France looks headed for political instability after a surprise win by a left-wing coalition in Sunday’s legislative election offered no party a path to claim the majority needed to govern.

The New Popular Front — which includes the Socialists and far-left France Unbowed — won 178 seats in the National Assembly, according to data compiled by the Interior Ministry. Marine Le Pen’s National Rally, which pollsters last week had seen winning the election, came third with 143, while President Emmanuel Macron’s centrist alliance notched up 156.

Even with smaller parties or individual lawmakers aligning with the larger groups, all will fall far short of the 289 required for an absolute majority in the 577-seat lower house. It’s unclear therefore how the country, which doesn’t have a tradition of coalitions, will form a government that is able to pass laws.

French Prime Minister Gabriel Attal announced that he would present his resignation to Macron on Monday, which would start the process for the formation of a new government.

The euro and French bond futures slipped at the start of trading, as investors digested a result that few had anticipated and brings back to the fore concern about the country’s fiscal problems, given parties’ commitment to a major increase in public spending.

The Institut Montaigne estimates that the campaign pledges by the New Popular Front would require nearly €179 billion ($194 billion) in extra funds per year. The far-right National Rally’s plans would cost about €71 billion, while Macron’s party and its allies would incur extra spending of close to €21 billion.

Le Pen put a positive spin on the results, pointing out that National Rally, which had 89 spots in the previous legislature, is on course to get the most seats of any single party.

“The tide is rising,” Le Pen said. “It hasn’t risen high enough this time, but it’s still rising.”

The unexpected result means no single alliance has the numbers to govern with an absolute majority, fragmenting the legislature into three distinct groups with divergent agendas. Macron will wait for the new configuration of the National Assembly before making any further decisions on naming the next prime minister, according to a statement from an Elysee official.

France will now face two options, which have little precedent in the history of the modern republic. Macron could try to cobble together a coalition among willing but not always like-minded parties, but that would require the New Popular Front to break apart and reconfigure behind the president without its more radical elements.

Or Macron could name a technocratic administration that could bridge the period of political turmoil. Both solutions will likely mean a weakened government that will have trouble passing any meaningful legislation and with less influence on the international stage.

“The absence of majority and the absence of government will expose France and French people to formidable danger,” Macron’s first prime minister, Edouard Philippe, warned on Sunday night. “Central political forces now have a responsibility they cannot duck: They must work for an agreement without dishonor that will stabilize the political situation.”

Jean-Luc Melenchon, the leader of France Unbowed, told supporters Sunday that the New Popular Front would implement its program in its entirety and that he would refuse to enter into a deal with Macron. But Socialist leader Olivier Faure struck a more conciliatory note, saying it’s the party’s job to “find a path” to respond to the needs and demands of French people.

While a lower-than-expected seat count for Le Pen’s party and a bump for Macron’s bloc thus came as a relief to some traders, the win for the left bloc is likely to hurt French assets in the weeks to come.

For Vincent Juvyns, global market strategist at JPMorgan Asset Management, that could pop up in the spread between French and German bond yields, which he sees widening.

“The European Commission and rating agencies are expecting €20 billion to €30 billion euros of cuts but the government will actually have to deal with a party which want to increase spending by €120 billion,” Juvyns said. “This could create tension across markets in the coming weeks. Markets may demand a higher spread as long as the new government hasn’t clarified its fiscal position.”

Sunday’s projections offer some vindication for Macron’s call to dissolve parliament following a crushing defeat to Le Pen’s party last month. He was widely criticized for the decision after his party finished a distant third in the first round of voting last week in which Le Pen seized the initiative.

The past week has seen frantic efforts to activate the so called Republican Front — an arrangement in which mainstream parties strategically pull candidates from certain races to bolster votes against the National Rally. Macron’s party withdrew 76 candidates from runoff contests where they had little chance of winning, in order to avoid splitting the anti-Le Pen vote. The New Popular Front withdrew 130.

National Rally President Jordan Bardella criticized the strategy, saying that the approach orchestrated by the Elysee palace “is not going anywhere.”

Antonio Barroso, deputy director of research at Teneo, wrote in a note that the formation of a new government would be complicated and could take a long time.

“This indecision runs a risk for the country that nobody should underestimate,” Philippe said. “The credibility of our country could be hit, as well as its credit ruined.”

By Samy Adghirni, Ania Nussbaum, and William Horobin with assistance from Julien Ponthus, Albertina Torsoli, James Regan and Tara Patel.

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What Elections in the UK and France Mean for Fashion

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The notion that there are wholesale brands and direct-to-consumer brands is dying.

Just look at Glossier, one of the defining DTC start-ups of the last decade, which after years of resisting wholesale, began selling its $40 lip balms and $22 eyebrow pomades in Sephora in 2023. On the flip side is century-old Levi’s, a legacy wholesale brand that has been reducing inventory at multi-brand retailers in a bid to do 55 percent of its sales direct to consumers by 2027.

That’s the tip of an industry-wide shakedown. Digitally native disruptors like Allbirds have flocked to wholesale in recent years to widen their reach as the costs to acquire customers online skyrockets. Traditional wholesale brands, such as Ralph Lauren, Calvin Klein and a host of luxury labels, are investing more in their DTC businesses and pulling back from third-party retailers as those partners struggle and brands seek more control over their pricing, image and customer relationships.

Today, the idea of being either a DTC or wholesale brand is being supplanted by the understanding that each channel has its strengths and weaknesses, and that most brands need both to thrive. Shoppers are just as quick to stand on a line for a brand’s pop-up store as they are to peruse Ssense for the best deals or visit Sephora to indulge in beauty trends. Brands have to make themselves available wherever they think their customers will be, and that’s increasingly everywhere.

“We need this diverse shopping environment,” said Claudia D’Arpizio, a senior partner at management consulting firm Bain & Company. “I don’t envisage a world where you only buy in a mono-brand environment … It’s difficult for the brands to keep an assortment that is ok for all the markets and for all the customers.”

But striking the right balance can be difficult even for the most successful players. After Nike started pulling sneakers off the shelves of retail partners in 2017 and driving more sales through its own stores, website and app, it found that customers weren’t always following it to its own channels. In the past year, it revitalised wholesale partnerships after seeing its sales growth slow and only modest increases in its profit margins.

In this case study, The Business of Fashion lays out how brands can ensure that each channel is contributing to overall sales and profit growth without cannibalising one another. Brands investing in wholesale, like activewear start-up Vuori, womenswear label Cult Gaia and shoe brand Aldo, are tapping retail partners to test new markets, improving how they tailor their assortments for each channel and using the data they get to better target prospective consumers. The companies that are leaning into DTC, such as denim brand Paige and Rebecca Minkoff, are using it to promote their full array of products and push their more expensive items.

Ultimately there is no magical formula for the right mix of wholesale and DTC sales. The correct balance is different for each brand and its individual business needs. But the insights in this case study will allow brands to work out how each channel can best serve them. The goal of balancing the wholesale and direct-to-consumer models is that sales should be growing concurrently in both.

British fashion house Burberry Group Plc is expected to shed hundreds of jobs, mostly in the UK, following a sharp drop in its stock market value, the Telegraph reported.

Employees were informed during a Zoom meeting in late June, with those affected told they were facing redundancy or having to reapply for their roles, the newspaper reported, without saying where it got the information.

Burberry has reportedly begun a 45-day consultation, signaling that hundreds of positions could be cut.

It’s understood that union officials are coordinating redundancy settlements with a select group of employees. Employees fear as many as 400 jobs could be at risk. Burberry declined to comment to the Telegraph.

Burberry employed an average of 9,169 full-time equivalent workers during the 2023-24 fiscal year, according to its most recent annual report.

The reported cuts would follow 500 positions slashed in 2020, when the iconic trench-coat maker sought to save £55 million ($70.5m) amid pressures from the pandemic.

By Jack Wittels

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Burberry Shares Plunge as Company Slashes Profit Forecast

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The post-pandemic travel boom is showing no sign of letting up. In the US, the Department of Transportation has reported a series of all-time highs for daily travellers passing through its airport security checkpoints, and July 4 saw Americans hit the road in record numbers. Chinese tourists also appear to be taking international trips in numbers that are starting to approach pre-Covid levels — outbound trips reached 89 percent of 2019′s total during Golden Week in May, according to Jing Daily.

Fashion and beauty retailers have mostly benefitted from the tourism surge, though a rapid and seemingly permanent shift in how and where travellers spend their money has thrown some brands for a loop. Western tourists are spending more on experiences. Chinese tourists, meanwhile, show a growing preference to shop at home rather than while on holiday abroad, and a post-lockdown preference for Asian destinations over European ones has carried through to this summer.

Certainly, a dramatic increase in the overall number of travellers, and how much they spend on holiday, seems set to lift all boats. However, the big winner looks to be Japan, where the weak yen — the currency is trading at a 38-year low to the dollar — is attracting bargain-seeking visitors from around the world. Tourists there have more than doubled their spending on fashion from a year earlier, according to an analysis of credit card data by SpendingPulse, a division of Mastercard. Bernstein found that 64 percent of in-store spending by Chinese tourists took place in Japan, nearly double the country’s share in 2019.

Big duty free players, such as LVMH and Estée Lauder, have struggled to keep up with the shift in travellers’ spending patterns. For fashion and beauty brands not saddled with vast infrastructures catering to circa 2019 Chinese tourism, winning a share of holiday shoppers’ wallets is much simpler. An over-the-top resort pop-up is always popular; at the Mytheresa X Flamingo Estate outpost in the Hamptons, vacationers can purchase beauty products and jewellery, or even test-drive an all-electric Porsche. Others are still trying to catch tourists on their layovers; Lacoste is opening duty-free boutiques in airports in Singapore, Qatar and other hubs favoured by big spending long-haul travellers.

As we get deeper into summer, we’ll see whether increased travel numbers translate into a rebound in luxury spending, which has stalled out in many key markets. It’s also an open question whether lower-income travellers will splurge on fashion. Soaring hotel and fuel costs are squeezing budgets, and shopping sprees may not always make the cut.

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