“These companies are nicely profitable from early on. This makes it possible for the big groups to get involved even at an early stage without having to micromanage them.”
“We’re selling you a dream in a way,” Mallevays says about packaging old labels for sale. “Sleeping Beauties can be hugely attractive for the right group—the right brand can get up to scale very quickly and successfully.”
“I don’t see private equity or hedge funds backing (a Ghesquière) brand, because of time horizon and fashion risk,” said Pierre Mallevays of the London investment bank Savigny Partners.
“Major fashion talents can truly have a transformational impact on brands,” Pierre Mallevays continued, citing as examples Alber Elbaz and Phoebe Philo, who respectively catapulted Lanvin and Celine to critical and commercial success.
Pierre Mallevays, managing partner at London-based Savigny Partners LLP, which is advising Luvanis in its brand-revival model and was involved with both the Vionnet and Moynat deals, said dormant brands could be of interest to multiple players, except private equity.
Pierre Mallevays, managing partner of Savigny Partners said “There is a lot of appetite for deals, particularly from China, but often with a very narrow scope and specific requirements.”
Pierre Mallevays, a former head of M&A at LVMH, who now runs boutique advisory firm Savigny Partners, says much of Hermès’s current success is down to the “brand vision” of Jean-Louis Dumas who took the helm in the late 70s.
A lack of scale or expertise limits smaller companies’ ability to build brand recognition and tap demand in Asia and may lead some to seek alternative paths to growth, said Pierre Mallevays [...]
[...] Pierre Mallevays said: “A brand like Cardin does not increase (in value) like a normal brand because it is entirely based on licence revenues.”
Pierre Mallevays, a former LVMH executive who founded the boutique investment advisory Savigny Partners, says it could be worth about four times sales, but it’s not clear how much sales are.
Pierre Mallevays [...]: “There is no other industry where the pressure is so prevalent and relentless – not just for the show but most importantly for the multiple seasonal deliveries. ” [...]
Pierre Mallevays [...] says: “During the crisis, all the big luxury groups were heavily restructuring. [...] Now, they’re in the happy situation of having a lean cost base while sales go through the roof.”
[...] The way to go for apparel brands, said William Plane, is to reduce seasonality, in other words to come up with up to six collections a year, including pre-collections and inter-seasonal collections.
“You simply have more and more people that are less involved in the business, and who might prefer to have cash rather than illiquid shares,” Mallevays said. “The real danger is the danger from within.”
Pierre Mallevays [...] noted that some luxury brands – Louis Vuitton, Hermès and Chanel, to name a few – have not only managed to withstand the downturn, but have actually increased market share in recent years.
Mr Mallevays, who sold French high fashion house Lanvin to such an investor last year, says the new type of investor is a European who has made money elsewhere but is someone who has an “emotional response” to brands and is comfortable with the long-term appreciation of the luxury sector.
Pierre Mallevays, managing partner, Savigny Partners, London, a boutique investment bank specializing in luxury goods: “The crisis has changed the definition of ‘value’. That was a dirty word in the luxury goods circle before the downturn, just like ‘mass’. Now the luxury customer wants value as in investment value.
“Alle haben zu kämpfen, am meisten aber jene, die sich auf modische Produkte konzentrieren. Was dagegen als zeitlos und klassisch gilt, zieht sich besser aus der Affäre”, sagt Pierre Mallevays, der mit seiner Londoner Gesellschaft Savigny Partners Luxusunternehmen berät.
Fashion companies are either looking to take out burdensome debt, fund expansion of their retail networks or provide liquidity to a part of their investor base that needs cash, said Pierre Mallevays.
‘There is a drive towards timeless, very high-end brands,’ said Pierre Mallevays, a partner at Savigny Partners, an investment banking boutique in London. ‘If you buy a Louis Vuitton bag, you know that it will not lose much value. But if you buy a weaker brand, you are not so sure.’
The financial crisis will end sellers’ hopes of a return to valuations of a year ago, said Pierre Mallevays, managing partner at luxury investment bank boutique Savigny Partners.
Pierre Mallevays, managing partner at London-based Savigny Partners, said the credit crunch has finally pushed potential sellers to have realistic expectations. It will do a lot of good to the M&A market in luxury and branded goods, he said.
Groups like LVMH are not leveraged and still have appetite for acquisitions.
Pierre Mallevays believes that while the current economic uncertainty may or may not be affecting demand for luxury goods, depending on the particular product and its markets, major French acquirers are certainly being more circumspect.
Owning a fashion house, says Pierre Mallevays, managing partner of Savigny Partners advisory firm in London, is like owning a piece of art. There is clearly a glamour factor.
Pierre Mallevays said “Where the British were very good traditionally was in their own production and their own manufacturing. Once you start dismantling that by selling factories you sell your soul.”
WWD has learned that Lacroix, owned by Florida-based Falic Group, has engaged London-based Savigny Partners LLP to explore the possibility of a minority investor to accelerate the fashion company’s expansion.
Pierre Mallevays said management was doing a great job on products, but that some improvement was needed in the design and ambience of Jaeger stores. Products and image keep getting better, he said.
“There is a big difference, and disconnect, between how Tommy Hilfiger is perceived in the U.S. versus Europe”, said Pierre Mallevays, the founder and managing partner of Savigny Partners LLP, a luxury good advisory and mergers and acquisitions firm in London.
Pierre Mallevays, managing partner of Savigny Partners: “Both are equally important, but I also think it depends on the stage the company is at. Sometimes, a company needs a creative spur, and other times it needs to get organized under good management.
Duties on luxury products, such a watches, can be as high as 60 per cent plus state taxes and value-added tax, making them uncompetitive against overseas prices, according to research by retail advisory firm Savigny Partners.
The worldwide luxury market is estimated to be worth $200 billion, and is expected to grow by 10 percent in 2007, according to Pierre Mallevays, managing director of Savigny Partners LLP, a corporate finance and mergers and acquisitions firm in London.
“Entertainment people who are investing in fashion do it with their investment-business hat on, and it definitely helps if they have leverage over the media to increase the visibility of the brand,” said Pierre Mallevays, founder and managing partner of Savigny Partners
“There is no clearly defined investors’ universe for new designer brands,” said Pierre Mallevays, founder and managing partner of Savigny Partners. “Luxury conglomerates need to focus on their big brands, private equity funds want established businesses and most hedge funds want sizeable deals.
In the early days of the Internet boom, luxury brands feared online selling would undermine the exclusivity of a dedicated brand environment, said Pierre Mallevays. “All those fears are pretty much dissipated by now” he said. “The Internet channel is effectively turning into the best or one of the best stores in each local market.”
The 15-year-old company said Friday that as part of an effort to further expand the label, it has sold a majority stake to Marc Fisher LLC, a Greenwich, Conn.-based footwear firm headed by Marc Fisher.
One of the key features of private equity is they’re able to apply focus and professional management to their investments,” said Pierre Mallevays, managing director of Savigny Partners LLP. If you have a large group, there will often be isolated assets that get less attention from senior management.