Byline: Godfrey Deeny
PARIS — A new broom has swept through Christian Dior Couture these past 18 months. His name: Francois Baufume.
But as managing director of Dior — the fourth in eight years — Baufume hasn’t staged a revolution. Instead, he’s embarked on a strategic, long-term plan to revitalize the esteemed house, while keeping a very close eye on the current bottom line.
Baufume, who is in the U.S. this week to visit Dior boutiques and talk with retailers, appears determined to avoid repeating the highly publicized errors made in recent years by Gucci and Lanvin. Overly rapid overhauls and a policy of slashing licenses ruthlessly sent both those venerable businesses spinning into the red.
Baufume does plan to continue cleaning up Dior’s licensing business, but cautiously, while at the same time carefully expanding Dior’s own retail business and steadily improving the quality of all merchandise bearing the house’s name. “Some of our products really weren’t right. We are trying to make better goods, but we have lots to do,” admitted Baufume in his first interview since he took over the reins at Dior in the fall of 1993. Recent studies show that consumers regard Dior as “a beautiful brand making fine products.”
“But clearly you can’t make ties in polyester that sell for $7. Which is exactly what we were doing two years ago,” he groaned.
Baufume, who headed the house of Kenzo before joining Dior, has already whittled down Dior’s licenses to roughly 120 from the 146 in force at the end of the reign of his predecessor, Philippe Vindry.
“And we still need to reduce their number,” he emphasized.
Recently Dior decided to phase out its U.S. license with Warnaco for shirts, ties and men’s small leather goods. The decision will knock out over 10 percent of Dior’s U.S. retail volume, but Baufume is certain the move was worth that pain. “It wasn’t exactly a love story between ourselves and Warnaco. Their strategy was very different. Dior would have continued the license, provided the quality was high and the distribution was at the right level and price,” he said.
“But Warnaco’s deliberate strategy is that it’s only interested in a license when it has worldwide rights and the liberty to do what it likes with a big volume business. These are two opposing conceptions. We had talks, but eventually realized we couldn’t live together,” he explained. Baufume’s first task on joining Dior was to build a fresh management team, some of them old Kenzo hands, some from other houses. “I’ve put in a staff of my own, one of quality and professionalism, who work a bit like a rugby team. They are not there to score touchdowns, but to win the match, ” Baufume said.
“That’s a big change culturally from before. There used to be lots of dissension, jealousy and competition in many areas of the enterprise, which was plain bad for the company. Some executives have left, and others were booted out,” he added, in his blunt manner. “The problem before was simple — too many chiefs.”
Among the major changes:
Sidney Toledano, a former Lancel executive, was hired to take charge of leather goods, tableware and all negotiations with duty-free stores.
Dominique de Longevialle, who used to manage Kenzo’s licensing business, now handles Dior’s licenses and accessories, replacing Philippe Spiette, a Vindry appointee. Caroline Grouvel has become the new couture directrice, after five years as couture directrice of Hanae Mori.
Victor Lipko, formerly in charge of Paloma Picasso’s accessories business, has replaced Michael Burke as head of Christian Dior Inc. in the U.S.
Thierry Letreillard continues to manage Dior’s men’s business (the lines are still designed by Patrick Lavoix, another Vindry appointee), and Baufume himself has taken direct control of women’s ready-to-wear. In a major rtw move last year, Baufume ended the house’s diffusion line, Christian Dior Coordonnes, which was manufactured by GFT of Italy. He has no plans for a similar line in the future.
“There’ll be no more diffusion lines, just one collection, which we will evolve. Before, there were far too many references, nearly 400. I’m aiming at about 150 to 180, depending on what Gianfranco Ferre wants to add,” he said.
Baufume is careful to underline his confidence in the courtly Ferre, who has earned more friends than critical acclaim in five years in France. Ferre designs both the couture and the rtw collections for the house. “Signor Ferre is doing extremely well,” said Baufume, who speaks fluent Italian and respectable English. “I’m very happy with him, and I hope he is with me. He’s had five years of experience in haute couture and has an atelier that functions smoothly. Some people may still lament that he’s not French, but talent doesn’t respect national borders.”
Baufume pointed out that he developed one of the industry’s first diffusion lines in the late Seventies, when, as an executive at GFT, he managed Giorgio Armani’s Mani collection. “Then I did the same at Kenzo. But marketing has changed,” he argued. “Fashion today is either industrial or a sophisticated and beautiful product for a limited few, and positioning yourself anywhere between the two is extemely difficult.
“A house like Dior is in the category of luxe, and that’s what we must concentrate on. We have to stay out of simple products at a different distribution level. Dior is an imperial house of creation, and diffusion will do nothing for our image or our bottom line. It’s a terrible business, with heavy costs in creation, image and production, in which it’s very hard to make any money.
“There are lots of hoodlums in Sentier [Paris’s sweatshop area], who produce in Asia and can turn clothes around a lot quicker than we can. We have to do what we do best — true creation. Sure, one can debate the merit of some collections — there are good seasons and bad ones, like apples and wine — but it’s clear where our future lies,” he said.
Reenergizing Dior’s boutique network is essential for Dior’s future, and Baufume is candid enough to admit that there’s plenty to do. Dior’s top women’s line sells in just 20 doors in the U.S., including its own boutiques and Neiman Marcus stores. And Dior’s Fifth Avenue flagship has never boomed, though Baufume insists that the store hasn’t been a setback. “It’s not an enormous success, but still works pretty well. The operating costs of a boutique on Fifth Avenue are very steep, but if you look at the ensemble of our U.S. operations at retail, they are profitable. L.A. does better, and Hawaii does very well,” said Baufume.
Dior has already added an accessories shop in Las Vegas, hopes to open a second unit in Hawaii by July 1 and is considering possibilities at South Coast Plaza in Orange County, Calif.; Houston, and Miami or Bal Harbour, according to Lipko. A division of luxury conglomerate LVMH Mot Hennessy Louis Vuitton, Dior is a decidedly profitable affair. In 1993, the last year for which figures are available, Dior scored a three percent rise in net profit to $23 million (116 million francs), on sales of $160 million (816 million francs). Parfums Christian Dior is a separate unit, though also part of LVMH. In 1993, Parfums posted a 10 percent rise in sales for $839 million (4.3 billion francs). Profits were not disclosed.
Baufume would not discuss his company’s financial performance in 1994 (official figures have not yet been released), other than to assert that despite trimming licenses, “We have done better, but I can’t say by how much. We did better overall, everywhere.”
In 1993, the Asia/Pacific region accounted for nearly half of Christian Dior Couture’s turnover, North America for just under one-quarter and Europe for just over 20 percent. Licensing revenues accounted for 39.4 percent of sales, wholesale sales for 31.2 percent and direct sales in Dior’s own boutiques and haute couture for the remainder.
In the U.S., Dior has 22 licenses: nine for men (the men’s tailored clothing license with Schoeneman has just been ended after six seasons) and 13 for women, including one for women’s suitings with Jones and another for coats with Cuddlecoat.
“Those will continue, I hope. We are pretty satisfied since they function well,” Baufume said.
“Our policy of regaining control of licenses and guaranteeing the right level of distribution is not easy in the U.S. There’s this permanent problem of doing so without wrecking sales volume. It’s always a risk, replacing an existing license with a new partner,” said Baufume. In Asia, Dior has just bought control of its Hong Kong operations from Jardine & Matheson for an undisclosed sum. It’s now a joint venture, 76 percent held by Dior and 24 percent by the old owners. As of March 1, Dior will control the two Hong Kong boutiques and wholesale distribution in the colony. Baufume has also created an affiliate in Hong Kong to oversee all of southeast Asia, including Singapore, Malaysia, China, Thailand, Indonesia and Taiwan. In November, Dior opened in Shanghai, adding to a chain which includes two freestanding stores in both Singapore and Malaysia, and one each in Indonesia and Korea.
In Japan, Dior has 15 outlets, though these are managed by its local partner, Kanebo. “They are real shops in shopping centers or places like the Hotel Imperial in Tokyo, which opened this year, all with their own separate entrances onto the street,” Baufume said.
In Europe, Dior has its Paris flagship on Avenue Montaigne, as well as shops in Monaco, Geneva, London and Munich, and it is opening in Cannes. And late last year, BaufumA opened franchise boutiques in Jeddah and Riyadh in Saudia Arabia, and one in Dubai.
With all these licensing negotiations and the flurry of store openings, he’s a man who is almost constantly in the air. But Baufume, who left Kenzo after an acrimonious battle with the designer, insists that he keeps in close contact with Bernard Arnault, the president of LVMH and Dior, who is known to be a demanding boss. “I work in harmony with Mr. Arnault. We understand each other. I consult him continually on aesthetic matters, because I find it normal to discuss these matters with your patron. Collaboration between managing director and president is fundamental, and I’m happy to say I enjoy working with Mr. Arnault. I don’t have problems of authority,” he said.