Kering

Demna Apologizes for Ad Campaign Depicting Children

Demna Apologizes for Ad Campaign Depicting Children

The designer at the center of the Balenciaga ad scandal has broken his silence.
In a post Friday on Demna’s Instagram account, which counts 373,000 followers, Balenciaga’s creative director writes: “I want to personally apologize for the wrong artistic choice of concept for the gifting campaign with the kids and I take my responsibility. It was inappropriate to have kids promote objects that have nothing to do with them.”

The Georgian designer, who is prone to provocation and subversion in his designs, runway shows and communications, was referring to Balenciaga’s holiday campaign featuring children posing alongside handbags shaped like stuffed bears dressed in bondage gear.

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The ads sparked outrage on social media, with some consumers destroying Balenciaga products, urging boycotts and calling for the designer’s ouster. Last week, Kim Kardashian said she was “reevaluating” her relationship with the brand, saying she was “shaken by the disturbing images.”

On Friday the British Fashion Council confirmed that, after speaking to Balenciaga, “the brand has decided not to attend” the Fashion Awards in London on Monday, Dec. 5.

Demna was originally a candidate for Designer of the Year, alongside peers including Miuccia Prada and Pierpaolo Piccioli for Valentino. The BFC confirmed that his name is no longer on the list for the award which is voted on by more than 1,000 international industry figures.

“I need to learn from this, listen and engage with child protection organizations to know how I can contribute and help on this terrible subject,” Demna’s post read. “As much as I would sometimes like to provoke a thought through my work, I would NEVER have an intention to do that with such an awful subject as child abuse that I condemn. Period.

“I apologize to anyone offended by the visuals and Balenciaga has guaranteed that adequate measures will be taken not only to avoid similar mistakes in the future but also to take accountability in protecting child welfare in every way we can.”

Comments are disabled on the post, the only one on Demna’s feed, and it garnered a little over 10,000 likes after a few hours.

The designer made no mention of a second campaign that has also brought a firestorm of criticism and a lawsuit against the production companies involved.

That fashion campaign, for the spring 2023 collection, depicted actresses Nicole Kidman and Isabelle Huppert in a business environment. In one photo of a handbag, there is a page in the background from the Supreme Court ruling “United States v. Williams” 2008, which confirms as illegal and not protected by freedom of speech the promotion of child pornography.

Kidman is facing heavy criticism for her silence over the ads, which she promoted to her 8.7 million Instagram followers.

Balenciaga has issued several statements stressing it condemned child abuse and never intended for “it to be included in our narrative.”

“The two separate ad campaigns in question reflect a series of grievous errors for which Balenciaga takes responsibility.” The fashion house said it is “laying the groundwork with organizations who specialize in child protection and aims at ending child abuse and exploitation.” It did not provide details of what its efforts might involve, however.

One statement detailed: “The first campaign, the Gift collection campaign, featured children with plush bear bags dressed in what some have labelled BDSM-inspired outfits,” the brand said. “Our plush bear bags and the Gift collection should not have been featured with children. This was a wrong choice by Balenciaga, combined with our failure in assessing and validating images. The responsibility for this lies with Balenciaga alone.

“The second, separate campaign for spring 2023, which was meant to replicate a business office environment, included a photo with a page in the background from a Supreme Court ruling ‘United States v. Williams’ 2008, which confirms as illegal and not protected by freedom of speech the promotion of child pornography. All the items included in this shooting were provided by third parties that confirmed in writing that these props were fake office documents. They turned out to be real legal papers most likely coming from the filming of a television drama. The inclusion of these unapproved documents was the result of reckless negligence for which Balenciaga has filed a complaint. We take full accountability for our lack of oversight and control of the documents in the background and we could have done things differently.”

Balenciaga is said to be initially seeking $25 million in damages through its legal action against production company North Six Inc. and set designer Nicholas Des Jardins.

North Six logistically managed the campaign in the office setting, but it was not involved with the Gift Collection campaign featuring the questionable teddy bears.

Fashion casting director Piergiorgio Del Moro, who counts more than half a million followers on Instagram, said in a post earlier Friday that he stands with North Six and des Jardins.

“It is troubling to see a fashion house knowingly deflect blame on the hired production company to avoid responsibility for its own creative decisions,” he wrote. “Clients are on the set and are responsible for all approvals through and, most importantly, have final say before all images are released to the public.

“Production does not create the vision but works to serve clients and bring to life their vision, ot contribute their own,” he continues. “Everybody in the fashion industry knows how closely brands create, test, define and safeguard their image, including micro-managing all media associated with such imagery. I stand by the community to ensure that blaming production companies for the fallout and problems associated with vision and image does not become the norm and hope that Balenciaga will see to it that North Six’s name is properly cleared.”

Balenciaga said investigations are continuing internally and externally, but in the meantime it is revising its working methods and organization and putting new controls in place around its creative processes and “validation steps.” 

Gucci Confirms Alessandro Michele Exit

Gucci Confirms Alessandro Michele Exit

MILAN – Gucci and parent company Kering on Wednesday evening said Alessandro Michele would be exiting the brand, relinquishing his role as creative director. This confirms a WWD report from Tuesday.
“I was fortunate to have had the opportunity to meet Alessandro at the end of 2014, since then we have had the pleasure to work closely together as Gucci has charted its successful path over these last eight years,” said Gucci president and CEO Marco Bizzarri in a statement. “I would like to thank him for his 20 years of commitment to Gucci and for his vision, devotion and unconditional love for this unique house during his tenure as creative director.”

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François-Henri Pinault, chairman and CEO of Kering, said: “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. I am grateful to Alessandro for bringing so much of himself in this adventure. His passion, his imagination, his ingenuity and his culture put Gucci center stage, where its place is. I wish him a great next chapter in his creative journey.”

Michele, who was appointed to the top creative role in January 2015, said, “there are times when paths part ways because of the different perspectives each one of us may have. Today an extraordinary journey ends for me, lasting more than 20 years, within a company to which I have tirelessly dedicated all my love and creative passion. During this long period, Gucci has been my home, my adopted family. To this extended family, to all the individuals who have looked after and supported it, I send my most sincere thanks, my biggest and most heartfelt embrace. Together with them I have wished, dreamed, imagined. Without them, none of what I have built would have been possible. To them goes my most sincerest wish: may you continue to cultivate your dreams, the subtle and intangible matter that makes life worth living. May you continue to nourish yourselves with poetic and inclusive imagery, remaining faithful to your values. May you always live by your passions, propelled by the wind of freedom.”Now the question remains on who could be succeeding Michele, who engineered the brand’s turnaround with his unique style. Gucci, in the statement issued late Wednesday evening, said the company’s design office “will continue to carry the direction of the house forward until a new creative organization will be announced.”

One source wondered if Remo Macco, a Gucci veteran who was recently appointed studio design director, could be in the wings. He has been tasked with offering more commercial products to balance Michele’s aesthetics.

“There has been an increasingly strong divide between the show team and the merchandising and commercial studio,” said the source, adding that Macco has acted as “a filter between all the directors of the different categories and Michele,” as Gucci has increased the number of capsule collections and special editions.

Another potential candidate could be Davide Renne, also a Gucci veteran.

Another sign of a sharper focus on boosting the top line and a change of direction may be seen in the appointment last spring of former Roger Vivier brand manager Maria Cristina Lomanto. She was named  executive vice president, brand general manager, a new role for the Italian luxury company. Lomanto was tasked with focusing on coordinating collection and retail merchandising, visual merchandising, beauty and eyewear licensing and retail training, reporting to Bizzarri.

Zoning in on historic codes, iconic handbags and craftsmanship was also touted by Pinault, amplified and added to the mix for a “blend of heritage and innovation,” as the executive commented on the group’s third-quarter performance.

In 2021, Gucci revenues tallied 9.73 billion euros, just shy of its oft-stated goal of 10 billion euros.

An internal promotion path is not new at parent company Kering, and it’s not the first time Pinault has shaken up one of Kering’s key brands. Michele himself, handpicked by Bizzarri, was promoted from his role of “associate” to then-creative director Frida Giannini, in January 2015. He had joined the Gucci design studio in 2002 following a stint as senior accessories designer at Fendi. Giannini brought him to Gucci and he was named her “associate” in 2011. In 2014 he took on the additional responsibility of creative director of Richard Ginori, the porcelain brand acquired by Gucci in 2013.

Last November, in a surprise move, Pinault ousted Daniel Lee from Bottega Veneta, despite the designer’s strong performance at the brand and much critical success. Lee, who is now creative director at Burberry, was succeeded at Bottega Veneta by Matthieu Blazy, previously the brand’s ready to wear design director.

Blazy in two seasons has rapidly put his mark on the brand, taking it back to its artisanal roots.

As reported, sources say that Michele was asked “to initiate a strong design shift” to light the fire under Gucci, but this request was apparently not met by the designer, whose quirky aesthetic is very specific. Michele has helped boost Gucci’s influence in fashion, and his gender-fluid and romantic spirit has left its mark on a slew of other designers, catering to a younger and more diverse customer, but, according to one source, “Pinault has been trying to recover the uber luxury consumer.”

Michele has reinvented Gucci with a completely new androgynous style that toppled Giannini’s sophisticated jet-set lifestyle image. Giannini’s tenure as creative director at the brand lasted 10 years, while her predecessor Tom Ford engineered the first Gucci turnaround and stayed on for almost eight years.

It is unclear what the future holds for Michele, who has expressed his passion for cinematography – much like Ford – but one source speculated the designer “could be receiving a phone call from Pinault’s arch rival Bernard Arnault any time soon.”

On Wednesday morning, commenting on the potential change at Gucci, Luca Solca, senior research analyst global luxury goods at Bernstein, said this was “very good news” and that, “in order to reaccelerate, Gucci doesn’t need to move to the mainstream or to become timeless. It needs to open a new creative chapter. This, in all likelihood, can be only done with new creative energy and talent.” Without mincing words, he noted, “the sooner Alessandro goes, the better.”

Solca’s opinion is that “Gucci is suffering from brand fatigue” as Michele “has been doing more of the same for seven years. Consumers who bought a lot early (the Chinese) got bored first. This is not surprising.” He credited Kering for its ability to reinvent its brands time and again, and concluded that Gucci “has enough scale to be able to make itself heard, the moment it has something new to say, that is.” He also noted that Kering is trading at a discount to peers due to the slowdown at Gucci.

On the other hand, Jefferies equity analyst Flavio Cereda wrote last month that he did “not share the view that Gucci, as a very cyclical brand, is broken in its current guise and needs a total reset to reverse trends: we believe brand equity is very strong, as are capabilities (on- and off-line), supply chain and track record.”

The news come ahead of Gucci’s return to Milan’s Men’s Fashion Week in January.

Kering last month, reported that its cash cow brand continued to underperform versus the group’s other brands, although organic sales picked up pace in the third quarter. Revenues at the Italian label totaled 2.6 billion euros, up 9 percent on a like-for-like basis, following a 4 percent rise in the second quarter.

That was slightly below a consensus of analyst estimates, which called for a 10 percent increase in comparable sales at the maker of Dionysus handbags and horsebit loafers. By comparison, organic sales at LVMH Moët Hennessy Louis Vuitton’s key fashion and leather goods division rose 22 percent year-over-year in the third quarter.

Bottega Veneta Prioritizes ‘Value Over Volume’

Bottega Veneta Prioritizes ‘Value Over Volume’

Bottega Veneta’s handbags are made in days, not hours — and now some are warrantied for a lifetime.
The Italian luxury brand’s chief executive officer Bartolomeo “Leo” Rongone revealed the new service program at WWD’s Apparel and Retail CEO Summit, noting that certain of Bottega Veneta’s iconic bags can be brought in for complimentary refresh and repair, and will be replaced free of charge in some cases.

Called “Certificate of Craft,” the program is launching this month. The service also provides for courtesy loaner handbags in cases when repairs are lengthy, he said. According to a release issued after the event, the certificate is offered via a physical card associated with the serial number of the bag in question.

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“We believe that true luxury is connected to the concept of time,” Rongone said during an on-stage conversation with Luisa Zargani’s, WWD’s Milan bureau chief.

He asked a colleague in the audience to hoist up the brand’s handwoven Kalimero bag, a bucket style that requires some 55 meters of calf leather and which is created without any stitching. Rongone noted that the artisan simply changes the pressure of the weaving process to realize the curved portions.

Bottega Veneta’s Kalimero bag on the spring 2023 runway.

Consequently, “there are no two bags identical,” and if an artisan falls ill before the bag is completed, Bottega Veneta must wait for him or her to return to work to finish the object, he noted.

“Use your product for longer; keep it forever,” he urged. “We consistently prioritize value over volume.”

So how will Bottega Veneta, part of publicly traded French luxury group Kering, continue to grow its business while it is urging a more restrained, yet elevated brand of consumption?

Rongone argued that its value proposition is “seducing a larger audience” and that the number of its clients is increasing.

“Definitely one of the most genuine connections with sustainability is to use the product for longer, not replacing it. This level is way more impactful,” he explained. “We all want to be successful in our lives. But do you want to be remembered for being the largest? Or the most impactful?”

The executive credited Bottega Veneta’s new creative director Matthieu Blazy, who was promoted to the top job in November 2021 after the ouster of Daniel Lee, for embracing the brand’s legacy of “extraordinary craftsmanship” and challenging the artisans at its Montebello leather goods atelier to push techniques to new limits.

These include garments that Blazy described as “perverse banality”: blue jeans, T-shirts and flannel shirts realized in leather treated to resemble ones made of knitted or woven fabrics. Wearing some of the leather jeans on stage, Rongone lauded the “constant caress of the nubuck” leather for the wearer to enjoy.

He characterized the brand as non-conformist since, unlike most luxury labels, it has no logo.

What’s more, in 2021, Bottega Veneta raised eyebrows and generated headlines for taking itself off Instagram, which has become the dominant channel for numerous fashion brands.

“We do this to keep creativity at the center. Creativity drives us much more than media” he explained.

In lieu of social media, Bottega Veneta fosters what Rongone called “cultural affinity platforms.” A recent example was the dinner the Italian brand held during New York Fashion Week at famed used book store The Strand, along with a limited-edition leather reworking of its iconic tote bags.

“In a moment of high visibility on digital, we wanted to give importance to the physical, to paper, to a bookshop that probably has more than 100 years of history,” he said.

Despite its abstention from social media, Rongone described a “fantastic” rapport with Gen Z clients.

He described the relationship brands have with customers on Instagram as “one to many….You are talking to someone.”

If this is removed from the equation then people are free to talk about brands. “Gen Z love these conditions. They love talking about us. They share opinions, ideas, and we love to learn,” he enthused.

The executive also insisted that having no logo is a plus in the face of this generation of consumers.

“They want to be themselves. So it may look like strange in reality, but having no logo has been one of the largest, the most important levers of engagement with the youngsters,” he said.

Rongone highlighted several strong historical links between Bottega Veneta and New York City. The wife of one of the founders lived in Manhattan in the late ’60s, and was hired by Andy Warhol to answer phones at The Factory “and say, ‘I don’t speak English,’” thereby serving as a “filter” for the sought-after art superstar.

The Italian brand, founded as a collective of artisans in 1966, opened its very first store on New York’s Madison Avenue in 1972, a time when the brand was gaining renown for its distinctive leather weaving and its tag line “When your own initials are enough.”

“They were firmly believing that they were creating a brand that was celebrating the uniqueness, the quality of people,” Rongone said. “The founders had this idea in mind of creating this extraordinary, luxurious brand, and to celebrate individuality, something that we call today diversity.”

Where Fashion Stands in Sustainability: Data Crunching, Laws and a Long Way to Go

Where Fashion Stands in Sustainability: Data Crunching, Laws and a Long Way to Go

VENICE, Italy — Sustainability in fashion has made leaps in recent years but it has a long way to go as its complexity and many aspects pose daily challenges, regulatory nightmares and costs the supply chain as a whole has yet to account for.
“Sustainability is boring, burdensome and expensive,” said Claudio Marenzi, chairman and chief executive officer of Herno, summing up the challenges with a chuckle.

He was speaking at the seminal two-day Venice Sustainable Fashion Forum, which closed Friday and was organized by, among others, Camera Nazionale della Moda Italiana, Sistema Moda Italia and Confindustria Venezia to discuss where the eco-transition in the sector is headed.

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The newly appointed minister for businesses and made in Italy Adolfo Urso addressed the forum in one of his first public speeches. “There’s more to add to made in Italy, in addition to the beautiful and well-made notions that are globally recognized by consumers. A technological element and sustainable developments should add a new layer of excellence,” he said.

Overcoming the hurdles of an eco-transition requires the efforts of brands and retailers, policymakers, supply chain players and even consumers.

“We’ve to try to act like a system, alone we go nowhere. We can find solutions through innovation, research, implementing measurability, traceability, durability,” said Carlo Capasa, chairman of the Camera della Moda, which has spearheaded several initiatives, including the Re.Crea consortium to tackle fashion products’ end of life, as reported.

A similarly geared consortium was established by SMI under the Retexgreen moniker.

Fendi chairman and chief executive officer Serge Brunschwig and Carlo Capasa, chairman of Camera Nazionale della Moda Italiana.

Stefano Trovati/SGP

According to a study released by consultancy The European House — Ambrosetti that analyzed the financial and sustainability reports of 2,700 European fashion companies and 167 supply chain players, in addition to interviews and reviews of articles and policies, the shift toward responsibility is defined by six pillars.

These include anticipating the market transition; the creation of government-led multistakeholder task forces; alliances among companies to spark change; the promotion of a positive cultural shift; stimulating a sustainability vanguard by Italian and French luxury value chains, and the definition of an up-to-date measurement policy based on a few significant key performance indicators.

“We’ve entered the third phase of integration of sustainability and the industry…today we are confronted with global crises and [fashion] businesses have found in financial entities their intermediaries, who are increasingly holding them accountable. It’s a performance-driven era, with numbers defining what products and processes are sustainable,” explained Carlo Cici, partner and head of sustainability practices at the consultancy.

The global apparel market had sales of $1.5 trillion in 2021 and is poised to grow at a compound annual rate of 6 percent to $2 trillion by 2026.

Swirling forces in the industry are varied, the study said, and include the increasing penetration pace of social commerce and fast fashion, still largely embraced younger consumers, as well as a transition toward “ultra-fast” manufacturing cycles that are pressuring the supply chain.

Conversely, circular business models — resale, repair and rental — represented only 3.5 percent of the overall fashion market in 2019 and only one third of consumers in the U.S. and U.K are eager to spend more on their fashion purchases because of sustainable components.

“They don’t want to because they don’t have the right information,” said Federico Marchetti, chairman of the Sustainable Markets Initiative Fashion Task Force.

A Launchmetrics study presented at the forum confirmed Marchetti’s sentiment. Sustainability-focused content online is jumping 31 percent year-over-year, meaning consumers care and are very engaged in the conversation and the media impact value generated is skyrocketing at a 54 percent rate year-over-year.

In addition to consumers, the intervention of policymakers is shifting the paradigm and as much as the industry’s consensus points to anticipating regulations, fashion executives were vocal at the forum about seeking standardized parameters, which only the European Union could possibly provide.

So far policymakers had been moving slowly and businesses took the lead, but this gave space to fragmentation.

The European House — Ambrosetti counted 100 eco-certifications and 600 rating systems applicable to fashion, often lacking correlation between each other.

“Data crunching is a complex effort because the supply chain is global, fragmented and opaque,” said Maria Teresa Pisani, acting head of the Sustainable Trade and Outreach unit of the United Nations Economic Commission for Europe, or UNECE.

Although the EU’s leadership in fashion sustainability will reach its heights with the Green Deal in 2027, already the 2023 Corporate Sustainability Reporting Directive will impose ESG reporting on around 1,000 large and listed fashion companies, which do not already issue one.

“The Union is interested in textiles because of its sustainability focus and as a big part of the area’s industrial ecosystem,” said Dirk Vantyghem, director general of the EU’s textile association Euratex. “The textile industry used to be a fairly unregulated sector; it’s become a very regulated industry now.”

As part of the EU’s vision, all textile products placed on the market are requested to be durable, repairable, recyclable, embed recycled fibers, be free of hazardous substances and produced respecting social rights.

He stressed that such a framework would ignite a seismic change globally.

“The relationship between Europe and rest of the world is changing from a naïf focus of free trade — no questions asked — toward a fair free trade,” where market surveillance is strict and foreign manufacturers are equally held accountable, based on a level playing field as to preserve competitiveness, he said.

Asking for more data is the way to go, but the lack of peer-reviewed information is a bug to be fixed.

“We cannot walk into these things hoping for the best but not considering the underlying data,” said Maxine Bédat, executive director at the New Standard Institute.

“Sustainability reporting is an act of creative writing today, no two reports can be compared with one another,” echoed Simone Cipriani, head and founder of the Ethical Fashion Initiative of the U.N., with which Camera della Moda has forged an alliance.

According to Antonella Centra, Gucci’s executive vice president, general counsel, corporate affairs and sustainability, the issue lies not necessarily in the measurement tools, but in the lack of sharing practices.

She anticipated Lorenzo Bertelli’s remarks on fashion companies’ responsibility in spearheading a cultural shift by educating new generations.

The Prada Group’s head of CSR detailed the “Sea Beyond” project in partnership with UNESCO’s Intergovernmental Oceanographic Commission and dedicated to students of different ages, the latest leg called “Kindergarten of the Lagoon” and geared toward toddlers aged three to six introduced in Venice earlier this year. It has already attracted the interest of other brands eager to join, he said.

Prada Group head of CSR Lorenzo Bertelli at the Venice Sustainable Fashion Forum.

Stefano Trovati/SGP

“Being jealous of sustainability is stupid, there is no sense in it, at all.…If we want to shape the future of society we need to talk to the minds and hearts of new generations,” Bertelli said. “We want to make people understand that culture is convenient, being educated is better for the planet but also for oneself.”

The project also involved educational programs geared toward Prada’s workforce, similarly to the OTB group, which tackled sustainability first by upskilling its top managers.

“Sustainability is a strategic vision and a business model, and it costs money,” said Renzo Rosso, OTB Group’s founder. “Sustainable products are more expensive that’s why luxury companies are advantaged, we have higher margins,” he noted.

“Sustainability is no longer overlooked by CEOs, we need to define a roadmap and concrete interventions to act now; we cannot do it in 10 or 20 years,” said Marchetti. “The fashion industry has been individualistic by nature, but the issue has grown to big not to intervene.”

Fashion mirrors the times and climate change being the most talked about issue in society at large, it appears to be high on companies’ agenda, with 45 percent of the European fashion and luxury businesses subject to the 2023 EU directive setting targets under the Science Based Target initiative.

It may not be the most pressing topic for the sectors, said Cici, who underscored how the use of raw materials and waste, as well as the preservation of biodiversity, which has been largely untackled, are paramount.

Yet from a sustainability perspective the supply chain is a mesh rather than a chain, with all elements interconnected.

Italy’s fashion is passably ready to tackle climate change. According to the Net Zero Readiness Index 2022 issued by the Italian Stock Exchange, fashion totaled 4.4 points out of 10.

Contributing to 4 percent of global GHG emissions, fashion is required to halve its footprint to comply with the 2050 net zero target implementing a greener energy mix, improving efficiency and adopting circularity — and this leaves out of the picture tech-advanced practices such as 3D design, metaverse fashion and the use of biomaterials.

Again, standardized measurements are seen as key.

“What you can’t measure you can’t manage,” said Marie Claire Daveu chief sustainability and institutional affairs officer at Kering. “We need to be very operational and so we have to define clear targets. For each topic we try to have a quantitative target and [define] how to measure it.”

Kering has been relying on the environmental profit and loss account, or EP&L, methodology linking monetary value to footprints, which helps the group have a granular understanding of how much its eco-projects are impacting people and the planet.

At Canali, the LCA-based OEF and PEF standards are proving a reliable methodology to track the sustainability state of things up- and down-stream, in addition to its core business.

“Getting measured is the first act of responsibility, it defines level zero and allows to consciously decide what to do,” said Stefano Canali, the menswear brand’s president and CEO.

So too at Fendi, with chairman and CEO Serge Brunschwig revealing that 83 percent of its tier-one to tier-three suppliers were audited by the luxury house in 2021.

To be sure, most of the actions — and sustainable advancements — happen at the top end of the pipeline. The most fragile segment with weaker financial strength, especially in Italy, are the many small- and medium-size enterprises, some of which have as little as 10 to 15 employees.

That’s where alliances come in handy.

“Sustainability is not a compliance factor, rather an attitude and mindset permeating the entire [fashion] cycle,” said Gucci’s Centra.

According to Paolo Naldini, director of the Fondazione Pistoletto: “the top and bottom ends of the supply chain are joining forces…their link is the greatest issues of all because of opposite financial interest that for so long prevented cooperation.”

OTB Group and Diesel founder Renzo Rosso at the Venice Sustainable Fashion Forum.

Stefano Trovati/SGP

As shareholders stepped into the game, holding companies accountable for their sustainability credentials or lack thereof, backed by regulators’ decisive steps, sustainability resonates on a financial level.

“There are economic values to sustainability…the stakeholder relational capital is the general sentiment consumers, policymakers and investors have towards companies, towards our own reputation.…It’s a source of revenue growth,” said Cipriani. “Sustainability is about risk management, assert of opportunities, value creation, seizing these opportunities.”

Kering’s Daveu said the group has organized an ESG-oriented roadshow with investors, at the beginning to disclose its risk management approach but now increasingly in response to their request for information on the company’s way forward.

Carlo Carraro, president emeritus and professor of environmental economics at Venice’s Ca’ Foscari University, argued that 55 percent of sustainability levers, or investments, are estimated to save money for the industry overall, offering an additional reason for action.

“I wouldn’t want to witness ‘just stop fashion’ rallies,” said SMI president Sergio Tamborini, referencing the recent Just Stop Oil protests and urging the industry at large to act now.

Kering Sales Rise 23% in Q3 as U.S. Tourists Splurge in Europe

Kering Sales Rise 23% in Q3 as U.S. Tourists Splurge in Europe

PARIS – French luxury group Kering said sales rose 23 percent in the third quarter, fueled by a stellar performance in Western Europe, where U.S. tourists have been splurging as a result of the weakness of the euro against the U.S. dollar. 
Its cash cow brand Gucci continued to underperform versus the group’s other brands, although organic sales picked up their growth pace in the three months ending Sept. 30. Revenues at the Italian label totaled 2.6 billion euros, up 9 percent on a like-for-like basis, following a 4 percent rise in the second quarter. 

That was slightly below a consensus of analyst estimates, which called for a 10 percent increase in comparable sales at the maker of Dionysus handbags and horsebit loafers. By comparison, organic sales at LVMH Moët Hennessy Louis Vuitton’s key fashion and leather goods division rose 22 percent year-over-year in the third quarter.

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Reporting first-half results after the market close on Thursday, Kering said group revenues in the third quarter totaled 5.14 billion euros, representing a rise of 14 percent in comparable terms. This was up versus the second quarter, and above the consensus forecast for a 12 percent sales rise.

The group, whose brands also include Saint Laurent, Bottega Veneta and Balenciaga, said revenue in its directly operated store network continued to grow at a rapid pace, up 19 percent on a comparable basis. 

Western Europe posted a 74 percent jump. Conversely, North America was up just 1 percent, further penalized by a high comparison base. Japan saw a 31 percent increase, while Asia-Pacific posted growth of 7 percent, despite ongoing restrictions in Mainland China designed to curb the spread of COVID-19.

“We delivered sharp top-line growth, both versus last year and from pre-pandemic levels. Our ongoing focus on the exclusivity of our brands and on the quality of their distribution are yielding very positive results and reinforce their positioning in their key markets,” François-Henri Pinault, chairman and chief executive officer of Kering, said in a statement. 

“In an increasingly complex environment, we maintain the required flexibility to support our profitability and sustain our investments in the long-term outlook of all our houses, Gucci first and foremost. We are as confident as ever in the potential and prospects of the group,” he added.

Kering’s share price has fallen by 35 percent since the start of the year against the backdrop of looming recession, surging inflation, supply chain disruptions, Chinese lockdowns and the war in Ukraine. But Luca Solca, analyst at Bernstein Research, believes its current valuation is fair due to the potential of the group’s smaller brands.

“The ‘small’ Kering brands are not so small any more, as they represent a larger portion of Kering’s profits,” he said in a report dated Sept. 21. Solca noted that the non-Gucci brands accounted for 28 percent of EBIT in the 2021 financial year, up from 20 percent in 2010, with absolute profits tripling in the same period. 

“The Gucci relaunch will take some time, in all likelihood. But in the meantime the ‘small’ Kering brands continue to shine. At this valuation level, and with the prospect of a boost from China reopening next year to outbound travel, it is difficult to be bearish on Kering. Even if it may not produce significant positive surprises short-term, the relative downside seems limited from here,” he said. 

Kering said recently it is targeting revenues of 15 billion euros at Gucci. It also outlined Saint Laurent’s potential to become a megabrand, with a medium-term revenue target of 5 billion euros, double the 2.5 billion euros in sales registered last year. 

The Kering results come on the heels of figures from Hermès International earlier in the day showing sales at constant exchange rates rose 24 percent in the July-to-September period, with double-digit revenue gains across all regions. Meanwhile, LVMH reported its sales grew 19 percent in the quarter on an organic basis, in line with the trends observed in the first half of the year.

Luxury Brands Flock to Inaugural Edition of Art Basel Fair in Paris

Luxury Brands Flock to Inaugural Edition of Art Basel Fair in Paris

PARIS — Leading luxury brands took advantage of the inaugural edition of Paris+ by Art Basel to stage citywide events that had the French capital buzzing even before the art fair’s official opening to the public on Thursday.
Within minutes of the preview opening on Wednesday morning, the Grand Palais Éphémère temporary structure, in the shadow of the Eiffel Tower, was thrumming with visitors ready to whip out their credit cards. At the Louis Vuitton stand, staffers had to explain that the objects on display were not for sale.

The French luxury house partnered with Art Basel for the first time to highlight its longstanding relationships with artists including Richard Prince, Jeff Koons and Yayoi Kusama, who was present in spirit via a lifesize statue created for her first collaboration with Vuitton in 2012, which will be followed by a second collection set to launch next year.

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Among the 43 works on show at the hard-to-miss stand, located just to the left of the entrance, were a giant panda sculpture by Takashi Murakami, a travel trunk designed by Cindy Sherman, and a wall of handbags designed by artists as part of Vuitton’s Artycapucines collection, the latest edition of which launched in select stores on Wednesday.

“It allows us to put a little smile on everybody’s face,” said Michael Burke, chairman and chief executive officer of Louis Vuitton, surveying the early crowd. “Everybody can be so serious in the art world, and Kusama has taught us, Murakami has taught us, that you don’t always have to be deadly serious.”

Although the walls between art and fashion have crumbled in recent years, with a glut of collaborations between luxury brands and art world stars, the prominence of the Vuitton stand may raise a few eyebrows among purists — but Burke doesn’t mind.

“I would hope a few would be shocked. I’m convinced not all of them will be shocked. The snobs will be shocked. We’re not snobs,” he demurred. Vuitton’s partnership with Art Basel is surfing on the euphoria of post-pandemic social gatherings and trade events.

“When you’re given that opportunity to have that type of discourse and engagement with this crowd, who is still very, very hungry coming out of the pandemic, you want to contribute to that,” Burke noted. “I think before the pandemic, we were so serious in everything we did, and then having been gone for over two years, when you come back, everybody’s a little bit giddy.”

That was reflected in brisk deal-making. Hauser & Wirth president Marc Payot noted there was “discernible new excitement around both edge-defining contemporary art and discoveries in modern and historical art,” noting that the first day had signaled that “collectors and curators have gotten the assignment,” snapping major pieces within hours of the opening.

By Wednesday evening, the gallery had sold newly produced works from George Condo for $2.6 million; the energetic blue swirls of Rashid Johnson’s “Bruise Painting ‘Sanctuary,’” snapped up for $1 million; and an Avery Singer piece, which went to a European museum for $800,000.

Scuptures by Claude and François-Xavier Lalanne on display at Kering’s headquarters in Paris.

David William Baum/Courtesy of Christie’s

The sentiment was echoed by Cécile Verdier, president of Christie’s France, which partnered with Kering to display 15 sculptures from its upcoming New York auction of the works of Claude and François-Xavier Lalanne in the courtyard of the French luxury group’s picturesque headquarters, located in a former hospital dating back to 17th century. 

“There is an effervescence around Paris as an art capital that is due to several existing factors, and the fair is the extra ingredient on top,” she said. 

The announcement earlier this year that MCH Group, the owner of the Art Basel fairs, would dislodge France’s FIAC contemporary art fair from its traditional fall slot at the Grand Palais reflects a revival in the French capital’s status as an art market, reshuffling the decks for participating galleries and sponsors. In addition to Vuitton, partners of the Paris+ show include Audemars Piguet, David Yurman, Groupe Galeries Lafayette, Lalique and Guerlain.

The first edition features 156 leading French and international galleries, spread across the main exhibition space and citywide sites including the Tuileries Garden and Place Vendôme, where access is free, organizers said.

“I was at the fair this morning. There are a lot of familiar exhibitors, some of which also took part in FIAC, but it’s a smaller fair than it will be when the Grand Palais reopens [following renovations]. So there are only important galleries and important works, and you felt that the whole world was there,” Verdier said.

“There’s a lot of excitement around this fair due to the international reach of the Art Basel brand, which is a guarantee of quality. FIAC was a very nice fair, but perhaps more focused on emerging artists,” she added.

Verdier noted that Paris+ opened amid a busy calendar of fall exhibitions in local museums, with shows devoted to artists including Oskar Kokoschka, Sam Szafran, Edvard Munch, Joan Mitchell and Alice Neel, among others. “I don’t know any capital worldwide where this many exhibitions have opened between early September and mid-October,” she marveled.  

And the city has spruced up since the coronavirus pandemic broke out in 2020, with the opening of several new institutions including the Bourse de Commerce, the contemporary art museum owned by billionaire François Pinault, the founder of Kering and owner of Christie’s.

“It’s an ecosystem that was already there, but that’s expanding. When you look at Avenue Matignon, where Christie’s has its headquarters, a lot of galleries are setting up shop in the area. It’s changed a lot in the last three years,” said Verdier, pointing to the arrival in the area of art dealers including Emmanuel Perrotin, Per Skarstedt and Nathalie Obadia, and the upcoming opening of the Hauser & Wirth gallery on nearby Rue François 1er.

Laurent Le Bon, president of the Centre Pompidou, and Yana Peel, global head of arts and culture at Chanel.

Courtesy of Chanel

Yana Peel, global head of arts and culture at Chanel, was also feeling the buzz.

“Paris+ today had wonderful energy,” she said at a party on Wednesday night celebrating the launch of Assemble, a three-year partnership between the Chanel Culture Fund and the Centre Pompidou contemporary art museum that aims to foster a public dialogue with artists, architects, scientists and other innovators. “There’s amazing museum shows on at the moment, and I think what’s really exciting is to have all the artists here with us tonight.”

The event, held on a fifth-floor terrace with panoramic views of Paris, drew artists including Kehinde Wiley, Sheila Hicks, Mickalene Thomas and Mire Lee, as well as Ruth Rogers, the widow of Pompidou architect Richard Rogers, accompanied by her stepson Ab.

Among Assemble’s planned initiatives are an annual conference to shape the future cultural program of the Pompidou, which is scheduled to close in 2024 for several years of renovations, but will continue to host exhibitions off-site. It will also create a lab dedicated to advancing sustainability and regenerative practices in design and architecture.

Unlike some of its competitors, Chanel doesn’t funnel its artist collaborations into products. Instead, it is banking on the global cultural aura of its partnerships with leading art institutions, and the Chanel Next Prize, which supports individual creators. 

“We’ve had a century of cultural philanthropy. If we look at Gabrielle Chanel and her work with Stravinsky and Diaghilev, it was very interdisciplinary, it was very modern, and it was very focused on creating conditions for artists to dare,” Peel explained. 

“Artists are at the heart of life. You can see the energy in this room, and artists often show us the way forward. We live in such complex times and Gerhard Richter said art is the greatest form of hope. So I think we look to artists for their beauty and for their prescience,” she added. 

Peel noted that the Pompidou partnership was inspired by philosopher Bernard Stiegler, who encouraged institutions to think about knowledge exchange.

“What is demanded of future audiences who may never know a world without the internet? What are the questions that museums like this should be asking as they also preserve history? I think these are all really important questions, and I think it’s very, very exciting for Chanel to engage with the thinkers, the doers, the creators who are really defining what matters most and what’s coming next,” she said.

Supporting artists to create and exhibit to the public, rather than adding to a company collection, is also what Audemars Piguet is aiming for. Now in its 10th year, its contemporary art program commissioned Andreas Angelidakis for a three-week immersive installation at the headquarters of the French Communist Party, a landmark building designed by Oscar Niemeyer.Titled “Center for the Critical Appreciation of Antiquity,” the Greek artist’s first solo exhibition in Paris reframes antiquity through a queer lens, turning the building’s famous domed conference room into a subterranean archeological excavation filled with plush blocks in shapes inspired by classic architectural features.

Meanwhile, Lalique unveiled its collaboration with James Turrell, which includes two limited edition fragrances in crystal bottles, marking the first time it has created a perfume with an artist.  

The busy schedule of auxiliary activities was set to last for the duration of Paris+, which runs through Sunday. Hermès is staging what it bills as a “poetic and cinematographic” performance based on the myth of Pegasus. “La Fabrique de la légèreté,” conceived by choreographer Michèle Anne De Mey and her husband, filmmaker Jaco Van Dormael, is due to run at the Grande Halle de la Villette from Oct. 21 to 28.

With contributions from Lily Templeton

Kering Net Profit Up 34 Percent in H1 Despite China Lockdowns

Kering Net Profit Up 34 Percent in H1 Despite China Lockdowns

PARIS — French luxury group Kering said net profit rose 34 percent in the first half versus the same period last year, as strong sales with local customers in the rest of the world more than offset the impact of lockdowns in China in the second quarter. However, its cash cow brand Gucci continued to underperform versus the group’s other brands, with organic sales slowing in the three months to June 30, likely penalized by the label’s relatively high exposure to China. Revenues totaled 2.58 billion euros, up 4 percent on a like-for-like basis, following a 13.4 percent rise in the first quarter. 
That was slightly above a consensus of analyst estimates, which called for a 3.5 percent increase in comparable sales at the maker of Dionysus handbags and horsebit loafers.

By comparison, organic sales at LVMH Moët Hennessy Louis Vuitton’s key fashion and leather goods division rose 19 percent year-over-year in the second quarter, reflecting the resilience of its star brands Louis Vuitton and Dior, in addition to smaller brands like Fendi, Celine and Loewe.

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Reporting first-half results after the market close on Wednesday, Kering said group revenues in the three months to June 30 rose 20 percent year-on-year to 4.97 billion euros, representing a rise of 12 percent in comparable terms. 
This compared with a 21.4 percent organic sales increase in the first quarter, and was above the consensus forecast for a 9 percent sales rise.
The group, whose brands also include Saint Laurent, Bottega Veneta and Balenciaga, posted net income of 1.99 billion euros in the first half, a new record. Recurring operating profit was up 26 percent to 2.82 billion euros, yielding an operating margin of 28.4 percent, up from 27.8 percent in the same period last year.
“The group delivered sharply higher sales in the first half of 2022, sustaining last year’s top-line momentum — solid performances in retail around the world more than offset the impact of COVID-19-related measures in China in the second quarter,” François-Henri Pinault, chairman and chief executive officer of Kering, said in a statement.
“In a period of heightened macro uncertainty, Kering is in great shape to surmount short-term challenges, take advantage of new opportunities, and support the ambitious strategies and tremendous prospects of all our brands,” he added.
Kering’s share price has fallen by more than 25 percent since the start of the year against the backdrop of looming recession, surging inflation, supply chain disruptions, Chinese lockdowns and the war in Ukraine. But Piral Dadhania, analyst at RBC Capital Markets, believes the stock is ripe for picking.
“We think Kering is an attractive stock, given its valuation profile and the potential for Gucci improvement,” he said in a report dated July 5. “We also appreciate the portfolio business model, and the strength of some of the brands including YSL and Balenciaga with longer-term potential for Bottega Veneta and the expansion of Kering Eyewear following two recent acquisitions.”
Kering said recently it is targeting revenues of 15 billion euros at Gucci. Detailing its action plan at its Capital Markets Day event in Paris last month, the group said Gucci’s medium-term growth hinged on fashion and timeless products, and there was strong potential in the men’s and travel categories.

Gucci plans to increase the proportion of leather goods in its sales mix, and expand its Gen Z clientele with aspirational categories, while simultaneously reinforcing the high-end offer to seduce mature customers.
Kering also outlined Saint Laurent’s potential to become a megabrand, with a medium-term revenue target of 5 billion euros, double the 2.5 billion euros in sales registered last year. The group said it is targeting revenues of 2 billion euros for its eyewear division, launched in 2015.
The Kering results come on the heels of figures from Compagnie Financière Richemont showing sales at constant exchange rates rose 12 percent in the April-to-June period, with double-digit revenue gains across all product categories and regions, except for Asia Pacific.
Meanwhile, Burberry reported that the Chinese lockdowns dented its growth in the fiscal first quarter. At constant exchange rates, retail revenue was flat in the 13 weeks to July 2. Hermès International is the next big luxury player scheduled to report second-quarter results, on Friday.

Kering Is Betting on Cryptocurrencies

Kering Is Betting on Cryptocurrencies

PARIS — Kering believes that cryptocurrencies are here to stay, and recently invested in a $1.5 billion fund aimed at supporting the growth of Web3, the next iteration of the internet.The French luxury group was one of the investors behind Katie Haun’s crypto fund Haun Ventures, launched in March, chief client and digital officer Gregory Boutté revealed on Friday in a presentation at the Kering Imagination Lab, the company’s hub for digital innovation in Paris.
And it recently made the leap into digital currencies by giving customers the possibility of paying in cryptocurrencies at Gucci stores, initially in key U.S. flagships. Balenciaga is set to follow suit “imminently” and will also accept cryptocurrency payments on its e-commerce site through specialized payment service BitPay. Boutté dismissed recent volatility as par for the course.

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“We’re convinced that cryptocurrencies are here to stay,” he said. “They’re hugely appreciated. A lot of wealth has been created around these currencies. Some of our customers who hold these currencies would like to be able to use them to buy our products, so in order to offer our clients the best possible experience, it makes sense to offer this option.”
He noted that Kering has a “test and learn” approach and would be closely watching developments at Gucci, which launched the option two weeks ago, as well as Balenciaga, before deciding whether to extend the payment system to other brands.
“That’s one of the beauties of having our own platform: it allows us to decide the developments we want to pursue,” he said. Kering last year completed the process of internalizing its e-commerce operations, which account for 15 percent of overall revenues, by integrating Balenciaga and Bottega Veneta.
Through its Kering Ventures fund, the group makes minority investments in start-ups or technologies aimed at serving the luxury customer of the future.
Haun is a former partner at Silicon Valley venture capital firm Andreessen Horowitz, and Kering executives, including chairman and chief executive officer François-Henri Pinault, also met with Marc Andreessen, one of the industry’s most respected entrepreneurs, on a recent trip to California to explore the potential of the metaverse for its business.
Separately, Kering partnered last year in a fund launched by investment firm Cathay Capital that invests in early-stage Chinese companies with high-growth potential in the consumer goods and retail sectors.
“On China and the topic of Web3 and cryptocurrencies, we feel that we have to learn, so we want to work with people that know these areas better than us, to be able to exchange with them on topics of common interest, and for them to help us formalize how these technologies or regions can adapt to that,” Boutté said.
The Kering Imagination Lab, which opened a year ago and is home to 200 employees, will host a hackathon on July 20 and 21 where employees will be encouraged to submit their ideas for how Web3 can drive the luxury business. A jury headed by Pinault will designate a winner, whose idea might be implemented by one of the group’s labels.
Boutté detailed how innovation and data were being used at every stage of Kering’s activities, from 3D product design, which is now used to develop between 30 and 40 percent of carryover styles, to machine-learning algorithms that help Gucci’s planners place inventory in stores with up to 20 percent more accuracy than before.

“Digital is not just about e-commerce. It can be relevant to every dimension in our value chain,” he said. “I think we’re very much ahead of the curve on this, and we have a very open approach to innovation.”
Kering is also bringing its “test and learn” approach to the metaverse, with Gucci selling a digital version of its Dionysus bag on Roblox, and Balenciaga teaming up with Epic Games’ Fortnite.
“There are 2.5 billion people playing video games every month, who are in this metaverse, who use these platforms and spend a lot of time in these virtual worlds. We believe these virtual worlds will be increasingly immersive and present in our lives,” Boutté said. “We think that Web3 and NFTs in particular represent a real disruption and we want to be at the heart of this disruption.”
SEE ALSO: 
Google Executive Joins Kering Board Amid Metaverse Push
Balenciaga and Fortnite Debut Physical, Digital Collections and World
Gucci Town Arrives on Roblox

Kering Launches First Employee Share Ownership Program

Kering Launches First Employee Share Ownership Program

PARIS — Kering said Wednesday it is launching its first employee share ownership plan, for employees in eight territories including France, the U.S. and China.
Employees will be able to buy 200,000 shares at a discounted rate. The subscription period will be open from May 19 to June 9, with the price set on May 17. Delivery and settlement of the shares is slated for July 7.
“Kering’s outstanding success over the past few years is based on each of its employees, their ability to push their limits and their willingness to contribute to shaping a modern, authentic and responsible luxury,” François-Henri Pinault, chairman and chief executive officer of the French luxury group, said in a statement.

“The launch of this employee shares program is a sign of recognition for the efforts of our employees and for their commitment to our corporate culture. It reflects my confidence in their involvement and in the future of Kering,” he added.
Shares purchased through the scheme will have to be held for at least five years in France and three years in all other countries, barring early-release exceptions applicable in each jurisdiction.
Kering has previously launched group-wide parental, baby leave, and diversity and inclusion policies. In April, it announced the signature of a partnership charter with the French Ministry of Labor, Employment and Integration to reinforce its commitment to hire more young people from disadvantaged communities.
FOR MORE, SEE ALSO:
Gucci Casts a Shadow on Kering in Q1
Google Executive Joins Kering Board Amid Metaverse Push
Kering Inks ‘Integration Charter’ With French Government

Gucci Product Searches Spike After “House of Gucci” Film Release

Gucci Product Searches Spike After “House of Gucci” Film Release

MANY HAPPY RETURNS: It looks like the eagerly-awaited “House of Gucci” will be bringing in more than box-office returns this holiday season. Cash registers should be ringing at Gucci as data showed a spike in searches for its handbags and clothes, coinciding with the film’s worldwide release this week.Fashion e-commerce aggregator Lovethesales.com reported on Friday that there was a 257 percent jump in searches for Gucci bags compared to the prior week, while searches for Gucci clothes rose 73 percent. Interest in Gucci slides, meanwhile, was up 75 percent week-on-week, it said.
The ripple effect is not unexpected. Claire Roblet, director of financial communications and market intelligence at Gucci’s parent company Kering, predicted in a conference call with financial analysts in October that the release of Ridley Scott’s movie would have a “halo effect” on the brand.

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The film includes a protracted shopping scene, and features several actors closely associated with the house.
Salma Hayek, wife of Kering chairman and chief executive officer François-Henri Pinault, plays a psychic, while Gucci brand ambassador Jared Leto, who appeared in its recent runway show staged on Hollywood Boulevard in Los Angeles, stars as Paolo Gucci, one of the grandsons of founder Guccio Gucci.

All the Looks from Gucci Love Parade Show in L. A.
Katie Jones/WWD

Lady Gaga, who plays Patrizia Reggiani, the Italian socialite convicted of hiring a hitman to kill her ex-husband Maurizio Gucci, has worn several outfits designed by Gucci creative director Alessandro Michele for the “House of Gucci” press tour and premieres this month, further driving interest in the brand.
Gucci has also dressed Hayek and Leto for several red carpet events. The brand promoted the film this week with an Instagram post highlighting its loan of archival pieces to costume designer Janty Yates.
Gucci is not the only house that stands to benefit from the film. Lovethesales.com also reported a 245 percent jump in searches for pinstriped suits, fueled by the men’s looks featured in the movie, provided by another legendary Italian label, Ermenegildo Zegna.
SEE ALSO:
Everything to Know About the ‘House of Gucci’ Film
Moore From L.A.: Is ‘House of Gucci’ Any Good?
Behind the Scenes of Lady Gaga’s 54 Different ‘House of Gucci’ Looks

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