>> Even designers are shopping the closet when it comes to piecing together their latest collection. Fortune's Peter Gumbel writes in his new profile on Francois-Henri Pinault of PPR: "All the brands have been scouring for ways to save cash. Hiring and salaries have been frozen since last September. Bonuses for this year have been halved too. Inventiveness has become the order of the day."

Robert Polet, CEO of PPR's Gucci Group, illustrates with a story of how he found Tomas Maier on the floor of Bottega Veneta's headquarters in New York City with his shoe manager last November, going through a pile of books filled with leather and skin samples.  Fortune relates: "They were checking how much of each material they had in stock, planning to use it up in the next collections. 'I left the room and thought, Wow,' Polet says. 'Finding ways to manage down inventory has almost become a sport.'"

So how does Pinault feel about YSL's losses? »

>> Just a few days after LVMH reported a decline, causing all marketing to be cut save for its top-performing brands, PPR reported a 76 percent decline in first-half profits. Tomas Maier can breathe a sigh of relief: the company's only area of growth was Bottega Veneta, on which PPR has been focusing, which saw an 8.6 percent rise in sales in the second quarter.

At flagship brand Gucci, which accounts for the bulk of Gucci Group's profits, Frida Giannini was credited by PPR chairman Francois-Henri Pinault for bolstering PPR as a whole with sustained demand for her bags in China.

As for any incoming Gucci Group brands . . . »

>> Bernard Arnault, Francois Pinault Are Playing Nice, Still Rich —With the lapse of almost a decade since the fight over Gucci, LVMH's Bernard Arnault and PPR's Francois Pinault are experiencing a detente, symbolized by their willingness to appear on the cover of French business magazine Challenges together this week.  The accompanying story credits Arnault's wife, Helene, with the warming of feelings when she embraced Pinault's wife Maryvonne at an event last November.  Since, the Arnaults invited the Pinaults to dinner on May 26. The magazine also tabulates France's largest fortunes, with Arnault (14.58 billion euros) in second, the Hermes family (7.68bn euros) in fourth, Pinault (4.95bn euros) in sixth, and Alain Wertheimer and family, owner of Chanel, (3.5bn euros) in tenth. [WWD]

>> INSIDER WIRE —After much speculation, PPR CEO (and owner of Gucci, Yves Saint Laurent, and Balenciaga) Francois-Henri Pinault and Salma Hayek have confirmed the cancellation of their engagement.  The two met in Venice in May 2006, and have a daughter, Valentina Paloma, together. [USA Today]