L’OREAL BUYS CONTROL OF LANVIN
PARIS — L’Oreal has bought an additional stake in Lanvin from Orcofi, a Vuitton family holding company, giving L’Oreal majority control of the fashion house.
In the deal, L’Oreal acquired a 16 percent share, raising its ownership of Lanvin to 66 percent. Orcofi owns the remaining 34 percent.
“They offered to sell us 16 percent, and we accepted,” said a spokesman for L’Oreal. Terms were not made available.
The sale marks a second retreat from the luxury goods business by Orcofi, which in January sold its controlling stake in the Ines de la Fressange fashion business to a family member, Francois Louis Vuitton.
Orcofi and Lanvin jointly bought Lanvin in 1990 from Midland Bank and the Lanvin family for $95.3 million (500 million francs) at current exchange. However, Lanvin ran into serious difficulties as it mounted an ambitious expansion program under president Michel Pietrini.
After Lanvin ran up losses of $24.9 million (130 million francs) million) in 1992, its third year in the red, Pietrini was replaced by Loic Armand, who had managed L’Oreal’s Mexican subsidiary for the previous three years. Armand, who could not be reached for comment, recently predicted Lanvin would come close to breaking even this year.
In this effort, Armand had wielded the axe on staff, cutting Lanvin’s worldwide work force by one-third, from 537 to 355. He also sold off Lanvin’s townhouse on rue Bleu, which Pietrini purchased for office space at a reported cost of $10 million.
Due to the addition of the turnover from Asian operations Lanvin bought back in the early 1990s, the house’s consolidated sales more than doubled in 1993, to $53.4 million (310 million francs) from $25.7 million (149 million francs) in the previous year.
“L’Oreal is a great group, with considerable experience managing many operating companies. Orcofi is a company whose goal is to take care of the Vuitton family fortune. Running Lanvin is more our line of work,” said the L’Oreal spokesman.
L’Oreal’s move will likely accelerate the redevelopment of Lanvin’s perfumes. ArpÅge, its once great classic, is to be relaunched in the U.S. this fall.
The L’Oreal spokesman added that “it’s always possible” that L’Oreal might buy Orcofi’s remaining 34 percent stake in Lanvin, if the Vuitton family group decided to pull out completely.
“We proposed to L’Oreal that they buy the 16 percent,” confirmed Orcofi’s director-general Joseph Lafont. “We wanted to recognize financially that the management has been in the hands of our friends at L’Oreal for over a year now.”
The sale underscores how Orcofi has apparently given up on what was once perceived as its goal of becoming a major player in luxury goods under Vuitton clan leader Henry Racamier. Racamier was instrumental in building up the Louis Vuitton business and engineering the creation of LVMH Moet Hennessy Louis Vuitton, the luxury conglomerate that was subsequently taken over by Bernard Arnault.
Racamier, who resigned from Orcofi’s board in June 1993 on his 81st birthday, could not be reached for comment.