Sonia Rykiel

PARISSonia Rykiel is shuttering its Sonia by Sonia Rykiel diffusion line and laying off a quarter of its staff as it moves to reposition its main Sonia Rykiel line.

The company plans to introduce lower prices points to meet the demands of an increasingly competitive market.

Eric Langon, chief executive officer of Sonia Rykiel, said the firm was hit hard by the successive impact of the Russian financial crisis, the slowdown in consumer spending in Asia and the impact of terrorist attacks on tourism to Paris and the rest of Europe.

This has put the brakes on the house’s recovery following the arrival of Julie de Libran, formerly one of Marc Jacobs’ chief design deputies at Louis Vuitton, as artistic director in 2014.

Sonia Rykiel’s turnover nonetheless returned to growth last year for the first time since 2008, with revenues up 3 percent year-on-year, Langon said, without providing additional figures.

“This growth in revenues is not sufficient today to guarantee sustainable growth for the house and its activities in the years to come,” he told WWD in an exclusive interview. “Unfortunately, the economic situation remains very complicated and 2016 is also difficult. I hope to end the year with another sales increase,” he said, adding that sales in its retail network were down 1 percent year-to-date.

Rykiel was one of the last remaining independent French fashion brands when the founding family in 2012 sold an 80 percent stake to Fung Brands, an investment company backed by Hong Kong billionaires Victor and William Fung. Now known as First Heritage Brands, it is also the holding firm for Belgian leather goods firm Delvaux and French shoe brand Robert Clergerie.

Langon said Sonia Rykiel had registered losses continuously since 2013 and the new strategy was designed to return it to profitability by 2019. “Today it is essential for the house to rethink and revitalize itself,” he said.

The brand will lay off 79 out of 330 workers in departments including the design studio, back office and distribution. Workers’ representatives were informed of the restructuring on Oct. 19 and the company has pledged to provide assistance and training to help staff affected by the cuts.

Sonia by Sonia Rykiel has four stand-alone stores and four corners in department stores, the majority of which will be shuttered by the end of 2017.

“’Sonia by’ is not delivering the expected returns. We believe we are capturing a new clientele with the Sonia Rykiel line and it is important to accelerate and amplify that phenomenon by widening the offer for Sonia Rykiel and repositioning the line at a more accessible price point,” Langon said.

The house started lowering prices on certain key categories, such as knitwear, for fall 2016 and the strategy was proving successful, he noted.

The executive emphasized that de Libran had the full support of management and had demonstrated her affinity with the brand with her vibrant homage to its founder during her latest catwalk show in October, a little more than a month after Rykiel died following a lengthy battle with Parkinson’s disease.

Sonia Rykiel is also rethinking the model for its children’s line, currently produced in-house, which previously relied on Russia for more than a quarter of its wholesale revenues. Langon is looking for partners to manufacture and distribute the collection and hopes to have a new structure in place by 2018.

In parallel, the company is in talks with its longtime homewares partner Omilis on the renewal of its license, following the company’s acquisition last year by holding firm Soleanne.

Langon said Sonia Rykiel was keen to develop its online presence. It is set to expand e-commerce, currently available in the U.S. and Europe, to Australia soon. The executive is also toying with the idea of “see-now-buy-now,” though he noted that its relative small scale was a hurdle.

“This context of uncertainty is incompatible with a business model that requires such a long lead time, and I am trying to find solutions with my partners — including wholesale customers — that will help that wholesale customer move forward with us, which means finding new ways to share risk,” he said.