Known Unknowns

• Retail sales look strong heading into the holidays
• But the Omicron variant and lockdowns in Europe are creating uncertainty
• Supply chain pressures may be easing, though inflation remains a worry; US consumer price data for November is due out on Dec. 10

The numbers are in, and shoppers remain on track to spend a record amount over the holiday season. That’s good news for retailers, which are banking on strong sales even as they resist the temptation to use promotions to draw customers. This week should provide further clarity on two key uncertainties. The Omicron variant could mark a new chapter in the pandemic, and the world learns more about its infectivity and potency with each passing day. So far, the US remains on course to heighten vaccine mandates but otherwise carry on as usual, while some European countries are reimposing tighter restrictions. Whether the variant will lead to another wave of lockdowns and factory closures in Asia is impossible to say. The other variable in play is inflation, and the supply chain snarls keeping inventories tight and prices high. While the backlogs at warehouses and ports appear to be easing in some areas, new inflation data out of the US this week could colour the debate and recalibrate consumer expectations.

The Bottom Line: New variants and economic uncertainty are starting to feel like the new normal as the world learns to live with Covid-19.

Zegna Goes Public

• Zegna plans to go public via SPAC in December, though the company has not set a date
• The luxury menswear label, which also owns Thom Browne, recently rebranded and is pivoting to emphasise “casual luxury” over workwear
• Revenue dropped over 20 percent in 2020; the company projects €1.2 billion ($1.35 billion) in revenue this year, still down 8 percent from 2019

Fashion IPOs are red hot right now, though a 111-year-old, family owned Italian menswear label certainly stands out from the crowd of sans-serif-logoed DTC brands hitting the public market. Zegna is doing its best to show it can hang with the cool kids: a minimalist rebrand drops the Ermenegildo, and its method of going public via a special purpose acquisition company is very 2021. But though Zegna’s outlook has certainly improved from its pandemic lows, the label is unlikely to attract attention from the sort of investors who snapped up shares in Allbirds or Warby Parker. Rather, Zegna executives are emphasising a path to growth that lies in clothes for wearing outside the office, sold at luxury prices. The hundreds of millions of dollars Zegna expects to raise will help provide the funds needed to make the rebrand stick with consumers, while leaving the Zegna family with a controlling 62 percent stake.

The Bottom Line: “This transition to a casual luxury brand needs a lot of support,” chief executive Gildo Zegna told reporters when the SPAC deal was announced in July. Zegna will need every penny of the IPO proceeds, and potentially more, to compete in that arena, where the far larger LVMH, Kering, Chanel and Hermès dominate.

Dior’s Latest Collab

• Kim Jones will unveil Dior’s pre-fall men’s collection in London on Dec. 9
• The fate of Jones’ previous collection, a collaboration with Travis Scott, is unknown after 10 people died at the rapper’s Astroworld concert in Houston
• The London show will also feature a collaboration, people familiar with the brand say

Kim Jones and his knack for collaborations — whether it’s Ghanaian artist Amoako Boafo or Nike — have been a boon for Dior, whose business is roaring out of the pandemic, powering parent LVMH’s fashion division along with stablemate Louis Vuitton. But a much-hyped Dior men’s collection built around Travis Scott, which was unveiled in Paris in late June, has turned into a headache for the brand after 10 of the rapper’s fans died at one of his concerts in November. Some brands have cut ties with Scott, while others have remained silent about future projects with the artist. Nike delayed a sneaker release. For Dior, the tragedy came at an awkward time, just weeks before the Scott-themed collection was due to hit stores. The brand has thus far remained mum about its plans. Jones’ London show this week is similarly shrouded in mystery; it is set to feature another collaboration, but little else is known. Jones, an English-born Central Saint Martins graduate, is returning to London after a long absence; though he debuted his namesake label at London Fashion Week in 2003, he started showing in Paris the next year and has remained closely tied to the city ever since.

The Bottom Line: Collaborations have been an enormous windfall for luxury brands. But as the Scott team-up shows, they are not entirely risk-free.

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