Moufarrige, 53, confirmed Friday that he has joined forces with French entrepreneur Francois Barthes to form a fledgling fashion conglomerate. Initially, it will consist of Jean-Louis Scherrer, Jacques Fath, Emmanuelle Khanh and Harel, the high-end shoe firm, all previously controlled by Barthes as part of his firm, E.K. Finances.
Moufarrige and Barthes are majority stakeholders of Paris-based France Luxury Group, which also has its sights set on the likes of Courreges, Rochas and Balmain. Moufarrige said he also wouldn’t rule out bigger fish, even expressing admiration for Givenchy, currently part of luxury giant LVMH Moet Hennessy Louis Vuitton.
The exact ownership structure and the identity of other investors at France Luxury Group was not disclosed. But Moufarrige asserted that the group could become a $500 million concern in five years and ultimately go public.
“The objective of the group is to develop brands, not designers,” he told WWD. “We want to acquire companies that can benefit from synergies of management, distribution and licensing. There are so many French brands with pedigree that haven’t been developed.”
As reported in these columns Jan. 22, analysts and brand consultants warn that the multibrand strategy is not fully proven, evident most dramatically in the woes of The Leiber Group, the upstart American conglomerate which is said to have moved too fast with mediocre brands. And even well-established multibrand groups such as LVMH, Gucci Group, Compagnie Financiere Richemont and Prada are issuing profit warnings left and right in the wake of the recession.
Asked if he’s concerned about the weak market conditions, Moufarrige characterized the climate as opportune. He said valuations for fashion brands are falling and the major players are distracted, focusing on containing costs and boosting profitability.
“It’s tough, it’s not easy, but I’ve done it before,” he said. “I have no illusions.”
Moufarrige, who recruited Stella McCartney at Chloe, exited the company in 1999 after seven years at the house. He acknowledged that he’s got his work cut out for him. Jacques Fath has not produced a ready-to-wear collection for five years and its profile has dwindled to one boutique in Paris, selling furs, wedding dresses and eveningwear. What’s more, Emmanuelle Khanh recently closed four of its boutiques, leaving only two Paris locations, and Scherrer, which dismissed its founding designer in 1992, is today known mostly in the Far East.
He insists that the right combination of design talent and management can lead to quick growth and profitability. “I’ve met with 30 designers in the past three months,” he said, noting that he plans to make several appointments shortly and possibly stage ready-to-wear shows for Scherrer and Jacques Fath during Paris Fashion Week in March.
While declining to name potential candidates, his interest is said to span such names as Jean Paul Knott, Josephus Thimister and Dries Van Noten. Additionally, sources said Ritu Beri, the Delhi fashion star Moufarrige has backed since August 2000, may be in line to take up the rtw reins at Scherrer, whose couturier is Stephane Rolland.
Market sources estimate the Scherrer brand generates sales of about $75 million at retail worldwide. There are nine Scherrer boutiques worldwide: five in Japan, two in China and two in France.
Moufarrige said he plans to build all his new properties into global concerns, once designers inject “soul” into the brands and create an identity. “There’s a critical mass which is essential,” he said. “If you don’t go global, you can’t amass the necessary force and energy to get the numbers that make you competitive.”
Although loss-making businesses in recent years, the brands, slated for revival by the new group, are nearing the break-even point, according to Moufarrige. “The cleaning-up process has taken place, so the rebuilding has to take place now, which is what I enjoy doing,” he said. “That’s where you can make a lot of money and you can grow very quickly.”