The business of fashion

Fashion designer Alber Elbaz at the end of the Spring/Summer 2013 ready-to-wear collection show in Paris. Elbaz, who served as artistic director at Lanvin for 14 years, left the fashion house last month.
Fashion designer Alber Elbaz at the end of the Spring/Summer 2013 ready-to-wear collection show in Paris. Elbaz, who served as artistic director at Lanvin for 14 years, left the fashion house last month. PHOTO: AGENCE FRANCE-PRESSE

Recent big-name exits of Alber Elbaz, Raf Simons and Alexander Wang show that it is the business managers who call the shots in fashion

LONDON • The shows must go on.

But after three surprise exits recently by designers from some of the most powerful brands in the luxury industry, the question arises: Is this upheaval bad for business, or is bad business behind the turmoil?

Last month, Alber Elbaz, creative director of French fashion house Lanvin, announced he had been fired; Raf Simons announced he was leaving Christian Dior; and Alexander Wang had his final show for Balenciaga, before heading off to focus on his own brand.

It is probably too early to judge the financial fallout. But analysts are wondering if the brand loyalty that might help prompt someone to pay US$10,000 (S$14,250) for a Lanvin gown or US$2,500 for a Balenciaga bag is damaged when the creator walks out - or is pushed.

Thomas Chauvet, a luxury analyst at Citigroup, says an answer lies partly in a shifting dynamic between the boardroom and the design studio. "The times of star designers are long gone - we know they come and go and are possibly less loyal to the fashion houses than in the past," he said. "What matters most now is the brand name and DNA."

In the case of Elbaz, growth at Lanvin had begun to falter in recent seasons, after nearly a decade of strengthening sales and efforts at international expansion under his creative direction. Last month, he said his abrupt departure after 14 years at the French fashion house had been "the decision of the company's majority shareholder", Madam Wang Shaw-lan, a Taiwanese publishing magnate. "I wish the house the future it deserves among the best French luxury brands and hope that it finds the business vision it needs to engage in the right way forward," he said, hinting at internal discord at Lanvin over how to navigate an increasingly competitive marketplace.

Last year, Lanvin had estimated revenue of about US$321 million, but according to people close to the group not authorised to speak publicly, that figure is expected to fall this year to around US$221 million. Lanvin's wholesale partners, which account for 70 per cent of sales of the brand, had apparently been hit hard by flagging Asian enthusiasm for luxury goods, currency headwinds and geopolitical instability.

"It is crucial that management of a brand adjusts the business model to the growth needs of the company as it evolves, especially when it comes to the balance between wholesale and retail - and that did not happen at Lanvin," said Mr Ralph Toledano, president of the fashion industry association Federation Francaise de la Couture du Pret-a-Porter des Couturiers et des Createurs de Mode.

The surging production demands placed on designers by brand executives looking for greater sales growth are immense. The intensity of the workload has been cited as a factor in all three recent exits. Simons' collections appeared to perform well in the market. For the fiscal year that ended June 30, revenue at Christian Dior Couture was up 18 per cent, to €1.77 billion (S$2.69 billion). But at Balenciaga, sluggish sales of Wang's designs were rumoured to be part of the reason he and parent company Kering agreed in July that he would leave.

Different as the circumstances might be, the three departures in such a short time might indicate that now more than ever, it is the business managers who determine how fashion is created - and by whom.

NEW YORK TIMES

A version of this article appeared in the print edition of The Straits Times on November 19, 2015, with the headline 'The business of fashion'. Print Edition | Subscribe