The rise of the euro against the dollar is making US retailers attending Paris Fashion Week think hard before placing orders for pricey European clothes and accessories.
The US has been a vibrant market for the big European fashion labels, such as Gucci and Louis Vuitton. But the need for manufacturers to preserve profit margins during the dollar’s long-standing malaise meant the dollar prices of their products had in some cases been increased to vertiginous levels even before the euro climbed to more than $1.40 last month.
Jim Gold, chief executive of Bergdorf Goodman, the high-end New York department store, was in Paris on Wednesday for the annual catwalk shows. He said ever more expensive European imports needed to be of exceptional quality.
“The strong euro. . . . forces you to think carefully about the way you spend and which pieces have a real price-value relationship.”
He said some fashion houses had worked “very hard to run their business more efficiently in terms of manufacturing and fabric sourcing” in order to keep a lid on price increases.
Those designer brands that did not seek to pass on all the currency effect to buyers “offer more competitive products in this kind of atmosphere”, he said.
Ann Stordahl, executive vice-president of Neiman Marcus, the US department store chain, is another big customer for designers exhibiting in Paris. She agreed that more currency-related price increases would winnow out the less memorable products.
“Our customer is fairly price elastic when it comes to very special items. What the currency issues may affect are the sales of less special items.”
François-Henri Pinault, chairman and chief executive of PPR, the French owner of Gucci, recently told the Financial Times that the European Central Bank should not be blamed for the currency headwind faced by European exporters because its job was to control inflation.
“It is not [Jean-Claude] Trichet’s problem,” he said, referring to the ECB president. However, he said member states should consider whether the ECB could also be given a mandate to foster economic growth.