MILAN —Some said it wouldn't last a year. It didn't.
In a stunning move, Jil Sander has quit as chairman and chief designer of the fashion house she founded more than 20 years ago, just five months after selling the majority of her company to the Prada Group in one of the most surprising of last year's glittering designer alliances.
Sander announced Monday, in a joint statement with Prada, that the two were parting ways. The acrimonious rupture could be a large wrench in Prada"s plans to build an Italian luxury goods business, and cast a chill on the feverish pace of luxury acquisitions.
Jil Sander AG was Prada chief Patrizio Bertelli's first major acquisition in his ambitious plan to create a European luxury goods conglomerate a la LVMH. Buying the German company, a friend said, had been "his personal obsession."
The designer will hold on to the 25 percent minority share she has in the company.
The statement said the designer would "grant her support to Jil Sander for the design and creation of the fall-winter 2000 collection," which will be unveiled here next month. But after that, a spokeswoman for Prada said, Sander would no longer design for the company.
Neither Sander nor Bertelli could be reached for comment. Bertelli was traveling to New Zealand to support the Prada team in the finals of the Louis Vuitton Cup, the qualifying race for the America's Cup. Sources said Sander was at her home in Hamburg, Germany.
"She's tremendously unhappy and very disappointed in the way things have turned out," a close friend of Sander's told WWD. "She's been having major disputes with Bertelli and she saw no other way but to resign."
The news came as a shock to the industry--even those close to Sander said her drastic move caught them off-guard. But sources said relations between Sander and Bertelli, never exactly harmonious, had deteriorated in the past few weeks.
"They had a bust-up right around Christmas and the lawyers had to be called in to calm everyone down," said a source close to Sander and Bertelli, who spoke on condition of anonymity. "These are two strong personalities, and both sides are at fault. They never had a team approach and now they are beyond the point of compromise."
Bertelli is known throughout the industry as an ambitious, aggressive manager, with a penchant for controlling his businesses down to the last detail. Sander is quieter, but zealous in her control of the image and details of her label.
In an interview earlier this month in New Zealand, Bertelli downplayed any friction with Sander. In response to a question about rumors that the two were fighting, Bertelli said, "When a company that has been self-managed becomes part of a group, there are bound to be discussions regarding management reorganization. It's part of the routine," he said. Although Sander's company is public on the German stock exchange, Bertelli controls the majority of the shares. And Monday, his executives were insisting that Sander's resignation would not slow down the growth of the business. They insistedPrada would stick to bolster Sander's ready-to-wear and accessories divisions, and open new stores. At present, there are 27 freestanding Jil Sander stores worldwide, both wholly owned and franchised.
Last August, when the deal was announced--after a three-year courtship, Prada acquired 75 percent of the firm's common shares and 15 percent of its Bourse-traded preference shares--both sides played up synergies and mutual interests that would help make the merger a model for the fashion business community.
Neither Sander nor Bertelli ever disclosed the price of the deal, although some industry sources say Bertelli paid approximately $105.6 million. Sander owned slightly more than half of the company's 250,000 shares and had full voting rights. The remaining, non-voting shares are quoted on the Frankfurt stock exchange.
Prada and Sander seemed to share a commitment to high-quality, high-image fashion for men and women. There were also practical links, such as the fact that while Sander's headquarters are in Hamburg, she shows and manufactures here, Prada's hometown.
Sander chose Bertelli precisely because she considered Prada a fashion soul mate. "Jil Sander and Prada share a common understanding of fashion," she told WWD when the deal was announced. "Both are driven by the objective to design and market contemporary fashion."
Sander also said she sold to Prada because the company had "knowledge and experience in the Jil Sander business--for sure, I did not want to sell to a buyer who was solely motivated by financial objectives."
At the time, the designer said she cashed out for a number of reasons, mainly to focus on the creative side of her business. "Designing the collections has always been the main part of my daily work," she said. "I am happy to be able now to concentrate mainly on this." Sources close to the designer said Sander had become weary of the financial distractions that go with running a publicly traded company.
Under the terms of the agreement, Sander was to remain chief executive and in charge of design and styling of all Jil Sander products, while Bertelli became Sander's supervisory board chief.
And Sander's house was considered a key element in Bertelli's quest to create a new European luxury goods group. Last year, Prada also acquired controlling stakes in Helmut Lang, the upscale footwear firm Church & Co. and did a mega-joint venture with LVMH Moet Hennessy Louis Vuitton for a controlling stake in Rome's Fendi.
Sources said Bertelli and Sander fought from the start, particularly over how quickly the business should be developed and how expenses should be cut.
Bertelli never hid the fact that he wanted to cut costs and increase profitability.
"Companies [sell to other companies] because they are not making enough money," said Bertelli during the New Zealand interview. "If the company were well enough organized and made money, it wouldn't need to sell."
Bertelli was said to have criticized Sander on the cost of certain of her fabrics and, according to sources, was upset about the cost of her men's footwear, which is handmade. Bertelli even transferred some leather goods production out of Germany to Switzerland to save money. Sources pointed out that Sander was furious that jobs were transferred out of Germany.
On a management level, sources said Bertelli made little effort to involve the Jil Sander staff in the new strategies. "There was very little communication on his part," said one source. The source added that few Jil Sander employees hadbinding contracts and that Bertelli was faced with a potential brain drain at the company.
Until now, the luxury goods sector has been on a seemingly endless upward spiral and acquisitions take place regularly. But the breakup of a high-profile--and short--marriage like this could have a chilling effect on future alliances, most notably for Calvin Klein, whose business is for sale for more than $1 billion. "After this, if I were Calvin Klein, I'd be looking very carefully at who I sold my company to," said one industry observer.
There was immediate speculation about what reaction Helmut Lang would have to the Sander news. Lang said he was surprised by the development, given what he described as a positive experience with Prada Group, which bought a majority stake in his fashion house last March.
"Our relationship is really good with the Prada Group," Lang told WWD Monday. "We have basically achieved what we wanted to do. I am very happy with the cooperation we have received. They are very professional people and we have achieved quite a lot."
Lang declined to speculate on the Sander situation, saying he had no insight into her dealings with Prada. He also cautioned against drawing broad conclusions about fashion mergers from their particular falling out. "Just because somebody gets divorced, it doesn't mean marriage is out," he said. "Every house is a different story. For some people, it makes sense. For others, it doesn't.
In fact, most financial analysts said they didn't think the Sander situation would seriously temper the fashion industry's acquisition fever, given the number of manufacturers in pursuit of brands. But they acknowledged that the Sander scenario suggested that financial issues are not the only ones to consider in mergers.
"I don't think it's going to change the current spate of deals we're seeing," said Andrew Jassin of the Jassin O'Rourke Group, a Mahoney Cohen Affiliate, an apparel consulting firm. "But it does open up a whole can of worms with the personality issues. The personality issues are probably as important as the economic issues."
"I'm sure this will give people pause," agreed Faye Landes, analyst at Thomas Weisel Partners. She noted that the fashion industry's merger frenzy had proceeded with a "nothing bad can ever happen" bravado.
"We have seen it time and again: Designers have real personalities, so not everything is going to run smoothly every day," she said. "The question of what do they do now is particularly compelling."
Landes said the key reasons for merging remained the same: amassing brands so that firms can continue growing when other brands plateau and leveraging manufacturing, marketing and retailing expertise. She noted that the recovery of Asian markets had been key in fueling mergers and acquisitions.
The Lancaster Group, based in Paris, which holds the Jil Sander beauty license, expressed disappointment over the news.
"Our position is simple: We're sad to see Jil Sander go. We've had a good relationship with her and she's given important input to the cosmetics division," Lancaster president Patrick Thomas said Monday afternoon. "We will get in touch with the new management of Jil Sander and Prada to secure the best direction for the future of the cosmetics business. Jil Sander is growing very fast. It has double-digit growth, and we've had tremendous success with Sander Man and Sander Sun."
For the moment, the company is taking a wait-and-see attitude about how much interaction the designer will have in the future. Asked if Sander would take part in future cosmetics launches, Thomas said, "I hope so."
"We have new projects in the pipeline," Thomas said. "For instance, we will launch a new women's scent in October. I hope we will have more interaction with Jil Sander. I trust she will be as supportive of our projects in the future as she was in the past."
And outside those business implications, there are the retailers who are wondering what is going to happen to their Jil Sander businesses after the next collection, especially since there's no successor in sight. So far, Sander's key accounts are taking a wait-and-see attitude. It could be a touchy situation, since many of the same stores that have supported Sander do a healthy business with Prada--and now Bertelli controls both names.
"Our customer has really come to depend on Jil's elegant, chic approach to sportswear and her sense of color," said Linda Dresner, the eponymous retailer with a shop in New York and one in Birmingham, Mich.
Dresner, who was reached in Sander's Hamburg showroom as she wrote her fall-winter order, added, "Everyone was quite surprised by the announcement, but the tone here is business as usual."
Reached in Florence, Judy Collinson, executive vice president and general merchandise manager at Barneys New York, added, "We do a major business with Jil in men's and women's, and she has created an amazing company that is so committed to a certain esthetic and style. I'm certain the company will go forward with integrity."
Whatever his approach, there is no doubt Bertelli can run a money-making operation. In 1999, the Prada Group reported sales of approximately $1 billion, with the partial inclusion of the business he acquired last year: Helmut Lang, Jil Sander, Church and Fendi.
In the first six months of 1999, Jil Sander AG sales rose 4.1 percent to $57.2 million. Pretax profit rose 23.5 percent to $3.6 million.
Industry sources close to Jil Sander said she should have expected Bertelli to take full control of her company. "Everyone in this business knows that Patrizio Bertelli is authoritarian and that he manages business his way. We are not talking about a change in Bertelli's personality," said Carlo Pambianco, a Milan luxury goods consultant. Another industry observer, who asked not to be named, said "Sander is not young and she is not stupid. She had to realize that in the end, Bertelli would be calling the shots."
Those close to Sander said that leaving the Prada Group, in the end, was not a difficult decision. "At the end of the day, she doesn't need to prove anything to anyone. She has more than enough money, and she has her reputation," said a friend of the designer.
As for Bertelli's future, and the future of his growing luxury goods group, observers were divided.
"This is bad news for Bertelli and the Prada group,' said one luxury goods consultant who asked not to be named. "Bertelli is sending a negative message to the industry and will scare off any designers who are thinking of selling. Another issue is: Can the financial markets trust him?"
Although financial analysts downplayed the potential impact of the news on the market value of Jil Sander--only 150 shares are traded on the Frankfurt stock exchange--Bertelli will still have to answer to the company's minority shareholders.
"How willing will investors now be to trust Bertelli and lend him money for any of his new ventures?" asked one analyst.
Pambianco, however, said the Jil Sander name was still valuable, even without the designer, and that Bertelli had the power to capitalize on it. "Jil Sander's style is not complicated. Bertelli can always call in another designer and he can always count on his wife to help him in a pinch."
The Prada spokeswoman, however, stressed that Miuccia Prada would not design Jil Sander's collections.
Andrea Ciccoli, a consultant with Bain, Cuneo & Associati in Milan, said Sander's departure offered a valuable lesson to any fashion mogul interested in forming a luxury goods group. "It is very difficult to manage a designer and his or her creativity. It's a difficult process," said Ciccoli.
"What we are witnessing is a crucial moment in fashion after this orgy of acquisitions: We are now going to see who the best manager is. Being good at buying a company doesn't necessarily mean you are good at managing the company."
Troubles of that sort have never appeared to bother Bertelli. During the interview in Auckland, the self-assured Tuscan said, "I will make this new group fly. You can be sure about that."
@kith is moving into children’s. The men’s and women’s streetwear brand has launched Kidset, a Kith kids line located in New York at 64 Bleecker Street. The line includes mini versions of staple Kith pieces like the Astor bomber jacket and the Kith box logo sweatshirts, along with a wall that can display up to 120 pairs of shoes from @adidas, @newbalance, @timberland and more. #wwdfashion
“I just wanted to create this fully rounded character, but I do think what excited me most was just the opportunity to give a group of people representation that I feel needs it. I like to do characters in projects that stand for something and Karolina definitely does, so that was really exciting to me,” @ginnygardner says of her new role in @hulu’s “The Runaways.” Gardner plays Karolina Dean, a queer superhero, which is a rarity for @marvel. Read more about Gardner’s character on WWD.com #wwdeye (📷: @dandoperalski)
@heriethpaul and @gracebol have a moment on the @victoriassecret fashion show 2017. See every look from the runway on WWD.com. Link in bio. (📷: @giovanni_giannoni_photo) #wwdfashion #victoriassecret #VSFashionShow
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia