PARIS — Reflecting challenging market conditions for luxury brands — and missteps with its global expansion — Agent Provocateur is to shutter 30 percent of its retail network, reduce headcount at its headquarters by 30 percent and “phase down” its nascent diffusion line, L’Agent.
The restructuring plan was revealed to staff at the London-based firm on Wednesday night and disclosed in tandem with the financial results of its majority owner, private equity firm 3i, on Thursday morning.
3i also cited “the discovery of accounting issues” at Agent Provocateur among its other woes.
Still, “we are supporting the new management team to put in place a new strategic plan, which involves a restructuring of the business. Agent Provocateur is still a valuable brand and, as part of this restructuring, we have provided further investment of 4 million pounds in the quarter to Sept. 30, 2016. Reflecting these challenges, we reduced the value of our investment by 39 million pounds in the period.”
Prescriptions for the ailing business include ramping up its footprint in Asia and China, where it has a marginal presence, and offering its first line to wholesalers starting with the fall collection, said Fabrizio Malverdi, who became Agent Provocateur’s chief executive officer last May. He had joined the lingerie specialist from Dior Homme, where he had been senior vice president, piloting its upscaling drive, product expansion and targeted retail rollout.
At present, Agent Provocateur’s top line is only sold in its own network, which comprises 111 locations in 29 countries, and via Net-a-porter.com.
Malverdi said freestanding stores and concessions would go dark over the next year, mostly in the U.S. and Europe, where the brand had expanded rapidly over the last two to three years, often opening in poor locations and without sufficient infrastructure to support the business.
About 40 employees are to be impacted by the restructuring, with redundancies occurring across all functions including design, merchandising, commercial and store operations, a rueful Malverdi said.
Bright spots for the business include its own e-commerce operations, which logged a 15 percent increase year-to-date despite its scope, limited to English and certain currencies.
The plan is to reduce entry-level prices for the main collection, which had been bumped up with the launch of L’Agent in 2013. At present, the lowest-priced bra retails for about 75 pounds.
Malverdi declined to pinpoint how retail sales had been impacted by the luxury slowdown. Agent Provocateur’s fiscal year ends March 30, 2016 and final figures are expected in December.
The company posted revenues of 62 million pounds, or $94.8 million at average exchange, and earnings before interest and taxes of 10 million pounds, or $15.3 million, for the year ended March 28, 2015.
The U.S. represents Agent Provocateur’s largest market, with the U.K. in second place.
Vivienne Westwood’s son Joseph Corré and Serena Rees founded the racy lingerie brand in 1994, opening its first boudoir-inspired store in London’s Soho and filling it with silk and lace lingerie, garter belts and silk stockings.
3i acquired a majority stake in the company in 2007.