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Memo Pad: More Fashion Exposure... Some Are Richer Than Others...

After dedicating significant time to the subject last December, the Italian TV program "Report" — the nation's equivalent of "60 Minutes" — last...

MORE FASHION EXPOSURE: After dedicating significant time to the subject last December, the Italian TV program "Report" — the nation's equivalent of "60 Minutes" — last Sunday retackled the issue of ethical manufacturing in the luxury goods sector — and put the spotlight this time around on brands such as Dior, Louis Vuitton, Ferragamo, MaxMara, Chanel, John Richmond, Dolce & Gabbana, Bottega Veneta, Moncler and Burberry. In the program, called "The Unemployed of Luxury," presenter Milena Gabanelli contended many firms don't have a full picture of their production cycles and are obsessed with producing large quantities, and detailed how certain processes are either outsourced or assembled in low cost and often illegal factories.

"Report" revealed how Italian contractors that maintain relationships with the brands often subcontract production to smaller factories run by Chinese owners to both cut costs and get a faster turnaround.

Dolce & Gabbana, Vuitton, Dior, MaxMara and Ferragamo all declined to comment on the program, and a Chanel spokeswoman in Paris said Tuesday it was still evaluating the broadcast and could not yet comment about it.

During various interviews with small Italian manufacturers who are battling competition from the low-cost subcontractors, the interviewees noted how a regularly hired Italian worker who sews shoes is paid 18 euros, or $28, an hour while a Chinese employee at one of the subcontractors receives half that.

Another manager explained how an Italian worker who pockets a net monthly salary of 1,000 euros, or $1,567, costs the company triple that amount with health care and other costs. "Unfortunately, very often we have to pass on work commissioned by fashion houses because the price they demand is unsustainable for us. We have high labor costs," said Anna Piergiacomi, president of the Federmoda Marche, the region's fashion association.

Still, Gabanelli pointed out that a 20-euro, or $31, difference on manufacturing costs shouldn't influence a luxury brand's decision, especially given the high markups on products.

The geographic areas explored by "Report" were again Tuscany's Prato area, near Florence; the Marche region, known for the production of footwear, and the Riva del Brenta district, near Venice, where, for centuries, small artisanal workshops on the banks of the Brenta river cobbled the finest quality shoes, specializing in ornate vamps.

According to "Report," the number of Chinese factories in the Marche multiplied exponentially, from 39 to 395 in seven years, while the number of Italian vamp makers in the Brenta area dipped from 200 to 15 in four years.

Diego Della Valle, whose Tod's Group is headquartered in the Marche, was again the only one to go on the record for the program. He admitted his Hogan children's shoes are made in China and are so labeled.

"Children's feet grow every three months so their shoes have to be adequately priced, which is why we outsource to China part of the production," said Della Valle. "I can understand a counterfeiter or charlatan, but affirmed brands can afford to say I made this sneaker, I guarantee it, the price is right and the quality is high because I made it."

— Alessandra Ilari and Miles Socha

SOME ARE RICHER THAN OTHERS:
Marie Claire's female readers don't have the highest median household income (HHI) among fashion and beauty titles, but the magazine scored the highest increase in the category, according to Mediamark Research & Intelligence's spring 2008 figures, which were released Tuesday. The Hearst title is up approximately 22 percent in spring 2008 to $72,832, versus spring 2007. Other gainers included Town & Country, up 11.5 percent to $60,676; In Style, up 3.8 percent to $78,860; Cosmopolitan, which rose 7 percent to $59,400; Glamour, up 7 percent to $65,623; Allure, which rose 3 percent to $65,605, and Vogue, which had a slight increase to $66,191.

On the flip side, decliners included W, Harper's Bazaar, Lucky and Elle. W was down the steepest, at about 30 percent to $72,242. "It is not uncommon for an upscale title like W, which has a smaller circulation size, to experience swings in the MRI data," said a W spokeswoman. "Competitively, W continues to rank ahead of our competitors in HHI as a luxury fashion title."

Harper's Bazaar fell 17 percent to $63,826. "The MRI sample for non-mass magazines is extremely small: only 392 people were interviewed about Harper's Bazaar, and our circulation is 729,000+," said Valerie Salembier, senior vice president and publisher. "In the last MRI study, Harper's Bazaar did extremely well, yet we continued to discount its value. Simply stated, in most cases, MRI's methodology does not accurately portray the audience of non-mass luxury magazines. Our luxury advertisers rely on Vista, because Vista measures true reader involvement and responsiveness, including recall and action taken on specific brands." Lucky, which holds the number-one slot in median HHI at $82,430, nonetheless declined 5.2 percent versus a year ago. Elle also declined 3.8 percent to $67,862.

— Amy Wicks