Monday, May 30, 2011

Fashion's Latest Financial Fiascoes

Christian Louboutin vs. Yves Saint Laurent

Everyone knows Christian Louboutin for his impeccable shoes - excuse me, works of wearable art - and more specifically, those red lacquered soles. Louboutin has been in business since 1991 but really became a household name through notoriety of celebrities and artists alike singing the shoes' praises - sometimes literally - infinite red carpet and sidewalk sightings and of course, SJP as Carrie Bradshaw from Sex and the City.

But just last month, Louboutin filed a law suit against Yves Saint Laurent in New York for trademark infringement. The company claims that YSL's spring 2011 shoe collection is misleading consumers by using red outer-soles, and is seeking $1 million in damages after asking YSL to cease selling their "copy" of their shoes.

Louboutin's legal team argues in court papers: "The defendants use of red footwear outsoles that are virtually identical to plaintiff's Red Sole Mark is likely to cause and is causing confusion, mistake and deception among the relevant purchasing public as to the origin of the infringing footwear."

(Side note: YSL's collection also features purple shoes with purple soles, navy with navy soles and green with green soles but only the red shoes with red soles are cited in the legal controversy.)

YSL responded by stating that they have been known to design shoes with red outer-soles since the 70’s, that it is part of the ornamental design feature in footwear and that there has been production of red-soled shoes since the 1600’s (King Louis XIV of France had several pairs!).

The courts have yet to rule in either fashion houses favor. Who do you think should win? Is Christian Louboutin the only designer that should be allowed to use signature red soles?

BCBG vs. its Vendors

Women’s Wear Daily recently published that BCBG is in serious financial debt with its vendors, for an estimated $230 million. The company has temporarily suspended all payments to its vendors while it refinances its debt agreements.

This is not the first time the company has had to be helped out from the bank. Former company employees have been known to leak every dirty detail the company keeps covered up, from verbal abuse to not having air-conditioning in their factories. They have also been known to rant about financial troubles with their vendors, whether its late payments or not receiving payment at all. Most of the vendors BCBG is in dealings with have not seen a dime since February of this year.

In short, it has been a tough year for the company. Failing to reach lower socio-economic shoppers with its brand with Miley Cyrus that was sold exclusively to Wal-Mart, a failed attempt at finding a partner and now, the label’s public relations representative resigned just last Thursday!

There's no official word from BCBG on when the vendors will be paid but its definitely a story to keep tabs on, just to see how the company will turn around its financial - and public - image.

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