By  on March 20, 2012

PARIS — While diversification proved a popular path for many luxury brands in the past decade, the opposite strategy — a laser focus on core products — can be equally fruitful.

A case in point is Loewe, which today opens its largest store in the world in Barcelona, capping off a banner year for the Spanish brand, owned since 1996 by French luxury giant LVMH Moët Hennessy Louis Vuitton.

“It was more about getting back to the pillars of the brand,” explained Pierre-Yves Roussel, chief executive officer of LVMH’s fashion division, calling Loewe, founded in 1846, “probably the oldest leather handbag brand in the world.”

Indeed, LVMH kingpin Bernard Arnault — while prone to trumpeting the prowess of his “star brands,” particularly Louis Vuitton and Dior — gave the Spanish player special mention at February’s results presentation, along with Celine, another brand under Roussel’s purview.

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“We are generating remarkable growth numbers,” Arnault said of the brands at the time. “I’m not promising another Louis Vuitton, but we certainly expect new businesses of the same caliber.”

Roussel declined to discuss figures, but it is understood Loewe is profitable and logged double-digit sales growth in 2011, including in recession-ravaged Spain and in earthquake-stricken Japan.

Market sources estimate the company generates annual revenues of 250 million euros, or $327.9 million, putting it in the league of prominent European fashion players like Lanvin and Balenciaga.

Roussel credited Loewe ceo Lisa Montague and creative director Stuart Vevers for “bringing the brand back to its original focus,” scaling back a foray into fashion to concentrate on handbags, leather apparel and a substantial gift business based on leather picture frames, leather boxes and the like.

In an exclusive interview at Loewe’s sunny Paris showroom, Montague shed light on some of the behind-the-scenes work underscoring the brand’s current momentum and mapped out its expansion ambitions.

To be sure, putting the spotlight back on leather was a crucial decision, allowing the company to leverage its well-preserved craft skills and a wealth of archival designs, some bearing the influence of Baroque that endured for centuries in Spain.

“I see it as a very privileged moment to take the brand to the next level,” Montague said.

Loewe was already frequently characterized as the Hermès of Spain, but Montague marched prices and quality further upscale. For example, its top-selling Amazona bag, which had started at 1,200 euros, now opens at 1,600 euros, or $2,107 at current exchange, with leather lining and double zippers among the luxury improvements.

Loewe’s business remains concentrated in Japan, where it has about 40 directly operated boutiques or shop-in shops, and Spain, where there are 22 stores and where elected officials traditionally receive a Loewe briefcase as a gift when they take on a ministry.

However, the company continues to make inroads around the globe. Among emerging markets, China is posting the “strongest growth,” Montague said, noting that management for the mainland’s dozen stores is now headquartered in Shanghai.

Key openings this year include the Dubai Mall with Chaloub Group, and the brand is said to be plotting a New York boutique, egged on by encouraging results with a clutch of elite wholesale clients in America such as Bergdorf Goodman, Jeffrey and Hirshleifer’s.

At year-end, Loewe counted 113 boutiques, 13 franchises, 27 locations in travel retail and eight in Korean duty-free.

Overhauling its network to reflect a design by American architect Peter Marino is a key focus for investment. Montague said about 30 locations were renovated last year, a pace she hopes to keep up in 2012, noting that revamped stores immediately show a bump in revenues and average basket. “Peter understood the brand incredibly well. He’s a true genius in retail design,” she enthused of his concept, etched in rich bronze and deep yellow shades.

The 7,000-square-foot Barcelona flagship, located in a historic building at 35 Paseo de Gracia, is to showcase painstakingly restored ceiling frescoes from 1906, copper sculptures by artist Hervé Wahlen and stone floors and walls. Spread over three levels, the unit showcases Loewe’s full product offering, including its show collection and its first bespoke area. Vevers plans to replicate his Paris runway show — whose highlights included coats and dresses with trompe l’oeil collars and pockets — as part of the opening festivities.

Wednesday, Loewe plans to unveil Galeria Loewe, a contemporary, high-tech museum designed to showcase the heritage and know-how of the brand. Previously, it was a temporary Loewe store. Visitors can view the tools artisans use to craft handbags, and touch the silky napa skins for which the house is known. (It opens to the public on April 11.)

Montague noted Loewe skims only the crème de la crème of available leathers, and has carefully guarded its savoir-faire, allowing it to revive the made-in-Spain claim. Amidst a dismal employment climate, Loewe continues to create jobs in Spain through the expansion of its store network. Doubling the size of its factory in the municipality of Getafe, slated to go into operation in July, will create almost 150 new positions.

Men’s leather goods — its fastest growing category — represent another growth vector for the brand. Though still a small slice (6 percent) of Loewe’s business, men’s bags proved the house’s star category in 2011, posting 40 percent growth in all markets.

Roussel asserted that Loewe’s golden gift boxes, particularly in Spain, hold the same emotional charge as the blue box of Tiffany, or the orange one of Hermès.

Small leather goods and gifts represent almost one third of the Loewe business, and this category represents a bonanza in China, which has a deep tradition of gift giving, Roussel noted, while stressing that mature markets are showing strong traction, too. “People are rediscovering and feeling proud of the brand,” he said.

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