Once the darlings of the well-heeled shopper and the style maven, haute couture houses are struggling to keep needle and thread together as they shed jobs.
Lacroix shows fashion sector's quick change
Once the darlings of the well-heeled shopper and the style maven, haute couture houses are struggling to keep needle and thread together as they shed jobs. The late Coco Chanel, the doyen of French haute couture, was a sharp observer in her day and decades ahead of her time. As global stock markets crashed around her, sparking the Great Depression of the 1930s, she famously quipped: "There are people who are rich and there are people who have money."
No doubt she was referring to the "Depressionista", a cash-strapped sister to the 21st century "Recessionista" who could no longer afford to visit her legendary Parisian salon. Fast-forward nearly 80 years, and Ms Chanel's words were almost repeated in a Paris court last month, when the court-appointed administrator of Christian Lacroix said two bidders for the ailing French fashion house had failed to prove they could fund their offers.
"They are rich but they have no liquidity," said Regis Valliot, referring to offers made by the French firm Bernard Krief Consulting and by Sheikh Hassan bin Ali al Nuaimi, a member of the Ajman ruling family. The nephew of Sheikh Humaid bin Rashid, the Ruler of Ajman, emerged as one of two front-runners to acquire the company in October with a formal offer that would have saved the jobs of most of the firm's employees and retained both its haute couture and ready-to-wear divisions.
Bernard Krief, a French firm, made its ?100 million (Dh545.6m) bid in July, of which ?12m was an investment by Midex Airlines, a cargo carrier based in Abu Dhabi. Despite adjourning the matter to give the bidders more time to prove their financial merit, the Paris Court of Commerce last week approved a restructuring plan for the label that will put an end to its flamboyant haute couture line, cut 100 jobs and spread repayments to creditors over 10 years.
The Falic Group, the duty-free firm based in the US that bought Christian Lacroix in 2005 and is believed to have injected US$250 million (Dh918.2) into the brand, put forward the restructuring plan as a last-case scenario. The House of Lacroix story begins with a charismatic designer best known for creating le pouf, or the puff ball, skirt in the 1980s and for being the designer of choice for Edina Monsoon, played by Jennifer Saunders in the classic British comedy Absolutely Fabulous.
"It's Lacroix, sweetie, Lacroix!" Monsoon was often quoted as saying in the popular sitcom. Christian Lacroix, the designer, started out at the French high fashion house Hermes in 1978 and moved on to Jean Patou, the creator of the so-called designer tie, in 1981. His ostentatious creations caught the eye of Bernard Arnault, the chief executive of the luxury retail conglomerate LVMH. Mr Arnault, a mentor to Mr Lacroix, set up the fashion house with the financial backing of LVMH in 1987 with high hopes that it would replicate the success of many other nouveau ateliers around the world, such as Italy's Giorgio Armani and Gianni Versace, and the Japanese minimalist Yohji Yamamoto.
Despite his earlier success at Jean Patou, Mr Lacroix could not turn a profit under his own name. For the next 22 years the company failed to finish in the black even once, last year alone booking a ?10m loss on sales of ?30m. But it was not as if the brains behind the label tried to lose money, coming up with a host of increasingly desperate ideas to boost the bottom line and prevent it from sinking into the (rather fashionable) red, as well as making it more accessible to the masses.
From 1994 to 2005, the fashion house launched a range of lines as it sought to make a profit. They included towels, jeans, the Art de la Table venture with the silversmith Christofle, as well as perfumes, "novelty" jewellery, children's wear, menswear and even lingerie. While Mr Lacroix might not agree, perhaps the low point of his career came when he formed a partnership with Avon to launch a new scent, Christian Lacroix Rouge for women and Christian Lacroix Noir for men, complete with body lotion, shower gel and after shave.
Which brings us to the present day. The luxury retail sector has been so severely impacted by the global financial crisis that many fashion houses have been forced to abandon their expensive haute couture lines, often priced in the tens of thousands of dollars, to concentrate on their cheaper ready-to-wear and accessories divisions. Christian Lacroix is not alone in its struggle to stay above the water line. The Milan-based Versace label, now under the shaky leadership of his sister Donatella, recently embarked on a two-year restructuring plan that includes the loss of 350 jobs. It also has closed its last boutique in Japan, once one of the world's biggest luxury markets. Versace's problems began when its founder was murdered outside his mansion in Florida in 1997.
Even Chanel, which remains privately owned by the Wertheimer family, relatives of one of the original partners in the fashion house, was forced to shed 200 employees in December last year. These days, the typical high fashion house finds itself in unfamiliar territory. Accustomed to being feted by the world's richest in a private setting, most have been swallowed up by one of the top three luxury conglomerates: LVMH, PPR and the Compagnie Financiere Richemont group.
The fashion houses kicked off the 21st century still on a high from the boom of the 1980s and 1990s, when shoulder pads as wide as aeroplane hangars literally overshadowed the catwalks. Now, at the end of the first decade of the new century, they are struggling to compete against other top-name labels in their own stables, let alone their perceived rivals. The chain-store mentality of the luxury conglomerates does not help either. In Hong Kong, for instance, the jeweller Tiffany & Co has the highest concentration of its stores in any city in the world. Walk through any mall in the UAE and you will also see supposedly exclusive high-end fashion houses replicated in almost all of them.