Lacroix fashion house declares insolvency *Update* Inks Deal with Ajman Sheikh

[Diorette]

PARIS (AFP) – France's US-owned couture house Christian Lacroix SNC has declared insolvency after falling foul of the global crisis, the company said Thursday.
Arguably one of the most exuberant couturiers in Paris, Christian Lacroix SNC said in a statement that the company owned by Falic had declared insolvency before a Paris court due to "the sharp downturn of the luxury market."
The company said it "has filed a voluntary petition with the Tribunal de Commerce de Paris to put itself under the protection of the courts" but intends "to present a continuation plan" and "intends to maintain its business operations throughout the proceedings."
Declaring insolvency is a first step towards bankruptcy protection.
After being bought by the US firm from luxury group LVMH in early 2005, the company launched "an ambitious and costly restructuring plan to reposition the brand offering to higher end collections," terminating ready-to-wear lines and opening two stores in the United States, one in Las Vegas, one in New York.
"Unfortunately, this longterm strategy for repositioning of the brand was dramatically hindered by the current and ongoing world financial and economic crisis which severely hit the luxury sector," the company said.

news.yahoo.com

 

[reese06]

I'm confused on how this is happening. If this brand is under the LVMH umbrella then how could this really happen? I thought many of the brands that didn't make money were somewhat supported by the huge profit margins and returns of other brands under LVMH.

 

[Spike413]

^ He's not owned by LVMH anymore. They sold his brand in 2004. The Falic group owns his label now.

I wonder how/if this will affect the couture collection

 

[skot4mc]

from The New York Times

May 29, 2009
Lacroix Files for Bankruptcy Protection

By SUZY MENKES
Christian Lacroix, the French couturier whose artistic and exuberant pouf dresses propelled him to fame in the 1980s, became the latest victim of the global financial crisis Thursday as the U.S.-owned fashion house bearing his name filed for court protection from creditors.

The voluntary petition, similar to Chapter 11 bankruptcy protection in the United States, was filed with the commercial court in Paris, which will decide whether to restructure or liquidate the company.

Although Lacroix’s chief executive officer, Nicolas Topiol, emphasized that the brand intended to continue operating during the process, the news brings an end to a luxury business model for which Lacroix was the last of the Mohicans.

Founded in 1987 by Bernard Arnault, chairman and chief executive of LVMH (Moët Hennessy Louis Vuitton), the concept was to start with haute couture, at the apex of the luxury pyramid, and develop from it a range of ready-to-wear, accessories and fragrances. This was the system that had reaped mighty profits for established houses like Christian Dior and Chanel.

But despite years of critical success, the company failed to break even, let alone turn a profit. Mr. Arnault sold Lacroix in 2005 to the Florida-based Falic Group, known for its Duty Free Americas chain. The Falic brothers aimed to refocus the luxury brand at the peak, subsequently suppressing the lower-priced clothing and jeans lines.

“Since the acquisition of Christian Lacroix SNC, we have been committed to the brand and to its high-end development,” Mr. Topiol said in a statement. “We will continue to do so but the sharp downturn of the luxury market has significantly hurt our revenues.”

The owners had been in discussion with potential financial partners and investors for the past year, according to Mr. Topiol, who said that “this process which was in its final phase, was directly hit by the conditions of the financial markets and could not be finalized prior to the filing.”

According to people with knowledge of the situation, Lacroix was badly hit in the United States, where it has opened two stores in New York and Las Vegas and where buyers have recently reduced or canceled orders. Ready-to-wear sales for the coming autumn season were down 35 percent and losses for 2008 were €10 million, or $14 million, on overall revenues of approximately €30 million.

Mr. Topiol’s statement said only that the “long-term strategy for repositioning of the brand was dramatically hindered” by the financial crisis.

That has been evident for some time across the luxury sector, where even the biggest players are being hurt by recession and financial turmoil. LVMH, the world's biggest luxury goods company, recently scrapped a plan to open a Louis Vuitton flagship store in Tokyo. Early this year, Chanel announced the layoffs of 200 temporary employees.

Versace, an independent Italian house, is currently in a state of turmoil, announcing that revenues fell 13 percent in the first quarter of the year. The board of directors this week approved a three-year plan to steer the company through the economic crisis, while continuing to deny rumors that its chief executive of four years, Giancarlo Di Risio, will soon exit the company.

The lessons seem to be that it is now difficult to survive in high fashion without being part of a corporate group with recourse to investment for product development and flagship stores, and that the pyramid model is no longer viable.

The modern strategy, as exemplified by the growth of the Giorgio Armani brand, is a sunburst, with the designer at the epicenter and all product categories (except sunglasses, which are technically demanding) under the brand control.

Yet, significantly, an Armani Privé couture line was created to add prestige and a direct link with celebrity clients.

The loss of Christian Lacroix to Paris haute couture is immeasurable. Although the designer hopes to hold a small presentation during the July couture season, this was the last house established under the formal couture rules. Even a restructuring would likely have severe implications on his 125-member staff.

The grandeur and artistry of the couturier’s work was displayed earlier this month in the sumptuous gown created for Philomèna de Tornos, the bride of Jean de France, Duc de Vendôme, a descendent of the French royal dynasty.

But just as royalty now has less attention than celebrity, so couture has lost its unique prestige, with the word bandied about by any high-end designer. And whereas fragrances produced from the mystique of haute couture once kept the houses afloat, now it is just as likely that a hip jeans brand like Diesel or a celebrity like Jennifer Lopez will have the perfume hit that has stubbornly eluded Lacroix. Mr. Lacroix, who received the Chevalier de la Legion d’Honneur in 2002, for services to fashion, has other strings to his bow, apart from his colorful and sophisticated collections. He was creative director for Emilio Pucci, the Italian fashion house, from 2002 to 2005, while he was still within the LVMH group.

The designer also has his own XCLX company, for which he has created decor for the French TGV high-speed train, as well as hotel interiors and uniforms for Air France. He has also designed for theater, opera and dance and acted as curator for fashion exhibits, including one currently at the National Museum of Singapore.

 

[ParadEyes]

this is terrible...

 

[designerleather]

As this global depression continues, I expect to see more such thing. While many of these niche markets have been isolated from such downfalls because the uber wealthy are the uber wealthy, there is also a large abundance of designers and houses that are out there.

 

[leyla m.]

terrible truth of the current market!
i wish designers would come back with their feet on the carpet and be more humble when it comes to crazy overexaggerrated exuberance... everyone is having difficult times and everyone needs to adjust.. not sure if they followed the tendency or continued thinking (TOO) big ?! oh well shame shame

 

[Crying Diamonds]

I wonder how/if this will affect the couture collection

And didn't Lacroix just report a big boost in couture sales recently ?

Lacroix is a classic. It can't die out.
Maybe LVMH will buy it back ?

 

[Deleted member 7575]

The company has been in financial trouble for years. The Lacroix name has never been been able to really move product the way Arnault thought it would back in the 80's when he lured him away from Patou. Hopefully someone with deep pockets will help them out and turn them around but if it hasn't happened by now...

 

[happyguy]

of all brands, why lacroix??? i love the way his collections always pop. and nobody does colour like lacroix. nobody!!!

 

[designerleather]

^ Are people buying it? What is the market for RTW versus HC? Part of the biggest issue is Lacroix went through a huge restructuring only to emerge in a bad market. Bad timing. This is like an investor building a huge building when floor space is selling at $X/sq foot and then by the time the building is ready to lease, the economy has downturned and commercial real estate is at 1/2 X.

 

[Navygreen]

terrible truth of the current market!
i wish designers would come back with their feet on the carpet and be more humble when it comes to crazy overexaggerrated exuberance... everyone is having difficult times and everyone needs to adjust.. not sure if they followed the tendency or continued thinking (TOO) big ?! oh well shame shame

I agree with this notion.

 

[Humperz]

This news is yet another reminder to us all that the credit crisis is real and discriminates against no one. Nevertheless, we shouldn't shun the luxury market as we all like to be spoilt. Maybe it's not a good idea to go to Bond Street or 5th Avenue and spend money like its 2005, however, it's time to be more aware of ourselves and what fits our with lifestyles. Designer-high street collaborations, made famous by H&M, are the best way forward, this way designers maintain recognition and perhaps future costumers and high street chains gain record sales.
Though it's sad that a major fashion brand is in trouble we mustn't forget our part in the world and what we can do to keep such things from happening. The luxury market has been somewhat of a target for the credit crunch thanks to bankers wives parading around in couture ensembles accessorized with Fendi bags most of us could never afford. However, fashion inspires the young and opens up the imagination of so many. It would be a crime to see the industry suffer for the mistakes of so few.

 

[KKnardi]

I'm so sad! This is the reality. although we all knew that nobody was buying anything lacroix anymore...

 

[eternitygoddess]

NO!!!

OMG!!! No more Lacroix couture!!! *dies dies dies*



He was my favorite designer!!! THIS CAN BE HAPPENING!!! I ALWAYS look forwards to his couture collections. This can't be. It can't be!!!



*panic attack*

I can't recover from this. Someone call the ambulance. *sobs*

 

[nanker_phledge]

I can't believe it.Lacroix was one of the first names in the fashion world that I heard of.He's truly one of the few designers that I would qualify as being an 'artist'.He'll seriously be missed.I guess it's just unfair to see many hip brands carrying on while some of the most inspiring figures are forced to stop/retire.

 

[Crimson C.C]

It is sad that the art of couture cant maintain its place in society. <- this is one of my motivations, to change this pattern.

 

[dior_couture1245]

I'm in a state of panic...my heart is racing! And just today I was talking with a friend about how incredible Lacroix is.

I mean...Haute Couture without Lacroix is just...worthless. Lacroix is Haute Couture. I'm so heartbroken. I hope things work out soon, but I can't get too hopeful. This recession is ruining EVERYTHING! I mean, we like to say that a recession is good for fashion every once and a while to separate the talented from the...untalented...but when it threatens those who truly are talented, it no longer seems like the recession can do any good for the biz.

 

[Karen0193]

I cant believe this is actually happening

 

[Grunged]

Well, it makes sense. I mean nobody in their right mind would pay twenty grand for a dress that's not even wearable. Not everybody is filthy rich and able to just shed money for stuff like that, people need to start realizing that.