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Dumenil in Acquisition Mode

PARIS — As one of France’s most avid game hunters, French financier Alain Dumenil invites friends a dozen times a year to stalk critters on his property in the Loire Valley. Now, as the newest name to enter the luxury fray by acquiring...

PARIS — As one of France’s most avid game hunters, French financier Alain Dumenil invites friends a dozen times a year to stalk critters on his property in the Loire Valley. Now, as the newest name to enter the luxury fray by acquiring France Luxury Group in December, Dumenil plans to do some hunting of a different order.

This story first appeared in the March 24, 2003 issue of WWD.  Subscribe Today.

His strategy entails building the upstart fashion conglomerate, with a stable of dusty brands including Jean-Louis Scherrer and Francesco Smalto, by acquiring as many as 10 brands over the next few years. Dumenil already is rumored to have his eye on the Space-Age house of Courrèges, for example. He also plans to list the company on the bourse within the next two years.

But if Bernard Arnault, who runs the world’s largest luxury empire, LVMH Moët Hennessy Louis Vuitton, is famous for hunting industry elephants, Dumenil is aiming at fashion’s geese.

That suits the 53-year-old entrepreneur just fine.

“I’ve no intention of becoming a second Gucci Group or LVMH,” said Dumenil in an interview in his palatial headquarters, once the home of the 19th-century industrialist, the Count Cahen d’Anvers. “Not everybody needs to. I’d rather buy smaller brands and build them into medium-sized brands. By overhauling management, providing the capital to expand and creating economies of scales, a small brand can grow quickly into a smart, money-making venture.”

An imposing presence, Dumenil began his career in finance, transforming his family-owned bank, Dumenil Leble, into a high-profile investment house specializing in bond trading. He sold the concern in 1989 to Carlo de Benedetti, one of the great innovators of Italian finance, and moved into real-estate development via his Acanthe Developpement firm, listed on Paris’ Premiere Marche.

In the interim, Dumenil, whose personal fortune is estimated at some $100 million, bought and then resold the Flaine ski resort in the French Alps, as well as a company that specialized in electric signs and signals.

The businessman, with a penchant for collecting fine timepieces, has gained a reputation in France for his no-nonsense investment savvy and for buying companies in financial difficulty, turning them around, and then selling at a profit. It would appear he’s now applying that formula to fashion. In December, he purchased troubled French shoe firm Stephane Kélian, which had filed the equivalent of Chapter 11 proceedings in a French court, for an undisclosed fraction of its worth. He is in the process of repositioning the brand and streamlining its operations.

Kélian was his first acquisition as owner of France Luxury Group, which former Dunhill and Chloé executive Mounir Moufarrige cobbled together a year ago by buying Scherrer, Jacques Fath, Emmanuelle Khanh and the shoe firm Harel. Moufarrige left the group a month after selling it to concentrate on his newest fashion venture, Worth lingerie. Dumenil, for his part, already owned the Francesco Smalto brand, which he bought a year ago.

Dumenil likes to refer to his group as a “federation” of brands. His idea is to pool management and distribution resources between houses to boost each entity’s bottom line.

“In a federation, each company keeps its autonomy,” he explained. “But it profits from shared commercial and administrative aspects.”

It sounds strikingly similar to the strategy espoused by LVMH, Gucci and Richemont. But Dumenil arrives on the scene at a time when luxury acquisitions have screeched to a near halt. Prices, inflated by the feeding frenzy of the late Nineties, have declined, with most groups concentrating on organic growth while shedding noncore assets.

In his case, Dumenil said he’s not interested in playing the acquisitions game by the same rules. His priority isn’t acquiring a marquee brand such as Givenchy, which LVMH is rumored to be shopping around.

“When someone like LVMH wants to shed a brand, you have to ask yourself if the brand is really worth it without LVMH behind it,” said Dumenil. “If a brand isn’t profitable with a powerhouse behind it, you have to ask yourself if it can become profitable.”

Dumenil acknowledged that he plans to close deals this year, but he declined to provide details. At present, he is forging ahead with his development priorities for Smalto and Scherrer, which have sales around $50 million and $22 million, respectively. Although he has yet to sign its death warrant, he said he has put the house of Fath, whose ready-to-wear was designed for two seasons by Lizzy Disney, into hibernation.

A similar fate could be reserved for the house of Emmanuelle Khanh, a moderate sportswear brand with sales under $500,000 last year.

“A brand must have a clear identity,” he said. “I’m not sure that Fath does. But I could put it to sleep and wake it back up in a few years. Since there are no expectations of it, it wouldn’t matter if it disappeared for a while.”

The strategy to develop Scherrer, a couture house under the artistic direction of Stephane Roland, entails building business in Asia, the Middle East and Russia.

“Scherrer has an excellent name and a superb image,” said Dumenil. “It’s a brand for an elegant woman who is grounded in reality.”

Dumenil said he is hesitant to push Scherrer into America. “It’s a dangerous market for a women’s brand,” he said. “People are waiting with a shotgun to shoot you down. And with everything that’s going on with the war, America’s a very delicate market.”

Smalto, designed by Franck Boclet, is largely a men’s brand, although a small capsule collection for women has existed for two seasons. Last year, the brand, with one retail unit in Paris, opened shops in Geneva; Cannes, France, and London. Smalto, unlike Scherrer, has plans to expand into the U.S., according to Dumenil.

And given his ongoing search for more brands to buy, Dumenil naturally remains bullish on the future of luxury — even as it continues to navigate choppy waters.

“Luxury is not in crisis,” he said. “Luxury has become part and parcel with our consumer society. It has become a primary need, almost like food. It’s no longer the victuals of the privileged, but the manna of the masses. In that environment, there’s room to revive smaller niche brands.”