Mon, Jan 16, 2017 page14

• Lanvin employees fear job cuts as sales slump: sources

  • Reuters, PARIS
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  Morale is low at Lanvin with staff expecting job cuts after France’s oldest fashion brand swung into the red last year and new designer Bouchra Jarrar failed to lift sales, sources said.

  The company appointed advisory firm Long Term Partners to conduct an audit and it is due to present its findings to Lanvin’s board at the end of this month and recommend ways to reduce the company’s cost base, the sources with first hand knowledge of the matter said.

  Founded in 1889, Lanvin is one of France’s last major independent fashion brands, part of the country’s fashion heritage, in the same league as LVMH’s Christian Dior, Hermes and privately owned Chanel.

  Lanvin expects to post a net loss of more than 10 million euros (US$10.6 million) for last year — its first in nearly a decade — against a profit of 6.3 million euros in 2015, sources have said.

  TAIWANESE MAGNATE

  Many items on its Web site are being offered at a 50 percent discount.

  Sources, who spoke on condition of anonymity, said the company’s woes stem in part from the uncertainty created by the arrival of its new designer, as well as the luxury spending downturn and underinvestment.

  The controlling shareholder, 75-year-old Chinese media magnate Wang Shaw-lan (王效蘭) who is based in Taiwan, has been reluctant to invest in the brand for many years.

  Wang would also not let her associate, private investor Ralph Bartel, who owns 25 percent, inject more cash into the business, as it would dilute her stake, the sources said.

  “It is clear that the company’s situation is deteriorating fast and now it is in a stalemate,” one of the sources said. “But since Mrs Wang simply refuses to sell or [let the capital] be diluted, there is nothing we can do about it. It is so sad for the brand and its staff.”

  DISPUTES

  Wang shocked the fashion world in 2015 by sacking star designer Alber Elbaz after a boardroom dispute.

  Elbaz had been at the creative helm for 14 years and was frustrated by Wang’s refusal to invest in Lanvin, particularly in areas crucial to growth such as new boutiques and accessories, several sources said.

  Lanvin declined to comment, while a spokesman for Wang said she was not available for comment and Long Term Partners did not return calls or e-mails asking for comment.

  LUXURY

  Luxury analysts believe that Lanvin, had it benefited from more investment, has all it takes to become France’s answer to Italy’s Valentino, now generating more than 1 billion euros in sales and preparing itself for a flotation.

  Instead, orders for new collections from multi-brand shops and department stores, which represent around 70 percent of Lanvin’s turnover, fell 30 to 40 percent in the last half of last year.

  Overall, consolidated sales last year fell by more than 20 percent to below 170 million euros, from 210 million in 2015, several sources said.

  Designer Jarrar, appointed in March last year, presented at a show in September a Lanvin woman dressed in black and white tuxedos, very different from Elbaz’s ethereal, light, ultra-feminine silhouettes adorned with clunky jewelry.

  STRATEGY

  At its peak in 2012, before chief executive Thierry Andretta, now chief executive officer of Britain’s Mulberry, resigned over strategic differences, revenue reached 235 million euros and the company’s operating margins stood at around 10 to 12 percent.

  In 2015, Wang refused offers secured by Elbaz for Lanvin, including one of more than 400 million euros from Mayhoola, the Qatari firm that now owns Balmain and Valentino, sources said.

  PROCEEDINGS

  Elbaz is still in legal proceedings with Lanvin and Wang over his dismissal and the value of his stake.

  Dozens of employees have resigned or been sacked and many former key staff are in legal fights, they said.

  Wang also sold off many of Lanvin’s assets in the past decade, such as its Japanese operations to Japan’s Itochu and its perfume business to Interparfums, which the brand can buy back in 2025.

  Lanvin is also in a dispute with Itochu over the value of the license it is able to buy back, the sources said.
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