By  on February 28, 2006

PARIS — Balenciaga as a megabrand?

It's not such a far-fetched concept. WWD has learned the fashion house owned by Gucci Group has reached its profitability target two years ahead of schedule — triple-digit sales growth across all product categories is propelling it rapidly toward fashion's big leagues.

"We went from being a niche brand to now a future big brand," said Balenciaga designer Nicolas Ghesquière, whose fashion show here today will be rich in references to the house's archives. "I'm very happy and proud of that…The whole perception of the brand is changing. Balenciaga is starting to define a new kind of luxury house."

What's more, Ghesquière — who in recent years had battled over strategy with the powers that be at the luxury conglomerate — said he now feels "confident, supported and understood." Gucci Group has committed to investing more in Balenciaga's development, allowing Ghesquière to hire additional creative and product development staff, advertise more and build a company-owned retail network beyond its flagships in New York and Paris.

In separate interviews, Ghesquière and Balenciaga chief executive officer James McArthur described the future of the company in bullish terms, especially now that it has reached the profitability goal set by Gucci Group president and ceo Robert Polet in December 2004, when he unveiled his strategic plan for the world's third- largest luxury group. "This is a business that has the potential to do above 200 million euros [$240 million]," said McArthur who as executive vice president and director of strategy and acquisition for Gucci Group, also oversees Alexander McQueen and Stella McCartney.

McArthur declined to give Balenciaga's current sales figures or pinpoint percentage increases, as Gucci Group parent PPR is slated to report its 2005 earnings on March 9. However, he stressed the triple-digit increases at Balenciaga apply to all sales channels and to the ready-to-wear category.

Market sources estimate Balenciaga's sales volume already exceeds 60 million euros, or about $72 million at current exchange. That's more than triple the revenue figure in 2001, when Gucci Group snapped up Balenciaga as part of an acquisitions spree, offering a 9 percent stake to Ghesquière, the architect of the brand's rejuvenation and one of the most influential designers of his generation.

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