Luxury & Fashion Biz News: Nicolas Ghesquiere exits Balenciaga, Burberry (hearts) the big city, and Brands get geeky

Nicolas Ghesquiere isn’t a widely recognised household name, and frankly, neither is the hyper-chic and highly priced Balenciaga brand, so it’s unlikely that Ghesquiere’s sudden departure as head designer from the heritage fashion house (that was acquired by French luxury conglomerate PPR back in 2001) will make waves anywhere beyond the dinner conversations and blog comments of the more obsessive of fashion’s followers.

But among those obsessive fashion followers, the news that, after fifteen years of perfectionist, workaholic toil behind the scenes at Balenciaga, Mr. Ghesquiere has packed up his sewing kit and vamoosed with barely a wave goodbye is a big, f**king. deal. Noted NYTimes fashion journalist Suzy Menkes writes that “Mr. Ghesquière, 41, who was not quoted in the PPR announcement, was traveling in Japan on Monday and could not be reached for comment,” which is a polite way of saying that it was undoubtedly a nasty divorce fuelled by numerous heated arguments that finally erupted into ultimatums, and as Ghesquiere presently has nothing nice to say about how it all went down, he’s electing to ignore all requests for comment at this time.

Balenciaga Spring 2013 — Ghesquiere’s critically lauded last collection

Cathy Horyn weighs in with speculation that Ghesquiere was upset by the unprecedented control that PPR afforded Hedi Slimane when they hired Slimane as head designer for Yves Saint Laurent: “A source of ire may have also been the unusual freedom that Hedi Slimane was given as the new creative director of Saint Laurent, also owned by PPR, even though Mr. Slimane had been inactive in design for about five years and had not done a women’s collection. (Slimane) was allowed to change the corporate logo and store designs and remain in Los Angeles, commuting as needed to Paris. Mr. Ghesquière may have disagreed with these kinds of decisions as a matter of principle.”

But Horyn also hints that there was trouble already brewing between Ghesquiere and PPR management, with the post-recession bottom-line focused conglomerate eager to push Balenciaga in a more commercially profitable direction, which Ghesquiere seemed to be against, because why copy Gucci or Armani when you can maybe carve your own space in an ever cramped (and creatively stifled) market?

Being a niche player is really about the only thing that’s left on today’s volatile fashion stage (with its shrinking consumer base), and Balenciaga seemed to be thriving nicely as a small but tasty slice of the niche luxury pie (a 2005 article in Bloomberg Businessweek stated that the house of Balenciaga would be radically restructured, with its money-draining atelier closed down, if Ghesquiere couldn’t manage to nudge the label into profitability by 2007 — he must have managed to avoid the showdown), but it’s difficult to know exactly what the story is behind the Balenciaga split when one side is issuing PR platitudes and the other side isn’t talking at all.

But in the absence of definitive answers, the speculation swirls over what will come next: Ghesquière will take over at Chanel; Ghesquière will take over at Schiaparelli; Ghesquière will head to PPR rival LVMH and set up camp under his own name (oh, ouch! to PPR if that happens); Alexander Wang or Christopher Kane or Mary Katrantzou or Jack McCollough and Lazaro Hernandez or (insert wild guess here) will take over at Balenciaga sooner rather than later (“My biggest interest is to focus the organisation, accompany the team and develop the brand potential, so it’s in my interest to do it as soon as possible,” said Balenciaga CEO Isabelle Guichot).

Did someone say the name Mary Katrantzou?

Yet with this latest drama coming hot on the heels of the Balmain, Dior, Jil Sander and Yves Saint Laurent production numbers, it makes me wonder at the financial pressures the brands (and consequently, the designers) must be feeling about right now.

Who’s the next to crack? Should we start a betting pool?

*SPEAKING OF FINANCIAL PRESSURE: Burberry Rethinks Small Cities, Returns Focus to Major Metropolitan Areas“The company is focusing on investing in stores in 25 world cities, such as New York, London, Chicago and Hong Kong. Those cities, which account for about 60% of Burberry’s revenue and roughly 70% of group profit, have been the focus of Burberry’s store openings and renovations in the past year, as the brand has battled a poor economic climate in many locales. The result could be a pullback from the strategy that just a few years ago brought Burberry stores to places like Kansas City.”

Burberry Spring 2013 — kissing the small towns goodbye

Burberry has also made other moves aimed at bringing back more control and focus, including bringing its cosmetics and perfume business in-house instead of continuing to license out its name to companies like Inter Parfums. WWD reports that “the company was deciding whether to outsource or control in-house product development, technology, sourcing and supply chain. ‘It’s something we have to get our arms around,’ said (chief executive officer Angela Ahrendts). ‘We’ve got a lot to learn.'”

Meanwhile, Burberry has been cutting back on its lower-end fashions and catering to its wealthier clients, a move that helped stabilise their sales numbers: “Burberry said that while some of its more ‘aspirational’ consumers had been hit by the faltering global economy, it had sold a higher proportion of goods from its top-end Prorsum and London lines to its wealthiest customers, boosting first-half profit margins.”

The Wall Street Journal reports that, “The company is successfully getting more customers to trade up from jeans and polo shirts in the cheaper Brit range to higher-priced clothing from the London and Prorsum lines. In the second quarter, higher-priced ranges accounted for 49% of clothing sales, up six percentage points year on year.”

Which is an interesting development for a brand once entirely dependent on sales of logo baseball caps, scarves and anything covered in loud check print (of course, a lot of the tackiest check items are blamed on counterfeiters).

As long as we’re on the subject of perfume: EU will not ban Chanel No. 5 over allergy findings“The EU will not be imposing a ban on Chanel No. 5 perfume, a spokesman for the European Commission said Friday, despite a study that has recommended a tree moss used in the famous perfume should be banned because it causes allergic reactions . . . Responding to press reports, EU commission spokesman for health and consumer policy Frederic Vincent insisted it was ‘false to say that the European Commission wants to ban Chanel 5.’ The scientific findings were just that and did not represent the official position.”

So people who love the world of classic perfumery can relax. At least for now.

*OTHER LUXURY-BRAND RELATED PROFIT NEWS: Hermes sees no slowdown anywhere“Chief executive Patrick Thomas said trading remained strong in South Korea, Taiwan and also in China where other luxury brands such as Burberry, LVMH’s Louis Vuitton and PPR’s Gucci have posted slowing sales growth . . . Hermes said third-quarter sales rose 15.7% at constant currencies, up from 13.4% in the second quarter.”

The article notes that Louis Vuitton saw only a 5% growth in 3rd-quarter sales, down from 8% in the 2nd-quarter, and that Gucci posted a slightly better 7% increase in sales, but still slowing down from previous quarters of 10% (2nd-quarter) and 11.6% (1st-quarter). Patrick Thomas attributes the continuous Hermes revenue growth with their limited expansion strategy, which helps sell their brand image as more exclusive than their competitors. Perfume sales for Hermes were also up 14% from the previous quarter.

*NOT SO FASHION LUCKY: The Marzotto Group (including members of Italy’s wealthy and highly influential Marzotto family and former owners of the Valentino Fashion Group) has been targeted by tax authorities who accuse the Group of setting up a financial holding company in Luxembourg with the sole purpose of avoiding 65 million euros in taxes on the sale of the Valentino and Hugo Boss fashion labels“Italy’s tax police said on Monday they had confiscated real estate, land and corporate holdings of 13 people ‘linked to one of Italy’s most important families in the fashion and textile sector’ . . . Marzotto sold the Valentino Fashion Group – then including both the Valentino label and Hugo Boss – to private finance group Permira in 2007.”

The Dolce & Gabbana partners have also been targeted by the Italian tax police for tax evasion to the tune of €416 million. The design duo are slated to appear before an Italian court on December 3rd.

Three cheers for bankrupt governments and their tax collecting hounds, I guess?

A few quick looks at the new geek chic:

A.) My friend Marin Untiedt pointed me to this great example of how the jewellery design industry is adapting to 21st century consumer demand:

That’s a fantastic way of bringing personalisation and choice into the consumer equation — and personalisation is, more and more, what the contemporary consumer wants.

From the article, More interactivity and personalization please, demand connected consumers: “Retailers cannot afford to sit still as this digital revolution happens. They must engage plugged-in consumers in new and different ways, on their terms . . . 79% of (survey) respondents said they would work with retailers to co-design new products and services.”

So as a brand/retailer, you either have to climb aboard that personalisation train or get left behind.

B.) Karl Lagerfeld sends a valentine to his nerd-chic Chanel customers with this plastic Lego-inspired clutch in various shades of bright.

C.) Stylin’ GPS-embedded wingtips will point the way home:

Just because it’s fashion doesn’t mean it can’t be technologically innovative.


  • Marin

    New font? Or am I way behind the times in noticing?

    In regards to the wedding rings, aren’t they the very definition of “exclusive”? What’s more exclusive than bespoke? None. None more exclusive.

    I love the GPS shoes. Know what else I love? The collection of splash bowls in the background on his work table.

    • Way behind the times, Marin. Way. But, thank you for noticing, nonetheless. It took about a week for me to make up my mind on the font I wanted to use for the redesign, and the team I hired had to patiently endure my indecision. But we finally got it sorted.

      And that’s one (extra) thing I love about these artisan-indie type videos — the background clutter is sometimes just as interesting as the ostensible focus.

  • FiveoaksBouquet

    Re wingtip GPS shoes: think of all the guys starting off for work in the morning and ending up sitting at home in front of their
    tv for the day instead!

    Just as a general thought, if profits are up, who cares if it’s 7% or 10% or 4%? Even if they go down sometimes, we’re still talking about profit. This level of greed along with tax evasion makes luxury businesses look really tacky.

    Love the Lego bags! Speaking of Chanel (et al) if perfume creators don’t fight back now it’s over. They are already late. I think a strike by noses combined with a boycott by consumers is in order.

    • Five — I think that might be considered a feature, not a bug.

      And I totally (!) agree with you on the relative size of the profits. Whenever I read that the company has made a profit, I’m impressed. 1%, 2%, whatever. It means they’re not going out of business and that’s an achievement in today’s economic climate. But with a huge, global conglomerate, there seems to be that push to make it bigger, bigger, always bigger.

      It’s what brought about the bling and logo phase, and that’s a genie that’s near impossible to stuff back into the bottle.

      And it’s heartening to see the fragrance industry finally stand up for itself, even though (as you stated) it’s a bit late in the game to be growing a backbone. Better late than never?

      I wonder if it was the threat of having to reformulate Chanel’s biggest cash cow into an unrecognizable bottle of what have you that finally spurred some outcry.

      • FiveoaksBouquet

        Cash cow and sacred cow!