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As the realities of a war in Ukraine sink in, luxury brands and national apparel organizations grapple with the likely impact of sanctions on the fashion industry.
As Italian fashion collections unfolded in Milan on Friday, Carlo Capasa, head of Italy’s fashion federation Camera Nazionale della Moda Italiana, pointed out that Italy’s luxury goods exports to Russia amounted to around 1. 2 billion euros per year.
Unconfirmed rumors citing diplomatic sources suggested on Thursday that Italian Prime Minister Mario Draghi was pressuring the European Union to exclude Italian luxury goods from retaliatory sanctions that would ban exports and certain financial transactions with Russia. A spokesperson for Mario Draghi said Business in vogue Saturday that Italy has not made any request for exclusion from sanctions. Office tweeted“Italy’s position is fully aligned with the rest of the EU. #Ukraine.”
Capasa said in a brief interview ahead of Jil Sander’s show on Saturday afternoon that the camera was not pressuring leaders to exclude luxury goods from the sanctions packages. “We fully trust our government and what it is doing with Macron in France. Whatever they decide, we are with them.
The European Commission is still formalizing the next round of sanctions against the world’s 11th largest economy, which are rumored to include international payment systems SWIFT, which would also harm luxury’s ability to sell and trade with Russia. The European Commission did not respond to requests for comment. The French Ministry of Economy and Finance did not respond to a request for comment. The Comité Colbert, the French association of luxury professionals, declined to comment.
On Thursday, Richemont decided to temporarily close all of its stores in Russia but reopened them on Saturday, according to sources inside Richemont. The French luxury conglomerate declined to comment. In Ukraine, Richemont has a Cartier store and two franchise stores (Van Cleef & Arpels and Montblanc), which are closed.
Sentiments to exclude luxury from sanctions against Russia have not been vocally supported in the Italian fashion industry, nor by some other countries and national apparel groups.
“We are NOT pushing to exclude,” Alexander Gibson, spokesperson for the American Apparel and Footwear Association in Washington, DC, said via email. “The sanctions include all products, including apparel and footwear…Our goal has been to support the Biden administration’s efforts to reach a peaceful resolution to this crisis as soon as possible.”
Earlier, the organization issued a statement on Ukraine stating, “This is a terrible week for the citizens of Europe and indeed the world. The political instability and conflict we see boiling over is incredibly upsetting. We pray for peace and the Ukrainian people.
There will be an impact on operations in Europe and the region, according to the release. “We are working closely with our members to monitor developments, including the effects this will have on supply chains, other global economic factors and the imposition of sanctions. Our industry is making every effort to support workers and supply chain partners through such disruptions, and to ensure their operations remain fully compliant with all existing and new sanctions and requirements.
Hours after Missoni’s Fall 2022 collection show, company president and former creative director Angela Missoni noted that the industry – and all Italian industries – will be hit hard by rising natural gas prices. as much of the country’s supplies come from Ukraine, and are used to generate the electricity that apparel and accessories factories run on.
Despite these costs and the potential loss of sales to Russia, she said, “I think you have to take a stand. … I would never side with a war. I will always be on the side of the locals who are attacked.
“We have to show that we are against politics,” continued Missoni, “even if it is a sacrifice for Italy.”
After the Gucci show on Friday afternoon, creative director Alessandro Michele said he couldn’t have dinner the day before after hearing the news of the Russian invasion.
“I felt so bad. I think we need to love more against people who hate life,” Michele – who is known for his sweet and poetic take on design – said in non-native English. “I want to shout out to everyone – we need life!”
Morgan Stanley estimates that Russian nationals account for less than 2% of Kering and Richemont’s global sales, including Russian spending abroad. “The importance of Russia and Russian nationals for the luxury sector has diminished over the years and is now relatively intangible,” said Edouard Aubin, an analyst at Morgan Stanley. “Counterintuitively, the less homogeneous a society is (measured by a ratio such as the Gini index), the lower total luxury spending will be, and vice versa.” The analyst notes that South Korea is a very homogeneous society and spending per capita is much higher than in Russia, accounting for 5-6% of total spending on personal luxuries worldwide, for example. “Worldwide, the growth of the luxury industry is now driven by the middle to upper class.”
Philippe Benacin, CEO of Inter Parfums, said Business in vogue that Russia accounts for 5 percent of the company’s turnover. He assumes that being an American company, American sanctions would apply. It’s also not clear that if Russia is cut off from the SWIFT system, any payments could be made, he says.
With the report by Laure Guilbault.
Update: This story has been updated to include comments from Italian Prime Minister Mario Draghi’s office. (February 26, 2022)
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