L’OREAL SELLS LANVIN, EXITS FASHION
Byline: Miles Socha / Jennifer Weil / With contributions from Brid Costello
PARIS — Lanvin has a new owner — but it’s not one of the familiar fashion empires.
L’Oreal said late Thursday that it has sold the French fashion and fragrance house and its subsidiaries to a group of investors believed to be led by Shaw-Lan Wang, who has extensive media holdings in the Far East. This confirms a report in these columns Wednesday that a Lanvin transaction was nearing.
The investors, operating under a new holding company known as Harmonie SA, also include the French pharmaceutical firm Bio-Merieux-Pierre Fabre, the French industrial group Marcel Dassault, the Young Bros. financial group, based in Hong Kong, and the AXA group, an investment firm in Paris.
Neither Wang, other Harmonie partners nor L’Oreal executives could be reached for comment.
However, the L’Oreal release said the investors have indicated that they have “global ambitions for Lanvin, which will include in the future the takeover of the fragrance business after a period of transition.”
L’Oreal, which last February gave up its 49 percent stake in the Marie Claire magazine publishing group, said it sold Lanvin to “continue refocusing on its core business.” Lanvin SA, which had consolidated sales of $43 million in 2000, represented 0.4 percent of the beauty giant’s consolidated sales. Fragrance activity represented another $22.5 million last year, or 0.2 percent of L’Oreal’s consolidated sales. (Dollar figures are converted from euros at current exchange rates.)
In a statement, Gilles Weil, vice president in charge of the luxury products division and the chairman of Lanvin said: “For L’Oreal, Lanvin has represented an ‘opening’ to the world of fashion. All over the world, and particularly in Asia, the image of Lanvin has been restored, enhanced and modernized in recent years. It is clear that a group wholly dedicated to developing the brand in the long term, and with the necessary stature and high level of professional expertise, will successfully continue the work+.A substantial start has already been made.”
The future of Lanvin executives and its 200-plus employees could not be learned. Gerald Asaria, Lanvin’s chief executive officer, could not be reached for comment.
L’Oreal, which has held a controlling stake in Lanvin since 1994, has explored the possibility of selling the French house for more than a year and is said to have held talks with the Leiber Group, the American fashion group previously known as Pegasus. Other firms are believed to have looked at Lanvin’s books recently, including Dickson Poon and Compagnie Financiere Richemont.
Speculation of a transaction heated up recently when word began spreading that Lanvin’s contract with Cristina Ortiz, the house’s ready-to-wear designer since 1997, expired this month. Lanvin has declined to comment on details of her contract, but its expiration was interpreted as a sign that the house was leaving itself “clean” for a potential new owner.
Lanvin also never named a successor for its men’s designer, Dominique Morlotti, who exited last November after nine years with the company. But Lanvin recently unveiled a reconfigured men’s collection and several new product categories, including watches, during the men’s shows here this month.
Although Lanvin has a storied history in women’s wear, its men’s division is its largest business today, accounting for some 70 percent of the house’s direct sales.
Lanvin has limited distribution in the U.S. beyond fragrance, eyewear and neckties. Its main markets are Europe, the Far East and the Mideast, where most of Lanvin’s 50 boutiques and in-store shops are found. Lanvin is said to have a cult-like status in golf circles in Japan and it was one of the first European brands to be distributed in Malaysia and Singapore.
Lanvin was founded in Paris in 1890 by milliner Jeanne Lanvin. L’Oreal and Orcofi, a luxury goods holding company founded by former Louis Vuitton chairman Henry Racamier, jointly bought Lanvin from Midland Bank and the Lanvin family in 1990 for $95.3 million. L’Oreal upped its stake gradually to assume complete ownership.
Management made a concerted effort to develop Lanvin’s rtw business in the U.S. under a string of designers. Claude Montana was the last couturier at Lanvin and the line was discontinued with his departure in 1992. Morlotti designed the women’s rtw in the early Nineties and was succeeded by Brazilian Ocimar Versolato, who was in turn succeeded by Ortiz.
On the fragrance side, Lanvin tried to breathe new life into the business with a master brand called Oxygene. The women’s scent by that name was introduced in March 2000 in Europe.
Oxygene went to market in the U.S. last March. At launch time, Lanvin executives were confident that the scent could achieve a top-10 ranking countrywide next year. According to industry sources, Oxygene was targeted to do retail sales in the U.S. of $35 million to $40 million in 2001.
The hype around the scent was intense. Beside the striking ad campaign featuring Gisele Bundchen, the American launch was backed by 25 million scent strips and announced with a celebrity-studded party in New York.
But it’s a tricky business for a beauty company to get into the fashion trade. Aside from L’Oreal, France’s Groupe Clarins is among the only others to take the plunge, buying fashion house Thierry Mugler in 1997. It has taken years to make the company solvent.
Separately on Thursday, L’Oreal said it posted consolidated sales of $5.95 billion for the first half, up 13.5 percent against a year ago.
At comparable group structure and at constant exchange rates, consolidated group sales would have grown 7.8 percent; excluding currency fluctuations it would have risen 11.7 percent, the company said.
By division, consolidated cosmetics sales were up by 13.4 percent; consolidated dermatology sales were up 16.8 percent. Excluding currency effects, they would have risen by 11.6 percent and 12.8 percent, respectively.
Consolidation of acquisitions carried out last year had a positive impact of 3.9 percent in the period. These include Laboratoires Ylang, Kiehl’s, Matrix, Carson and Respons. This year, L’Oreal’s 35 percent stake in Shu Uemura will be accounted for by the equity method, the company said.