PARIS -- Will it disappear in a few seasons or is it destined to become a classic?
The multibrand luxury group is still in style, despite the rash of profit warnings from fashion giants, the collapse of the much-heralded Leiber Group and the increasingly dark climate for luxury goods.
But just how long the trend will last is spurring debate in fashion and financial circles.
Analysts, brand consultants and managers say the sour economic climate is actually spurring more players to enter the fray, given the bargain valuations. But they acknowledge the risks are great and success depends on scarce resources: creative talent, management skill and financial wherewithal.
Michael Zaoui, head of European mergers and acquisitions at Morgan Stanley International in London, cited a number of factors compelling new players to form multibrand luxury groups.
"There are still several brands available in the marketplace," he said. "Full consolidation has not occurred in this industry."
What's more, valuations of luxury and fashion properties have tumbled by roughly 20 to 25 percent because of the global economic slowdown, he added.
Despite intense competition among luxury giants LVMH Moet Hennessy Louis Vuitton, Compagnie Financiere Richemont and Gucci Group, Zaoui argued that smaller players gunning for rapid or external growth "have no choice" but to snatch up brands now. "You can't wait until everything is gone."
It's no surprise then, that over the past two years, the industry has witnessed the birth of Equinox Luxury Holdings Ltd., a private equity fund that last November bought Jimmy Choo and announced its intentions to buy up to four more family-owned fashion companies, and Cardington PLC, which was formed last summer to buy the English couturiers Hardy Amies and Norman Hartnell.
Opera, the Italian investment fund backed by the luxury jeweler Bulgari, has just bought Bruno Magli and has been in on-and-off talks about purchasing Valentino. Most recently, Mounir Moufarrige, the former Chloe and Montblanc executive, is said to be assembling a stable of old French labels including Jean Louis Scherrer and Jacques Fath.
Rita Clifton, chairman of Interbrand Corp. in London, said even "semi-forgotten" brands hold value because the luxury sector values authenticity.
“I see things on the hanger and I’m, like, ‘I never knew that color worked on me.’ It’s things you necessarily wouldn’t choose to wear, but once you put them on, you see why Janie is who Janie is." — Lily Collins on working with former "Mad Men" costume designer, Janie Bryant on creating looks for her role as Celia Brady's in Amazon series, "The Last Tycoon." 📸@jilliansollazzo #wwdeye
EXCLUSIVE: Sarah Rutson has been tapped to Build New American Fashion Group. The parent of Joie, Equipment and Current/Elliott hired the merchant to rev up its brands and expand its portfolio into designer, beauty and lifestyle categories. Read more on WWD.com, link in bio. #wwdfashion
Michael Kors' $1.3B Jimmy Choo deal has the company squaring off with Coach Inc. as both seek to build American powerhouses. Coach bought Stuart Weitzman in 2015 and Kate Spade just two weeks ago, but Michael Kors' acquisition may be putting pressure on its rival in the new push for scale. #wwdnews (📷: George Chinsee)
Meet actress Lucy Boynton, who plays opposite Naomi Watts in the recently released Netflix series "Gypsy." Boynton stopped by WWD to talk about her upcoming projects and her nomadic lifestyle. Get all the details on WWD.com. #wwdeye (📷: @dandoperalski)