is having too much stuff.”

Saunders said retailers have made progress in recent months in reducing excess inventories but that oversupply created banner conditions for bargain-hunters in many categories, including electronics, home improvement and apparel.

Juameelah Henderson always checks for sales, “but more so now,” she said while exiting an Old Navy store in New York with four bags of items.

The clothing chain’s prices were “pretty good,” she said. “If it’s not on sale, I really don’t need it.”

Higher costs for gasoline and household staples like meat and cereal are an economy-wide issue, but do not burden everyone equally.

“The lower incomes are definitely hit worst by the higher inflation,” said Claire Li, a senior analyst at Moody’s. “People have to spend on the essential items.” 

– Diminishing savings –

Leading forecasts from Deloitte and the National Retail Federation project a single-digit percentage increase, but it likely won’t exceed the inflation rate.

The consumer price index has been up about eight percent on an annual basis, which means that a similar size increase in holiday sales would equate with lower volumes.

US shoppers have remained resilient throughout the myriad stages of the Covid-19 pandemic, often spending more than expected, even when consumer sentiment surveys suggest they are in a gloomy mood.

Part of the reason has been the unusually robust state of savings, with many households banking government pandemic aid payments at a time of reduced consumption due to Covid-19 restrictions.

But that cushion is starting to whittle away. After hitting $2.5 trillion in excess savings in mid-2021, the benchmark fell to $1.7 trillion in the second quarter, according to Moody’s.

Consumers with incomes below $35,000 were affected the most, with their excess savings falling nearly 39 percent between the fourth quarter of 2021 and mid-2022, according to Moody’s.

Accompanying this drop has been a rise in credit card debt visible in Federal Reserve data and anecdotally described by chains that also report more purchases made with food stamps.

“We’re seeing continued pressure,” said Michael Witynski, chief executive of Dollar Tree, a discount retailer that has seen “shifts” in shoppers, “where they’re very consumable and needs-based focused to try and make that budget work and stretch it over the month.”

– Mixed picture –

Earnings reports from retailers in recent days have painted a mixed picture on consumer health.

Target stood on the downcast side of the ledger, pointing to a sharp decline in shopping activity in late October, potentially portending a weak holiday season.

The big-box chain expects a “very promotional” holiday season, said Chief Executive Brian Cornell.

“We’ve had a consumer who has been dealing with very stubborn inflation for quarter after quarter now,” Cornell said on a conference call with analysts. 

“They’re shopping very carefully on a budget, and I think they’re looking at discretionary categories and saying, ‘All right, if I’m going to buy, I’m looking for a great deal and a great value.'”

But Lowe’s, another big US chain specializing in home-improvement, offered a very different view, describing the same late-October period as “strong” and seeing no evidence of consumer deterioration.

“We are not seeing anything that feels or looks like a trade down or consumer pullback,” said Lowe’s Chief Executive Marvin Ellison.

Consumers like Charmaine Taylor, who checks airline websites frequently, are staying vigilant

Taylor thus far has been thwarted in her travel aspirations due to  exorbitant plane ticket prices. Taylor, who works in child care, isn’t sure how much she’ll be able to spend on family this year

“I’m trying to give them some little gifts,” Taylor said at a park in Harlem earlier this week. “I don’t know if I’ll be able to. Inflation is hitting pretty hard.”

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British online fashion retailer Boohoo on Wednesday denied allegations that staff in a UK warehouse worked in harrowing and health-threatening conditions and regarded themselves as “slaves”.

The Times newspaper, in an undercover investigation, reported that workers at Boohoo’s facility in Burnley, northwest England, complained of racism, sexual harassment, poor safety equipment, inadequate training and “gruelling” targets.

However, a Boohoo spokesperson said that it “does not believe the picture painted is reflective of the working environment at our Burnley warehouse”.

Boohoo “is taking every claim very seriously”, the spokesperson said, adding that making sure workers are safe and comfortable is the company’s “highest priority”.

The Times, whose undercover reporter worked at the warehouse for one month, said each staff member walked the equivalent of a half-marathon (13 miles, 21 kilometres) per shift.

Night-time summer temperatures reached up to 32 degrees Celsius (89.6 degrees Fahrenheit) and frequently collapsed, it alleged.

The daily added that Burnley employees are paid £11 ($13.25) per hour in shifts that are up to 12 hours long. 

Each staffer must fetch 130 items every hour, it said.

The online retail group has annual sales of almost £2.0 billion per year, and its chief executive was paid a £1.3 million bonus this year.

Boohoo had already been rocked last year by allegations that one of its suppliers in Leicester, central England, paid workers much less than the national minimum wage.

The group’s suppliers were meanwhile accused also of underpaying staff in Pakistan.

Boohoo benefited from an online sales boom during the pandemic, during which it expanded aggressively to snap up brands belonging to collapsed UK retail giants. 

It bought fashion labels Burton, Wallis and Dorothy Perkins from Arcadia, as well as assets of failed UK department store Debenhams.

The company employs about 5,000 people worldwide, according to its website.

Finance minister Jeremy Hunt on Wednesday defended the UK’s post-Brexit trade deal with the EU, despite growing criticism about its economic impact, and rejected claims he was pushing for closer European ties.

Hunt, who voted to remain in the European Union at the 2016 referendum, was rumoured to be the source of a report last weekend that the government was eyeing a “Swiss-style” deal with Brussels.

But he scotched talk he was the “senior government figure” quoted in the article, which has threatened to reopen deep divisions in the ruling Conservatives over the form Brexit should take.

The government supports the trade and cooperation agreement (TCA) struck with the EU, he told the influential cross-party Treasury Committee in parliament.

“We think it is an excellent agreement,” he added.

“We do not support, we would not contemplate, I do not support, I have never contemplated, any agreement which means moving away from the TCA.

“That means we are not negotiating or deciding the regulations that we want as sovereign equals, paying unnecessary money to the EU or indeed compromising on freedom of movement.

“That has always been my position as Chancellor (of the Exchequer).”

He added: “With respect to the story in the Sunday Times, if you’re saying was the Treasury, was I, the source for any suggestion we should seek to renegotiate the TCA to move it towards an agreement more like the agreement with Switzerland, the answer is no.”

– Tough going –

Former UK prime minister Theresa May proposed a similar deal, which was roundly rejected by lawmakers, and which contributed to her downfall in 2019.

May’s successor, Boris Johnson, railroaded his own “harder” Brexit deal through parliament on the back of a landslide 2019 general election win fought on a campaign to “get Brexit done”.

But despite promises of greater freedoms to set policy and chart its own course in the world, the UK has found post-Brexit life tough going, even without the shock of the Covid pandemic.

The Bank of England and the government’s independent spending watchdog have both said Brexit has hurt the UK economy and plunged it to the brink of recession.

On Tuesday, the Organisation for Economic Co-operation and Development forecast the UK economy would contract more than any of the world’s seven most advanced nations next year.

Many critics have partly blamed the fallout from Brexit, which saw the UK withdraw from the European single market and customs union, and end free movement between member states.

Switzerland has far closer ties with the bloc through bilateral agreements allowing access to the single market, a high degree of free movement and by paying into EU coffers.

But on Monday, British Prime Minister Rishi Sunak ruled out pursuing “any relationship with Europe that relies on alignment with EU laws” as eurosceptic Tories warned of backsliding.

The European Commission says no Swiss-style deal is on the table.

Hunt last week hiked taxes and slashed spending, to try to reverse unfunded tax cuts by his predecessor Kwasi Kwarteng, under short-lived premier Liz Truss, that sparked markets chaos and worsened a cost-of-living crisis of high energy bills and inflation.

Hunt also suggested on Wednesday that support for householders would not be extended beyond early 2024, even if energy bills remain elevated.

Credit Suisse predicted a surprise fourth-quarter pre-tax loss of up to $1.6 billion as the beleaguered bank undertakes a radical overhaul, sending stocks tumbling again on Wednesday.

Shaken by repeated scandals, Switzerland’s second-biggest bank unveiled a rejig in late October but accepted its accounts would take a hit of up to 1.5 billion Swiss francs ($1.6 billion) in the final three months of the year.

At the close, the group’s shares were down 6.1 percent at 3.62 Swiss francs, while the Swiss stock exchange’s main SMI index was up 0.2 percent.

At an extraordinary general meeting, shareholders approved capital increases worth around four billion Swiss francs in order to fund the restructuring plan.

Chairman Axel Lehmann called it an “important step in our journey to build the new Credit Suisse”.

“This vote confirms confidence in the strategy, as we presented it in October, and we are fully focused on delivering our strategic priorities to lay the foundation for future profitable growth,” he said.

The increase in share capital is expected to boost Credit Suisse’s CET1 ratio, which compares a bank’s capital to its risk-weighted assets.

The bank suffered a net loss of 273 million Swiss francs in the first quarter, then nearly 1.6 million in the second quarter and four billion in the third.

The scale of fourth-quarter losses “will depend on a number of factors including the investment bank’s performance for the remainder of the quarter, the continued exit of non-core positions, any goodwill impairments, and the outcome of certain other actions, including potential real-estate sales”, the Zurich-based bank said in a statement.

Credit Suisse said in October that it expected to incur restructuring charges and software and property impairments of around 250 million Swiss francs in the fourth quarter as part of its overhaul.

– Question of trust –

The bank’s reorganisation is aimed at dramatically reducing the scale of its investment bank, in a bid to repair the damage following a series of scandals.

In addition to revamping its investment banking unit, the bank announced measures including slashing 9,000 jobs and a capital injection from the Saudi National Bank.

However, the restructuring takes place in an unfavourable context for the banking sector.

Its investment bank suffered the backlash of the “substantial industry-wide slowdown” in capital markets and reduced activity in the sales and trading markets, it said.

“The bank expects these market conditions to continue in the coming months.”

Andreas Venditti, an analyst at Swiss investment managers Vontobel, said the “massive net outflows” in wealth management — the bank’s core business alongside its Swiss domestic banking — “are deeply concerning — even more so as they have not yet reversed.

“Credit Suisse needs to restore trust as fast as possible — but that is easier said than done.”

Flora Bocahut, an analyst at the US investment bank Jefferies, added: “Today’s update confirms our concerns that the Credit Suisse ship is yet to stabilise, and it’ll get worse before it potentially gets better.”

– Archegos, Greensill shocks –

Credit Suisse’s capital-guzzling investment banking arm has been the source of heavy losses which plunged its accounts into the red — eclipsing its more stable activities such as wealth management or its Swiss domestic banking services.

Credit Suisse’s investment bank suffered a loss of 3.7 billion Swiss francs in 2021 and backed that up with a 992 million Swiss franc loss in the first half of 2022.

It was hit by the implosion of US fund Archegos, which cost Credit Suisse more than $5 billion.

Meanwhile its asset management branch was rocked by the bankruptcy of British financial firm Greensill, in which some $10 billion had been committed through four funds.

Credit Suisse is one of 30 banks globally deemed too big to fail, forcing it to set aside more cash to weather a crisis.

While many industry experts think a bankruptcy highly improbable, these rumours helped drag its share price down to a low of 3.158 Swiss francs on October 3.