From despots to short stocks
Six months of Dark Luxury: Where we’ve got to and where we’re going
It’s been six months since Dark Luxury launched with a story about how the Assad regime shopped for luxury while Syria burned, followed by a deep-dive into the problems at Burberry. More than 1,000 of you have now signed up to get our weekly news round-up about the darkest news in the luxury industry, and our weekly stories based on original reporting.
We thought we’d take stock of what we’ve achieved in the last few months, look back at changes in the industry since December, and explain what we hope to achieve over the next six months with this free-to-read update.
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Six months of Dark Luxury
Alfred Tong
In between a meeting with some VPs of an international fashion PR firm in Aldwych and lunch at Cipriani in Mayfair with an executive of a Swiss watch brand – such is the life of a Dark Luxury editor – I took the opportunity to have a quick look inside the menswear department of Selfridges, the site and subject of one our most-read stories.
I did not see the rampant criminality nor firearms that our report describes in vivid detail (well done to our reporter John Simpson). However, a quick look at the Louis Vuitton menswear concession made me conclude that perhaps the greater crime was what was being hung on the rails and displayed on the mannequins here under the auspices of “luxury”. I was particularly astonished by a mannequin dressed in a branded polo shirt made out of the kind of synthetic fabric used on sports merchandise. On the bottom half was a pair of rough workwear trousers that I’m sure I’ve seen in Carhartt. The shirt retails at £1,025, the trousers £1,380.
As I felt the flimsy cheap fabric between my thumb and forefinger, I thought back to our opening post in December 2024, when I wrote, “We believe luxury’s moment of reckoning is now”. After six months of in-depth reporting, absolutely nothing has changed our minds. In fact, if anything, the decline of the mass luxury industry is happening even faster than we could have anticipated.
First, the socio-economic and geo-political shocks that no-one could have reasonably anticipated, and which have done huge damage. Namely, tariffs and China’s stop-start economic recovery. Yet, even here, luxury brands have not helped themselves. The viral TikTok videos broadcast in the wake of the first round of tariffs, which claimed to be filmed inside factories in China churning out branded goods from famous European brands, may well be mostly false. But they crucially contain a kernel of truth.
Most of the production of your “Made In Italy” or “Made in France” item was done elsewhere, and meets only the minimum statutory requirement in order to get that precious sewn-in label. Consumers have known this for years. How else to explain that crappy shirt in Louis Vuitton? Dana Thomas wrote about this extensively in her book, How Luxury Lost its Lustre in 2007 and today says on her Substack that these practices have only become more widespread, with a single handbag probably made out of materials, hardware and linings sourced from anywhere up to 30 countries.
And then, of course, there are self-inflicted creative mis-steps. Lets face it, if the stuff is desirable and beautifully designed in the first place, perhaps customers would care less about rip-off prices and dubious manufacturing and outsourcing. It’s clear now that Pharrell William’s tenure at Louis Vuitton is not a patch on his predecessor the late Virgil Abloh. Again, just look at what’s on the rails. And yet this is nowhere near the worst appointment, not even close. That dubious honour belongs to the appointment of Demna Gvasalia at Gucci, whose reign at Balenciaga included that S&M-style ad campaign starring young children.
Despite being one of the most influential designers of the last decade — oversized hoodies, clodhopper trainers and awkward tailoring is all his fault — there is nothing to suggest that this look would be a fit for Gucci, and nothing in his career suggests he is capable of adapting or changing to something that would work for Kering’s most important brand. No wonder the hedge fund Marshall Wace has a £300 million short position on Kering’s stock. Gvasalia’s tenure has the potential to be even worse than Sabato De Sarno’s, which wiped millions from the market cap of Kering’s stock.
Kering attracts short sellers
Hedge funds have built up bets that Gucci-owner Kering’s share price will fall.
Succession issues, quality and creative mismanagement continue to beset the world’s largest luxury goods company LVMH. How soon before the short sellers start to increasingly target the conglomerate which kick started the mass luxury phenomenon we know today? Bernard Arnault, the man that the fashion critic, Sarah Mower, once described as the “Rupert Murdoch” of luxury has done more than anyone to cheapen and coarsen the industry, and now appears to be paying the price. The market cap of Hermès, once astonishingly a takeover target for LVMH, momentarily overtook its rival earlier this year, with its one solitary brand compared to Arnault’s 75. Both stocks currently trade at pretty much the same market valuation.
A $1,000 investment in the S&P’s global luxury index 12 months ago would now be worth $980. If you’d stuck the same money in a standard S&P 500 tracker fund you’d have $1,130. The market thinks the luxury industry has less potential than the US market as a whole. All of which has been great for Dark Luxury. Moments of turmoil and change have always been brilliant for the business of journalism and we have enjoyed every minute of it.
Two of the stories we’re most proud of include our Burberry analysis, which correctly identified that its edgy high fashion creative strategy had been damaging, and it needed to return to a bourgeois sensibility in its design and marketing. Six months later, the share price shot up nearly 20 per cent this week as it announced its pivot into “timeless British style”. Many thanks to Showmedia CEO and former Esquire editor, Peter Howarth, and FT style columnist Anna Berkeley for their expert analysis on this story. Expect more of this in-depth analysis over the next six months.
Our reporting into criminality in the Louis Vuitton store in Barcelona has similar, market-moving implications for investors in LVMH, who should be trying to understand the company’s true sources of revenue. This report also revealed rampant subversion of VAT refund schemes, which is worth billions to luxury retailers. Something we’ll be exploring further as the industry in the UK lobbies to reintroduce that subsidy.
More recently, we have just rolled out our brand identity designed by Peter Leung. The “redact” symbol speaks to our desire to uncover the hidden parts of this always fascinating but still opaque industry. Meanwhile, the “Dark Luxury” font you’ll see in our charts and Instagram posts speaks to the craftsmanship and artistry associated with the best luxury goods, and also the practice of journalism. We have always seen what we do as equal parts art and creativity, as well as a special craft that has been painstakingly learnt and practised over many years. Thank you so much for being part of our first six months — we look forward to many more.
Next week on Dark Luxury
We’re at the Financial Times’ Business of Luxury summit in Barcelona. Are you going to be there? Drop us a line if so. We’ll have coverage of the panels, interviews with attendees, and hopefully a story about a star source of one of our previous investigations.
Plus: a review of Bob Sheard’s book, The Brand New Future, which claims to reveal how luxury brands can save the world. We’re skeptical. Also, what we thought of a very interesting panel discussion at Central Saint Martins which Sheard hosted to launch the book.
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I love your reporting. Perfect for this moment of reckoning. Lets hope it brings back real creativity and craftsmanship
Thank you - we love yours too, and really appreciate the support!