Agent Provocateur CEO says luxury lingerie brand bucks slowdown

PARIS (REUTERS) - Lingerie provider Agent Provocateur is seeing brisk business in China, Hong Kong and Russia, contrary to many other luxury brands, and is rolling out a second line co-designed by actress Penelope Cruz and her sister Monica, its head said.

Agent Provocateur, recently put up for sale by its private equity controlling shareholder, 3i, has enjoyed same-store sales growth of 17 per cent since January, Chief Executive Garry Hogarth said.

"So far, our businesses have not been affected by events worldwide," he said in an interview on Tuesday on the fringes of the World Retail Congress in Paris.

When including contributions from new stores, Hogarth said growth in the fiscal year to March could reach around 30 per cent to 70 million pounds (S$145 million), roughly in line with trends seen in previous years.

This contrasts with the overall luxury goods market, which has seen growth slow further this year to 5-6 per cent from 8 per cent in 2013 and 10 percent in 2012 as fewer tourists shop in Europe and Hong Kong, and as Chinese and Russian demand has weakened. Already, many luxury groups including Cartier owner Richemont and Italian fashion group Prada have pointed to flagging sales.

Agent Provocateur was created in 1994 by Joseph Corre, son of British fashion designer Vivienne Westwood. In 2006, Corre, who is no longer involved with the business, asked Hogarth to run it. The CEO has a stake of around 10 per cent in the company.

The brand competes with La Perla, Lise Charmel and Chantal Thomass at the high end of the lingerie market. Goldman Sachs has been hired to help 3i find potential buyers for Agent Provocateur among cash-rich private equity firms and wealthy individuals, a source close to the company said.

The company hopes the business will get a valuation of at least 200 million pounds, or more than 13 times its expected earnings before interest, tax, depreciation and amortisation (EBITDA) of 15 million pounds for the year to March 2015, up from 10 million last year. Net profit this year is expected to rise to 10 million pounds from 6 million in 2013/2014, Hogarth said.

Last year, rival La Perla was sold to Italian businessman Silvio Scaglia, who built his fortune with the Omnitel phone company and Fastweb broadband provider, and also acquired the Elite modelling agency. A formal auction for Agent Provocateur should start in April, the source said.

Hogarth said its second line, L'Agent by AP, would offer lingerie products at half the price of Agent Provocateur. L'Agent plans to open a first boutique in New York next month, followed by Los Angeles, Moscow and London in following weeks.

Hogarth said he expected L'Agent to have a retail network about twice the size of its more upmarket sister brand, with about half of revenue coming from wholesale accounts.

Agent Provocateur has only one wholesale account, with online retailer Net-A-Porter, and runs 96 shops, including nine in Moscow, the city where it has the most clients, and three in mainland China.

Hogarth said Agent Provocateur planned to open around 20 boutiques a year for the next three years. Agent Provocateur, which is also expanding its swimwear line, has had a 10-year perfume licence agreement with French company Interparfums since last year.