So Michael Kors, we meet again. Some of you that follow @TalentedBlonde knew my negative stance on the stock back in March in this missive.

For those of you that missed it or simply were indifferent, here’s why the Street missed this massive fail: Firstly, a greedy management team basically bastardized the brand by lowering the opening price point for a handbag (the gateway drug of retail) to such a low level that the cache of Michael Kors was stupefied.

Like Tommy Hilfiger and Coach the self-imposed “logorrhea” and low price points decimated this “Jet-Set” brand from G6 to Cessna overnight. That said, the looming West Coast Port work “slow-down” and appreciation of the dollar were eminently avoidable earnings issues. I lamented as far back as October 2014 about the port crisis. This is not a consumer preference issue—this is the fault of a management team caught with their pants down. Like Wal-Mart with all the consumer and financial analytics available to them—how did they not effectively hedge FOREX risk, given the astonishing appreciation of the U.S. dollar? Trust me, I believe John Idol is a competent merchant, but for this type of loss, someone needs to be held accountable. Forward looking guidance that guarantees Forex headwinds will fade in the second half, sounds like empty promises, but that’s just me. A management team that missed something SO obvious has demonstrated little to suggest that they are ready to navigate both global volatility as well as shifting consumer preference.

The sniffles at Michael Kors foreshadow a flu in Corporate America. The inability or unwillingness to recognize and adapt to structural changes, whether they be FOREX, labor related, or shifts in consumer behavior is indicative of complacency of Corporate America who remains static in their approach to the nascent ‘Digical Economy.’ Below some fun Chart Porn for your viewing pleasure.

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Yesterday I took a call from an esteemed colleague and retail veteran. He wanted to brainstorm on Abercrombie & Fitch and how to fix it. I’ve been probably the most vocal –and the earliest call—on how poorly the Company was executing. But, no one out there really has commented on what exactly should be done with a retailer who has extensive brand equity, but who just took its eyes off the ball. Like WAY off. Below, some random thoughts from your favorite Blonde:
What to do?

1. Go Private.
By taking the company private, with or without private equity partners, it allows for management and boards to spend their energy on implementing the proper longer –term strategies necessary to right the company, versus succumbing to the whims of short-sellers, activist shareholders, and public investors.

2. Close More Doors                                                                                                                                                                                             Like a ton. No, seriously. And don’t even get me started on Europe. I’ve said this with regard to Macy’s and Michael Kors and it applies pretty much to all retail right now. You don’t need more stores. You need LESS. Especially with the Millennial consumer and ‘Mini Millenns,.’ The way they shop is via mobile: Curalate, Instagram, Wanelo, Flip thread, Style Thief, Rent the Runway, Wish, Gilt, Pinterest. See a pattern forming here? I do. And it seems like teen retail managements are the last to know.
(Shaking Blonde Head)

3. Gut the stores.
Ok, the exterior and interior of Abercrombie’s stores hasn’t changed since I started covering the stock as an analyst—and that’s like 15 years ago. Maybe more. I don’t know, maybe I’ve been in a coma. If it bores me, it sure as hell is boring the consumer they are still trying to target. Take down those shutters. Turn on some lights for God’s sake. If I need a Petzl Head Lamp to see the merchandise you may want to rethink the in-store lighting. Get rid of that God-awful perfume that smells like a brothel. We get it. Fragrance is a high margin, point-of-sale add on. However, I believe you don’t have to perfume-bomb the entire Mall to get your point across. If I can’t send my kids to school with NutterButters, you can’t pollute my personal dance space. I’ll deal with Hollister, the younger, sluttier sister in a separate missive.

4. Restore Credibility.
Ok this might be easier said than done. However, the brutal truth is that #$ANF has lost credibility with its once core audience. That teen is now most likely in college or beyond, so the task lies in proving its validity as a teen player in the retail space. Along with the bastardization of the brand came a severe drop in quality. Tissue thin tanks with shoddy lace trim and sequins. And those Hoodies-where hoodies and Cargo shorts go to die. SO, the first task is reinstating quality to the brand. You can’t raise price points with substandard product.

Abercrombie can’t compete with fast fashion brands like ZARA (Inditex) and H&M or Forever 21 and Uniqlo. So quality and fit is key.
And as most of you know, historically the Abercrombie fit was somewhat exclusionary and body-conscious, which is retail code for “skinny.” From my perch I would make a broader range of fits available—and yes add the dreaded plus size or special sizes to the mix. In case you’ve been trapped under something heavy, over 50% of American women are sizes 14 or higher. Think about that. You may be of the camp that plus size isn’t sexy. But you know what is? MONEY. Plus size teens want the same thing as their fitter counterparts: to fit in and look good. That’s the secret sauce. Along with clothes that don’t suck. Oh, and black clothing: Mike Jeffries HATED black clothing. True story.

5. Have A Point Of View.
Speaking of, after Abercrombie & Fitch abandoned its historical Sex-Prep creative, which is advertising jargon for the visual way the brand is represented—it completely lost any identity or point of view. It was Logo-phobic. If you look at Abercrombie’s Instagram account, the images of fresh-faced teens and NON-LOGO apparel could be ANY BRAND. Which begs the question: What does Abercrombie MEAN as a brand? Perhaps now the brand can re-write its history.

Perhaps the answer lies with ‘Baller Brands.’ You know, like J.CREW when it brought in Barbour and now Lacoste. Partner with external brands and designers to lend credibility back to Abercrombie.

I’m just free-associating right now. It happens when I’ve had too much coffee. Clearly I’ve noodled on this. Maybe its Toms Shoes, or Converse, or Frye Boots? Or VANS? Or sweet Nike DUNK SKY HI VAC TECH sneaks. (Spoiler alert: they’re sold out but you get the gist.)
Maybe they partner with a tech brand like GoPro where, if you share your pics/video/selfie in your fave Abercrombie look, you get XYZ. Or, perhaps the brand uses real life teens as its new brand ambassadors. Taken from an individual’s Instagram page, Abercrombie’s own following on Instagram could vote for the “new” faces of Abercrombie & Fitch. Allowing its (new?) customer base the choice of who is cool and who they want to represent them and the brand. The benefit here is two fold: new talent discovered by Abercrombie’s own customer base, and live real-time data mining of taste and preference of a demo that they’ve clearly lost. Random musings, but since no one has offered up a strategy, I thought I’d take the Moose by the antlers.

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50 Shades of Meh indeed. After sitting through a pretty painful presentation today of all things Apple, I’m even more disappointed in the Apple Watch. I can feel you gasping as you read this.you see, I’ve done serious time in the coal mine that is luxury timepieces. I’ve worked with everyone from Jeager Le-Coultre, to Zenith and launched many a luxury timepiece campaign.

Until you’ve truly experienced the horological SuperBowl that is BASEL WORLD you haven’t lived—or truly witnessed what a real luxury timepiece launch and marketing effort should resemble. I’ve often noted in my research that Apple is really more of a luxury stock than a tech stock, and should be viewed as such. As the lines between technology and fashion continue to blur, the stakes get higher to maintain innovation, and also enter the inner sanctum of the Luxury goods consumer.

Apple made some truly bold moves in its evolution to true luxury brand with the poaching of Angie Ahrendts from Burberry—a luxury marketing powerhouse, the former CEO of YSL, Paul Deneve, and of course Sir Jonathan Paul Ives-the mad scientist and senior vice president of Design. With this stable of brand and luxury power and experience it truly shocks me how pedestrian the Apple Watch looks.
Seriously, the Apple Sport watch model looks more the kid version I would buy for my twin 6 year olds from Vtech. The stainless version with mesh band is dangerously reminiscent of the danish Skagen brand, popular back in the late 90’s. And with a $10,000 price point for the gold version, I see no unique selling proposition for the consumer. Most of the functions Cook mentioned are already present and available on my iPhone. And I can barely type out twitter and tumblr missives fast enough on my handheld let alone trying to navigate the lilliputian screen on the Apple Watch. I just don’t find the Apple Watch compelling.

There are two distinct customers here in my opinion: tech early adopters and serious watch collectors.
That said it will be very interesting to see how the company markets and merchandises these timepieces. Here’s where the romance comes in with luxury goods. A $10,000 piece of jewelry/timepiece needs merchandising and salesmanship that truly evokes how special and technically precise the product is. The selling staff not only needs to be proficient in explaining all the technical features and applications, but also needs to understand they are selling a luxury timepiece. I clearly don’t want the smug kid in the Genius Bar T-shirt with ADD trying to sell me a seriously expensive timepiece while he’s helping a retired couple play Candy Crush on their iPad.

The Apple corporate culture may not be as inclusive to these luxury experts like Ahrendts and Deneve. I truly wonder how much input they were allowed. Hopefully we see that in the form of merchandising and product training when the Apple Watches start shipping. Mind you, no one’s gotten rich betting against Apple, but not EVERY single product they launch is a slam dunk (LISA anyone?). To truly dominate the wearable tech space I believe they will need many more iterations of the Apple watch until they get it right. We’ll see if time is truly on their side.

Disclosure: No positions, no conflicts

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“Today’s guest is the Talented Blonde aka Kristin Bentz. Kristin began her career in the luxury retail and hotel industry and then moved on to Wall Street where she ‘survived’ working with Dick Fuld and Jim Cramer, my ex-boss and previous So Money guest. Kristin is an ex-Lehmanite and a former managing editor of Real Money. She is most well-known for her ability to identify trends in the consumer, lodging and luxury sectors and offers fresh and independent analysis of the financial markets and consumer sector.”  Listen to the full interview.

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Kristin Bentz President Talented Blonde Discussing news from the Global Retailing Conference and outlook for luxury companies for The Bloomberg Advantage.

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A lot has been said about Macy’s recent weak stock performance. CEO Terry Lundgren has come under fire, and the company has tried virtually everything to stay relevant, from adding Best Buy kiosks, SunGlass Hut in shops, and off-price channel called “BackStage.” I scoffed at a lot of these strategies as ‘spaghetti against the wall’-however, one has my attention: the acquisition of luxury cosmetics and beauty retailer BlueMercury. The fastest growing beauty retail concept, Blue Mercury is basically a free standing, super high-end Sephora, carrying luxe products like La Mer, Bobbi Brown, Oribe, and Bumble and Bumble—but there’s a twist.

Consumers can also book services like peels and dermabrasion. According to CEO Terry Lundgren at the recent Global Retailing Conference in Tucson, AZ the concept is working so well that plans are in place to roll out Blue Mercury shop-in-shops in select Macy’s locations. Macy’s will also launch its first private label cosmetics brand, M61. Much like Sephora’s contribute to the slow turn at $JCP JC PENNY, BlueMercury just may be the magic elixir to lift the stock. I will certainly be watching this beauty-hotspot closely.

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Hold on to your flower crowns. While the Coachella Valley Music Festival is perceived by some as the new Hippie Woodstock, it’s anything but. This Indio, Ca based festival is an elite driven event that is a reflection of the increasing chasm between ‘haves and have nots’ in the U.S. If smart money is not paying attention to Coachella it should. While Coachella may be ‘feeling the Bern’ today it foreshadows a more aggressive tilt towards the upper quintile of income earners, their tastes, preferences and idiosyncratic behavior. Don’t worry investors. You may be’ feeling that Bern’ today but four or eight years from now the dancing fools at Coachella will be tapping their feet to the tune of your investment strategies.

Image from DYLANLEX.

The thing that is interesting to me from a fashion perspective, is that with all fringe and suede and JORTS (JEAN SHORTS—which should be outlawed, BTW) and crocheted halter tops and ankle boots and chokers—(they’re back also) the layman can’t tell Saint Laurent from H&M, Chloé from Calvin Klein. That’s simply disruptive to retail apparel which to date is taking it on the chin. Case in point: PRADA. Recently their CEO, Miuccia Prada essentially declared—after a less than stellar quarter that they are done with luxury. However, smart lux players are courting the Monied Millennial with pop-up shops at Coachella, and several lounge-y Palm Springs digs with pristine pools just ripe for the ‘Jennerficiation‘ of the festival. When a retailer comes to you, pay attention. Brett Easton Ellis is genius.

Paris Hilton at Coachella 2016. Image via BFA.

Prada is exiting the field at exactly the wrong time. Coachella is a living, breathing example of why luxury is not dead. Forward looking lux companies are using Coachella as a opportunity to shape tastes, behavior and expectations of the upper quintile of income earners who do not even note the dropping of several dimes just to get their fashion groove on. And that is before the costs for lodging, tickets and parking. And craft beer. In one sense they are just doing what the food product sector has been doing for the past five years. They are abandoning the middle class and providing products for the upper quintile of income earners who are the only segment of the population that has experienced an increase in disposable income that has nothing to do with falling gasoline prices. Call it the Anthony Bourdain effect: “I don’t know luxury, I SHOW luxury”, via Instagram. Millennials want to share what they are eating, where they are eating it, and who they are sleeping with after, “Eat, Pray, Insta” for lack of a better term. Master Card data shows that air travel had the highest airline spend in history last year. This begs the question of Experiential Luxury.

Kate Bosworth at Coachella. Image via Newscom.

One notices USC, Stanford and MIT have taken the field on the West Coast without apology and intend to reshape everything: whether it be society, the economy, luxury, lodging and retail. It’s like the Reagan administration never left office. They all voted for POTUS , but when it comes time to choose careers, form households and raise children they are not” feeling the Bern.’ These millennials are in transition and those luxury firms that are correctly interpreting the massive change in their milieu are missing out on the biggest opportunity since the Baby Boomers came of age in the late 1960’s. Go ahead and feel the Bern, vote for Donald, or worship at the alter of Elizabeth Warren. But these kids are going their own way. Their travel schedule and their carbon footprint do not reflect Obama’s America. They want luxury and are willing to pay for it. Drops Mic. Walks Away.

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At the intersection of clink and chic emerges The Liberty Hotel in Boston, MA. The onetime 1840’s prison is now the golden big-house of SPG and the location of my most recent adventure. The Liberty is a prison of puns; room service is referred to as “solitary dinning”, their outside restaurant “The Yard”– I can’t think of a more decadent way to do time. From the prison key ‘do not disturb’ signs to the constant reference of doing hard-time throughout the property, the arresting design of the property is thanks to inteior-genius Alexandra Champalimaud.

My Starwood Ambassador put me in the Superior Queen Queen (correct spelling) Suite. Right in the heart of Beacon Hill, our room perfectly carried on theme of the property with masculine touches of old prison keys, clocks and a supremely plush with superior thread count bedding. This property, a Luxury Collection in the brand hierarchy of Starwood( $HOT) is an example of urban renewal at its finest. Outlets named ALIBI, CLINK, and its fine dining restaurant SCAMPO—which means escape—all subtly weave the hotel’s theme. Some of the former Suffolk County jail’s bars are still left exposed, adding an authentic—but never cheesy tone to the Liberty. Unlike many hotels I visit, this property maximizes every square foot it possibly can to increasing revenue with LIBERTY AFFAIRS.

Monday & Wednesday nights are devoted to YAPPIER HOUR where guests and locals alike can imbibe on handcrafted cocktails while all things Bark and Woof do time outside in the YARD. On this visit our ambassador book a table on one of the CATWALKS to have cocktails and small plates during “Fashionably Late” a Thursday evening fashion show that puts even Bryant Park on its heels. And on Friday & Saturday nights, the entire property is transformed during BEAT WEEKENDS, where Boston’s finest babes are shaken not stirred to fat bodacious beats. Pro tip: If you are traveling with kids, request a higher room on the far side of the Lobby, because sleep and quiet will be at a premium. Otherwise, procure a seat in the Lobby bar CLINK, sit back and watch the show.

Dining:

CLINK is a great lobby bar. Perfect for light fare when you’ve been playing’ time zone hopscotch’ and just need a little TLC—tender loving cocktails. Make no mistake though, the bartenders, who are warm and jovial, become cocktail assassins when weekends kick in, proving masters of the shaker. Expect lines three and four deep during high volume nights Thursday-Saturday. Excellent Bloody Mary bar on Sundays as well.

SCAMPO

The perfect ‘escape’ this warm and inviting eatery boasts an expository kitchen and inviting bar. We requested off the menu pasta on this visit and the chef gladly met our requests. The food is delicious and savory and the cocktails again are made with care. Pro tip: on Friday nights the chef slow roasts a whole suckling pig. DEFINITELY worth staying on property as we cancelled outside reservations to do just that. We weren’t disappointed A trend that I’ve been noticing lately, this restaurant is not a part of SPG ($HOT) but independently run. The staff is wonderful. Efficient. Kind. Anticipatory. No Millennial flu here. Carla, the hostess basically became an honorary member of the family. Remember, in hotels, elegance without warmth is arrogance, and at the Liberty the staff from Valet to Housekeeping is warm but never too familiar. Most hotels cannot master that type of service.

BLONDE APPROVAL RATING: A+ Absolutely Blonde Approved

TRYST WORTHY —YES

GOOD FOR BUSINESS TRAVEL: YES

TAKE YOUR PARTNER– YES

KID FRIENDLY-YES with a caveat: know if staying for the weekend Fri and Saturday night are bumping and loud. Either plan events off sight or tuck in early. Also request a room that is up high or far from the Lobby.

AMBIENCE– THREE SHOES UP!

SMUG FACTOR: LOW

The Liberty

215 Charles Street, Boston, MA, 02114-  Phone: (617) 224-4000

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Click here to watch the interview on Asset TV.

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