MILAN — Is it or isn’t it for sale?
That question has swirled around the Helmut Lang business, owned by Prada Group, for at least a year. Prada chief Patrizio Bertelli has never officially acknowledged any plan to put the Lang business on the block, but it appears at least three potential buyers are looking at the company.
Lang resigned in January from the firm he founded 19 years ago because of conflicting strategies for the development of the brand. And the company’s creative center in New York is closing, but apparently that hasn’t deterred suitors interested in buying the brand from Prada Group.
“There is one fashion entrepreneur and two investment funds [that are talking to Bertelli],” said one Milan-based source. “If they are smart, they’ll talk to Lang, as well. Especially in the case of a fund, it simply can’t do without the designer.”
The source said it is only “logical” for Prada to sell Helmut Lang. “Why should Bertelli keep it? The designer is not going to go back as long as the brand remains with Prada.”
Prada took control of Lang’s business in 1999, at the peak of its success with minimalist, edgy cool, and planned to grow it globally. The label’s growth never materialized. While wholesale volume in 1996 approached $100 million, Prada reported in 2003 that Helmut Lang sales fell to 27.9 million euros, or $36.5 million, which the company mostly attributed to a difficult economy and SARS.
“For this reason, Bertelli can’t sell the brand at what it is really worth now,” said a source, noting that Bertelli’s “mistake was to push Lang out of his niche, pumping investments into the brand hoping for bigger volumes, instead of finding and cultivating Lang’s footprint.”
Bertelli hasn’t disclosed his vision for the business since Lang left. A Prada Group spokesman on Thursday declined to comment.
“There are two international investment funds and one Italian entrepreneur interested in Helmut Lang,” said another industry source, adding that a deal could be closed within the year. “Otherwise, it’s just about waiting [to sell].” The source added, “There is no asking price. It’s a difficult situation as the company’s sales are waning, its brand stores are not doing well and the designer has left.”
Another source pointed out that Lang has a noncompete clause in his employment contract with Prada that forbids him to work in any related business for six months.
After the acquisition, Prada repositioned the brand in the high-end range of the market, neglecting to bank and expand Lang’s successful jeans line, another source said. “While the specialized press appreciated his designs, it was difficult for Prada to build a high-end business in such a difficult moment for the sector [hit by Sept. 11 and the war in Iraq],” said the source.
However, the Helmut Lang brand and brands in general still have potential, said Andrea Ciccoli, vice president of consultancy Bain & Co. “Fashion brands today generate even more value than four or five years ago and they have an emotional appeal rather than a rational appeal….There is a lot of money available, and a strong interest in relaunching and developing a brand.”
Prada intends to make Milan the Lang business headquarters, including design, production, finance and public relations functions, a Paris source said. It is believed that a small part of Lang’s creative team remains in Italy, where the line is produced, and that fewer than a dozen people were affected by the shutdown of the New York creative office. One industry source speculated that Prada might even have some of its in-house design staff moonlighting on the Lang brand. The Paris source, however, characterized the retrenchment as a precursor to a possible transaction, or perhaps even a suspension of operations.
Retailers who saw the fall-winter collection, which was designed by an in-house team and shown by appointment this month rather than on the runway, described it as basics-oriented, with an emphasis on Lang’s signature items, particularly coats and trousers. They also noted prices were lower than usual.
— With contributions by Marc Karimzadeh, New York, and Miles Socha, Paris