What Escalation in the Middle East War Means for the Industry

It’s been a year since the mass killing and abduction of Israelis carried out by Hamas on Oct. 7, 2023 sparked a major escalation in the long-running Israeli-Palestinian conflict. The ensuing war, which saw Israel bombard Gaza-based Hamas, has resulted in what the UN has described as “unimaginable suffering” in the region, with the death toll so far surpassing 41,000 Palestinians and 1,200 Israelis and foreign nationals, according to the UN.

In recent weeks, the fighting has spread beyond Gaza and is now raging on multiple fronts.

On Monday, Israeli prime minister Benjamin Netanyahu said his forces were “changing the security reality” in the region as they continued with their ground invasion of southern Lebanon and airstrikes on Beirut in a push to weaken Hamas ally Hezbollah. And as Israeli officials weigh their response to last week’s missile attack by Hamas and Hezbollah-backer Iran, the United States CIA director William Burns warned of a “very real danger of a further regional escalation.”

The situation has weighed heavily on many fashion professionals in the region and beyond. But so far the impact to industry operations has been relatively contained.

Beirut is a small but significant fashion hub. Lebanese labels such as Elie Saab, Georges Hobeika and Zuhair Murad have major operations in the city. Some smaller labels are in “survival mode” trying to find ways to keep working to “create a sense of normalcy amidst the chaos and destruction,” said Sarah Hermez, founder of local fashion school Creative Space Beirut. But top players have thus far suffered limited operational impact.

Their ateliers and stores are largely concentrated in Beirut’s central retail and business districts, and not in the city’s southern suburbs which have borne the brunt of the Israeli assault, though the situation has put pressure on delivery timelines and interactions with overseas clients and retailers.

“Resilience has become a way of life for Lebanese designers, as we strive to showcase the beauty of Lebanon to the world, no matter the circumstances,” Georges Hobeika’s co-creative director Jad Hobeika told BoF.

Meanwhile, industry professionals in Tel Aviv, home to a small fashion sector, also pressed on this week, while reflecting on last week’s Iranian missile attack on Israel. The barrage was largely intercepted and resulted in limited damage. According to a report in the BBC, an Iranian missile landed “near the Ayalon Mall,” where the likes of H&M, Desigual and Forever 21 have stores, but did not strike the shopping centre directly.

Beyond the immediate conflict zone, in the nearby Gulf states, whose shopping hubs are critical to regional and global fashion businesses, there was a growing sense of indignation this week as bombs hit Beirut and insiders digested statements by industry leaders like Vogue Arabia’s Manuel Arnaut, whose latest editor’s letter was a tribute to the Lebanese people, and Lebanese designer Rabih Kayrouz, who lamented his country’s “bleeding.”

The sentiment was pronounced among insiders in key hub Dubai, where many Lebanese work in the local fashion sector and the conflict felt closer this week. But for the most part, it was business as usual, with only small tweaks or minor postponements to splashy fashion marketing activations out of sensitivity to the conflict’s escalation.

Christian Louboutin went ahead with an activation in Dubai on Thursday, while a Jimmy Choo event scheduled for October 22nd is set to proceed as planned, even if some brand parties are being recast as less celebratory events and fashion influencers are becoming more cautious about what they post to their social media feeds.

Consumer demand has yet to take a hit in the Gulf. Dubai’s shopping malls remained busy this week. Some even predict a local sales boom as the conflict heats up and more affluent Lebanese, Syrians and others relocate to the regional safe haven.

In Saudi Arabia’s capital Riyadh, and in the kingdom’s other fashion hub Jeddah, the war feels even further away than in neighbouring UAE. Riyadh Fashion Week, set to kick off October 17th, is pressing ahead without any noticeable tone shift. Its latest programme includes a gala dinner and a closing party, in addition to runway shows and showrooms.

But the situation in the Middle East remains volatile and a dramatic escalation, such as an Israeli strike on Iran’s nuclear sites, might yet spark a wider war that could damage the global industry by worsening the Red Sea shipping crisis, disrupting business operations, pushing up oil prices, fuelling inflation and dragging down consumer sentiment.

THE NEWS IN BRIEF

Compiled by Yola Mzizi.

FASHION, BUSINESS AND THE ECONOMY

Mytheresa acquires Yoox Net-a-Porter from Richemont in equity deal. Under the terms of the transaction, Richemont will transfer YNAP to Mytheresa with a cash position of €555 million ($603 million) and no financial debt. It will also provide YNAP with a €100 million revolving credit facility. Richemont will take a 33 percent stake in Mytheresa.

Gucci names Stefano Cantino its new CEO. The Italian executive is a veteran of Prada and Louis Vuitton. He replaces CEO Jean-François Palus as Kering’s flagship brand struggles to reignite consumer demand.

Bernard Arnault’s family poised to buy Paris FC football club with Red Bull. Under the terms discussed, the LVMH CEO’s family will initially take a stake of about 55 percent through its holding company Agache, before buying out club chairman Pierre Ferracci’s 30 percent holding in 2027. Red Bull will acquire a stake of about 15 percent.

Uniqlo owner targets higher sales from strong Western market. Fast Retailing Co. reported record annual revenue of ¥3.1 trillion ($20.8 billion) for the fiscal year ending in August, driven by strong demand for its Uniqlo brand in North America and Europe, despite a sales dip in China. The company is targeting an operating profit of ¥530 billion in the current fiscal year, surpassing analysts’ estimates.

Shein’s UK sales hit £1.55 billion ($2 billion) ahead of a possible London listing. The company saw its British revenue rise 38 percent in 2023 from a year earlier. Pretax profit in Britain doubled in 2023 to £24.4 million, the Companies House filing shows.

Mulberry-owner Ong Beng Seng charged in Singapore graft scandal. Ong allegedly abetted former transport minister S. Iswaran over two flights and a night’s stay at the Four Seasons hotel in Doha, with a total value of S$20,848.03 ($15,960). He was also accused of abetting the ex-minister in obstructing the course of justice.

Used luxury watch prices stabilise, boosted by Patek Philippe. An index of prices for pre-owned Patek Philippe watches gained 0.9 percent during the month, according to data compiled by Subdial, a UK-based watch trading platform. The modest watch market gains follow the first rate cut by the US Federal Reserve in more than four years last month.

Amazon antitrust case filed by FTC to move forward after ruling. US District Judge John Chun said federal antitrust enforcers offered enough evidence in their complaint. The FTC sued Amazon last year accusing the e-commerce giant of monopolising online marketplace services by degrading quality for shoppers and overcharging sellers.

Alibaba’s Lazada is courting luxury houses to help hit $100 billion goal. This week in Milan, Executives met with founders and managers of more than a hundred Italian brands interested in tapping Southeast Asia through LazMall Luxury. That courtship is one aspect of a campaign to try and fend off Sea Ltd.’s Shopee, ByteDance Ltd.’s TikTok and PDD Holdings Inc.

MercadoLibre posts record Argentina sales amid consumer rebound. A record 20 million products were sold on its platform in August, worth the equivalent of $916 million. Consumers were turning to non-essential goods like computers, tablets and cellphones after food and basic necessities led the way at the start of the year, MercadoLibre said.

Sears is looking for rent relief on last-standing stores. Sears is working with advisory firm Huron Consulting Group Inc. to help score rent concessions from its landlords of its remaining locations. The retail chain exited bankruptcy under the ownership of Lampert’s ESL Investments in 2022 with 22 stores in the US and Puerto Rico, but is now down to 11 locations.

Moose Knuckles receives minority investment from Chinese down apparel giant Bosideng. With its new funding, the label known for premium parkas and faux-fur vests will continue its global retail expansion. Private equity firm Cathay Capital, which acquired a stake in Moose Knuckles in 2019, remains its majority investor.

THE BUSINESS OF BEAUTY

Claudia Schiffer announced as Rhode ambassador. The supermodel stars in a campaign for its newest launch, a rich moisturising product called Barrier Butter. The product will be available from Oct. 28 on Rhode’s e-commerce site.

Unilever sells Russian business after pressure from campaigners. Unilever has sold off its Russian operations to Arnest Group, a Russian manufacturer of perfume, cosmetics and household products. Arnest Group will take control of Unilever Rus, which includes four factories, as well as the group’s interests in Belarus.

Estée Lauder Companies names new West Coast leadership. Somer Tejwani will be promoted to SVP and global general manager of Too Faced. Michelle Shigemasa has been appointed SVP and global general manager of Smashbox Cosmetics and Glamglow. The two executives will serve as the successors to ELC’s global president of California brands Tara Simon.

Revlon names Michelle Peluso its new CEO. Peluso replaces Liz Smith, who served as interim chief executive from August 2023, and will return to her role as executive chair. Peluso will also join the company’s board.

PEOPLE

Kim Jones exits Fendi, remains at Dior. The British designer is leaving the Roman fur and leather goods house and will ‘concentrate fully’ on his role as menswear artistic director at LVMH stablemate Dior.

Victoria Beckham CEO steps down. Marie Leblanc, who joined the company in 2018, is stepping down to spend time with her family in France, the company said. Chairman Ralph Toledano will step in as interim CEO until a permanent successor is named.

Proenza Schouler names new CEO. Shira Suveyke Snyder succeeds Kay Hong, who held the role since 2018. Formerly the brand president of Amazon-owned e-tailer Shopbop, Suveyke Snyder has held several roles in the e-commerce space.

Nike replaces North America boss ahead of new CEO’s arrival. Tom Peddie will become the vice president and general manager for North America. Peddie retired from Nike in 2020, but came back to the company just months ago as its vice president of marketplace partners.

MEDIA AND TECHNOLOGY

Superfine: Tailoring Black Style is the Met’s Costume Institute spring 2025 exhibition. The exhibition will centre around the theme of Black Dandyism, a concept that points to a style of dress adopted by formerly enslaved Black men in the Americas and Europe in the 18th century. It will also explore how fashion and style have contributed to the creation of Black diasporic identity.

System magazine co-founders exit publication. Elizabeth von Guttman, Thomas Lenthal and Jonathan Wingfield plan to launch a new editorial venture in 2025. System is the latest independent title to see a management shakeup amid widespread upheaval in fashion media.