SAO PAULO — Walking along the corridors of the 182,900-square-foot Villa Daslu, a Neoclassical building located in the heart of the booming Vila Olímpia neighborhood here, not much resembles the glorious days of its opening in June 2005.
At that time, Chanel, Giorgio Armani, Burberry, Louis Vuitton and 120 other brands were spread over the three floors of the new location of Brazil’s first and most important luxury retailer, which was founded in 1958. It was an increase of 44 brands and 54,000 square feet from the former address, a block of houses in front of which, in the mid-Nineties, Eliana Tranchesi, daughter of Daslu founder Lúcia Piva de Albuquerque, stood staring at the facade and predicted, “Here, I’ll put a Gucci, here Dolce & Gabbana…” The explosion in size and brands occurred after the Brazilian government lifted some of its controls on imported goods.
But now, Villa Daslu’s wall paintings are fading and chipping. No heliport works there anymore. The garage for 1,500 cars barely gets close to being a tenth full. And Prada, which prepared a capsule collection of green and yellow wallets in homage to the Brazilian flag for its opening at the Villa Daslu, is no longer there — or anywhere else in Brazil at the moment.
The 3,200-square-foot Louis Vuitton store and the scent of Daslu’s home fragrance, made of amber, are the only things remaining from the luxury retailer’s old format. “It took us eight years to develop this perfume, and now if you wear something from our racks, people will sniff it and say, ‘You bought something at Daslu and did not wash it before putting it on?’” said a bemused Tranchesi as she strolls over her domain during the days counting down to its final closing.
By November, the businesswoman credited with luring major fashion brands to Brazil when the letters BRIC weren’t the abbreviation for luxury firms’ golden markets will leave behind her biggest project — at least in terms of square footage — and start a new chapter. The Neoclassical building, now operated by Iguatemi, is said to be destined to become offices in the future. Daslu will transfer to the upcoming luxury mall JK Iguatemi, only a few steps away, which will open in April 2012.
Daslu is on a new track after almost two years of turmoil. The retailer was forbidden to import any products for 13 months as a result of smuggling and fraud charges that put Tranchesi behind bars for 38 hours and revealed a tax bill of 500,000 reals, or about $250,000, from the federal and São Paulo state governments. The legal process of saving Daslu from bankruptcy took more than six months.
Among its latest initiatives were summer and winter stores in Oscar Freire and a capsule Pedro Lourenço for Daslu leather collection by the 20-year-old Brazilian designer. “Our business has always been creating fashions,” said Tranchesi. “We are now adapting to a new market — simple as that.”
At her 26,900-square-foot store at Shopping Cidade Jardim — where Daslu is as an anchor and best performer ahead of Tiffany, Jimmy Choo and CH — Tranchesi will implement her latest idea: The “D-market,” a potpourri of brands never before sold in Brazil, such as Leonard and Carven. She also is considering the launch of a Daslu makeup and beauty line and will begin wholesaling her Daslu private label once again to overseas retailers. She also is thinking of opening Daslu units abroad.
All this is possible thanks to the recent influx of money from Laep Investments, a local private equity fund that bought Daslu for 65 million reals, or $35.6 million at current exchange.
The head of Laep is Marcus Elias, a 52-year-old investor known for having turned around Parmalat, which he bought in 2006 when it was immersed in debts of 900 million reals, or almost $475 million. He is a bit like Richard Gere’s character in “Pretty Woman” — “except I don’t divide business in bits to sell it, and I don’t have a Julia Roberts,” said the good-humored Elias, adding of his recent purchase, “Daslu is Brazil’s biggest and most important luxury retailer.”
Tranchesi and Elias sat with WWD at Leopolldina restaurant at Villa Daslu to talk about their plans for the future:
WWD: Why have you decided to keep Eliana Tranchesi in Daslu?
MARCUS ELIAS: I have no intention of being an expert in retail. My specialty is having no specialty — I have done business with milk and the food industry. I invest in companies which I believe have good growth prospects, and then I hire specific help to make the business happen. In the case of Daslu, I need specific expertise, somebody who understands not only fashion retail, for Daslu is far more special than any fashion retail business. We are looking for a chief executive, but truth is, if I have Eliana, I have the very DNA of Daslu. Without her, this would be a business like any other. She knows how to sell luxury and sophistication to Brazilians. Case closed.
WWD: You started talking to Eliana Tranchesi back in 2006 about a business alliance. It was only a year after the charges of racketeering, smuggling and fraud involving her and her brother, Antonio Carlos Piva de Albuquerque, broke out in the media. Didn’t that discourage you?
M.E.: You have to know Brazil and comprehend its political history — this is why the Daslu situation never frightened me as an investor. In my experience, the country has a trustworthy and effective judiciary. I believe in law, and I see the matter of Eliana as of very easy resolution. Also, starting from 2005, Brazil has a law of judicial recovery very similar to the American one. Whoever buys the company by no means inherits old problems. This is the core business of my company, Laep Investments Ltd. In my opinion, Daslu’s problem was its liquid capital assets; it was never a question of the business model.
WWD: Why did Daslu attract you?
M.E.: It is the business with the highest average ticket size in Brazil [2,000 reals, or $1,095]. It also has the biggest volume of sales by square meter [3,200 reals, or $1,720] and the highest conversion rate, which means whoever steps in Villa Daslu or Daslu Cidade Jardim ends up buying something. This is the dream of every retailer. It was very clear to me from the very beginning that the anchor of Daslu was its own brand — and not the international brands. Today, it accounts for 80 percent of the company’s income — up to 2004, imported brands represented 65 percent of the business. The crown jewel is Daslu women’s, men’s, children’s and home private labels, and not the Italian or French ones.
Daslu is at the same time Brazil’s most sophisticated brand and most sophisticated department store — although I have a hard time using this expression, because the Daslu business model is very particular and very unlike Galeries Lafayette or Harvey Nichols. Eliana has built a model that functions perfectly in Brazil, and it works here the same way Galeries Lafayette works for the French and Harvey Nichols for the British. Try to export the model and it would be doomed to failure.
WWD: The Daslu brand name in the tags comes in your own handwriting, and the company has been in your family for over 50 years, since your mother started bringing suitcases full of Argentinian cashmere to sell to her friends. Are you heartbroken having sold the company?
ELIANA TRANCHESI: No! I have always been very detached from everything I own. Of course, I love everything I have, but my entire life has been about building Daslu. It would be a sin to waste it. I’d much rather see it expanding in another’s hands. This is why I think judicial recovery is spectacular. The company doesn’t die. It gets a chance to go on. That’s exactly what we needed.
WWD: What are you planning from now on?
E.T.: The sky is the limit now. In August, we started e-commerce for the Daslu brands. In September, we will open an 8,600-square-foot Daslu at the Fashion Mall in Rio de Janeiro. It will be on the top floor and we are doing our best to keep the carioca spirit in the decor — we aim to absorb the local styles as we plan to open stores in the best malls of Brasília, Belo Horizonte, Curitiba, Porto Alegre, Cuiabá and Goiânia, among the country’s most important capital cities. More than the different decors, those stores will have a selection that speaks to the local taste — Daslu’s strength also resides in its strong editing. We know what Brazilians are looking for because we have been doing it for the past 50 years. We edit for people who are not fashionistas. We also want to create different price categories within our private labels.
WWD: In the past, Daslu’s showroom at the Plaza Athenée in Paris, filled with caipirinhas and Brazilian music, was one of the highlights of the season. We got used to seeing Daslu credits in the best magazines in the U.S. Do you plan on reinvesting in exporting the brand?
E.T.: I get phone calls from businessmen saying, “I want to be the Daslu of Portugal.” Our idea, though, is to export a different model of multibrand shop. Daslu in Brazil will have, along with our own brands, a selection of the hottest new foreign brands, such as Carven. But we also consider having the established brands in the country — let’s say Gucci doesn’t feel like opening a monobrand store in Porto Alegre. We can make a deal to carry the collection in a corner at this shop. In other words, we could act as a chain distributor for major brands.
For Daslu stores outside Brazil, we are thinking of becoming an emporium for the best of Brazil, be it fashion or jewelry. We’ll be Brazilian designers’ window to the world and will also export our private labels. In September, the Daslu showroom will be open for a week in Paris, and we plan on having a permanent address in Milan. We have always created novelty — we were the ones to introduce Charlotte Olympia shoes in the country three years ago, before everybody was talking about them. Now we are bringing Gianvito Rossi, Leonard — along with more than 110 brands that are not to be found anywhere else in Brazil. What we have to do now is to keep doing it more and more.