By and  on January 22, 2002

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.

To Read the Full Article
SUBSCRIBE NOW

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus