The Business of Fashion

BoF Recommends | Valentino, the last Emperor

In the Summer of 2007,  around the time when Valentino Garavani finally resigned from his own label after months of speculation, I would have done anything to be a fly on the wall. What, with the planning of a 45th anniversary celebration in Rome, the controversy surrounding Permira's battle with the Carlyle Group for control of the House, the never-ending will he-won't he leave debate, and the ensuing rumours about potential successors (Giambattista Valli, Zac Posen, Proenza Schouler), there was a veritable tornado of activity going on in the Italian fashion house.

Today, 18 months later, I got my wish. I caught an afternoon press screening of  Matt Tyrnauer's film, Valentino - The Last Emperor, in New York City. The film happened to focus on Valentino and his partner, Giancarlo Giammetti, at precisely this time. And while there was scant mention of the business issues of the day, it was still an engaging film that focused on the uninterrupted partnership of these two legendary men of a bygone era in la moda Italiana.

Valentino | The saga continues

By now, most everyone in the fashion universe has heard that Alessandra Facchinetti has been ceremoniously removed from her post as Creative Director of Valentino. Some fashion critics, Suzy Menkes included, have spoken against the designer's dismissal, pointing to early successes in her first outings over the past couple of seasons, where she availed herself of Valentino's formidable atelier.

But the story doesn't end there. A report in WWD said that Facchinetti's ousting was not due to poor collections, but rather to a difficult and long creative process, and an inability to build a cohesive team around her. And, perhaps therein lies the point. Designers are no longer able to operate in a vacuum, in studios which are isolated from the business at hand.

Escada | In private equity's crosshairs?

Not long after Valentino Fashion Group was acquired by Permira in 2007, Escada AG is the latest major European fashion company to find itself in the crosshairs of a private equity firm. The German newspaper Handelsblatt is reporting that Apax Partners is considering taking a stake in the the German fashion company -- and possibly looking to execute an outright takeover.

Escada's stock lost more than one third of its value in 2007, and another third of value was obliterated in the first few months of 2008, making it a very ripe target for acquisition. But any Escada-turnaround effort backed by private equity will not be easy, even if the price is cheap. Last week, Escada reported that its sales continued to slide in the first quarter of fiscal 2008: revenues across its Escada and Primera divisions dropped by more than 10% when compared to the same quarter in 2007, and EBITDA, a measure of profitability and cash flow, fell by almost 70%.

Paris Fashion Week | The brand revivalists

Amongst the most anticipated collections this season in Paris were the debuts by new designers at the helm of established brands -- Stuart Vevers for Loewe, Estaban Cortazar for Ungaro, and Alessandra Facchinetti  for Valentino. Each brand has faced its own unique challenges in finding the right creative spark to sustain brand awareness and business performance.

While many fashion companies are practically clambouring to establish a presence and gain legitimacy in the lucrative leather goods category, Loewe has a long, rich history in beautifully-crafted leather goods, including a strong link to the  Spanish Royal family. But despite its enviable heritage and high quality, Loewe has had a hard time breaking into the younger fashion mainstream. Enter Stuart Vevers, who has a luxury heritage all his own, with stints at Louis Vuitton and most recently at Mulberry, where he helped put the British brand on the global fashion map.

Valentino | The last word

On the eve of his final couture show held in Paris on Wednesday, Valentino Garavani was telling Italian newspapers that business is ruining the fashion industry and that he wished he had had time to groom a successor before retiring.

Earlier this year, Permira, the private equity company, won a battle with The Carlyle Group for control of the Valentino business, which at the time was split up amongst several shareholders who had aligned themselves with different investors, leading to a down-to-the-wire battle for the venerable Italian fashion house. This may explain why Mr Valentino chose to use particularly strong language to describe the state of the fashion industry, telling Italy's Messagero newspaper that:

"The world of fashion has now been ruined. I got rather bored of continuing in a world which doesn't say anything to me. There is little creativity and too much business. The young are all doing the same things."    

Links: Giancarlo Giametti Q&A, Andre J and BoF Publishing

On the Runway: Q&A with Giancarlo Giametti
In a fascinating behind-the-scenes look into the evolution of Valentino's business over the past 45 years, his business partner Giancarlo Giametti provides his candid thoughts in a frank exchange with Cathy Horyn. He lambastes financial investors for thinking they can profit from the industry without understanding and respecting its creativity, admits to the over-eager (but lucrative) licensing period in the 80s, and provides a history of the various suitors and owners of Valentino over the years.

New York Times: A Cover Girl Who's Simply Himself
We first came across Andre J. on Malcolm Harris' Cut Sew and Blog which was featured on the Business of Fashion in September. Andre had been selected by Cut, Sew and Blog's community as the face of Mal Sirrah's collection for S/S 2008. Then, Andre J appeared on the cover of French Vogue in November and now, in this article from Guy Trebay, we learn how all of this came to happen.

Business of Fashion:  In the Financial Times, Style.com and JC Report
We have started publishing articles in other important publications. Our first article for the Financial Times on Italian investors in fashion has finally been published online along with the rest of the FT's superb Business of Fashion supplement. We also shared a little tidbit about Daniel Craig's disappearing act at the Walpole Awards with men.style.com. Stay tuned for upcoming articles in the December issue of L'Officiel India, a curated tour of new Fashion 2.0 sites in JC Report later this week, and our lowdown on how luxury companies should think about Web 2.0 in the next FT Business of Fashion supplement.

Photoclip courtesy of New York Times. Andre J/Carolyn Murphy cover courtesy of Paris Vogue.

Breaking News: Facchinetti to replace Valentino

Worried.

That's what I would be if I was an investor in the Valentino business. Today, Alessandra Facchinetti was tapped to take over from Valentino when he steps down after the January 2008 couture shows.

Not only has Valentino Fashion Group lost the star designer behind the Valentino brand (apparently after coming close to signing a 3 year contract extension with him), but they have also chosen a replacement who has already failed once at taking over from another star designer, Tom Ford, after those halcyon Gucci days of the late 1990's.

Even though their aesthetics are very different, Ford and Valentino have much in common, and this is what creates uncertainty in my mind about Permira's choice. Valentino, like Ford, was known for his personality, creative vision and showmanship, partnering closely with his business partner Giancarlo Giammetti (like Tom Ford's Domenico De Sole) to allow him to focus on his creativity. They both personified their brands in every way. Ms. Facchinetti does not appear to have these traits, given what we saw during her short tenure at Gucci.

Will she be able to schmooze the celebrities, royalty and fashion press with the flair of Valentino? Will she be able to keep the Valentino flame alive? It remains to be seen, but my hopes are not high.

Breaking news: Valentino is calling it quits

Following his blowout 3-day fashion fiesta in Rome earlier this summer, WWD is reporting today that Valentino and his longtime business partner, Giancarlo Giammetti, will both step down from their positions at Valentino after this season. Finally, the fashion industry's rampant speculation about Valentino's future role in the post-Permira world will come to an end. But, this will only make more room for the other question on everyone's lips: Who will replace Mr. Valentino?

Zac Posen and the designers behind Proenza Schouler (which was recently injected with $3.7m of funding from Valentino Fashion Group) are amongst the names being tossed around. Over at Fashion Inc the money is on Proenza Schouler. Others are saying that Alessandra Fachinetti, the former womenswear designer at Gucci, is at the front of the pack.

Valentino: The end of new beginnings?

Many column inches and much screenspace has been dedicated to Valentino over the past few weeks. The Business of Fashion has been no exception to this trend. What with the acquisition of Valentino by Permira, the celebration of Valentino's 45th anniversary at the helm of his eponymous label in Rome last weekend, and the announcement of a 45% investment in Proenza Schouler by Valentino Fashion Group this past week, there has been much to write about -- or, more specifically, to speculate on.

Will Valentino continue to design for his label or was this party the beginning of the end? How well will Permira be able to manage Valentino, their first investment in luxury fashion? What will Permira do with the tiny Proenza Schouler business which they snapped up for what seems to be a low valuation? Who will replace Valentino when he goes -- will it be the Proenza Schouler boys or will it be Zac Posen, who was sitting in the front row in Rome along with other designers with careers longer and reputations much larger than his? Is there any meaning behind 45 years of Valentino and the 45% investment stake in Proenza Schouler? So many questions.

Valentino: Fashioning change from private equity

This week's Economist ominously warns of "The Trouble with Private Equity" at a time when many in the fashion world are wondering how the infusion of private capital will impact their industry. In the last month alone, La Perla, Samsonite and Valentino have all been snapped up by private equity funds. Just today, The Sunday Times broke the news that Prada has also been in talks with private investors. (Not surprisingly, Prada has denied these reports, but it is not hard to see why this would be a natural option for Patrizio Bertelli, especially given several failed attempts at taking Prada public.)

The recent investment exuberance around fashion brands is a dramatic departure from the stance that many professional investors took even just a few years ago. Back then, they said there was too much "fashion" risk and that without predictable and stable revenue streams, their highly-leveraged (heavy on debt, light on equity) investment strategies were untenable. Now, with more and more money fighting for fewer investment opportunities, it seems much of this wisdom has been thrown out the window.