MILAN — Alexander McQueen and Stella McCartney have quite nice nest eggs, thanks to Gucci Group.
A little-noticed filing with Britain’s equivalent of the SEC showed that McQueen and McCartney each pocketed substantial sums through their tie-ups with Gucci. McQueen took home $22.5 million, or 13.6 million pounds in local currency, when he sold 51 percent of his company to Gucci back in 2001. McCartney, who sold 50 percent of her firm to Gucci that same year to launch a label under her own name, made $10 million.
These are just a few of the details contained in the legal documents both London-based houses are required to file. These documents also reveal just how expensive it is to launch new fashion houses — both posted losses in the millions for the year ended Jan. 31, 2002, their first year under Gucci’s ownership.
In McQueen’s case, the business is controlled through a series of three companies. The lowest firm in this chain, Autumnpaper Limited, which holds all of McQueen’s operating assets, posted a loss of $7.2 million, or 4.3 million pounds, for the year ended Jan. 31, 2002. Autumnpaper’s turnover for the period came to $937,302, or 567,271 pounds.
Dollar figures have been converted from British pounds at current exchange rates.
As previously reported in these columns, Stella McCartney Limited posted a loss of $4.6 million, or 2.8 million pounds, for the year ended Jan. 31 2002. Revenue figures were not provided in the filing.
Needless to say, Gucci isn’t the only company grappling with the high costs of launching or turning around brands. LVMH Moët Hennessy Louis Vuitton is losing money with Fendi, and some of its other brands are also believed to be in the red. Marzotto is trying to get Valentino back in the black.
The data is also interesting because Gucci does not break down complete financial results for each brand in its portfolio — only for its Gucci and Yves Saint Laurent labels. The others are lumped together in a category called “Other Operations”
Returning to Autumnpaper’s filing, other salient points include the fact that the company had to pay $2.97 million, or 1.8 million pounds, to terminate McQueen’s former manufacturing license with Tuscan group Gibo SpA. That license, which was originally stipulated to last through the fall-winter 2003 season, was terminated on Dec. 31, 2001.
That outlay, coupled with administrative expenses of $4.5 million, or 2.7 million pounds, pushed McQueen’s business into the red. Gross profit before those costs came to $340,828, or 206,275 pounds.
The filing also provides a geographic breakdown for Autumnpaper’s turnover. Continental Europe is by far the biggest market for McQueen with sales of $505,739 (306,082 pounds) for the year ended Jan. 31, 2002. Sales in the United Kingdom came to $151,032 (91,407 pounds), while those in the rest of the world accounted for the remaining $280,531 (169,782 pounds).
In an indication of just how much money has been pumped into the house, the Autumnpaper report specifies that Gucci Group made a short-term working capital loan of $7.1 million, or 4.3 million pounds, during the fiscal year. Of that sum, $4.8 million, or 2.9 million pounds, was outstanding as of Jan. 31, 2002.
Meanwhile, the filings also reveal more details about the deals Gucci struck with McQueen and McCartney.
Gucci paid $10 million for just over half of Stella McCartney Limited, or more specifically for 100 ordinary shares plus the one existing preference share in the company. Stella McCartney Limited then paid out that sum to McCartney herself for the “right, title and interest” of the McCartney trademarks. The designer holds the remaining 100 ordinary shares in the company.
As for McQueen, Gucci-controlled Paintgate Limited bought 51 percent of Birdswan Solutions Limited from McQueen for $22.5 million, or 13.6 million pounds. Birdswan in turn controls Autumnpaper Limited.