Crisis deepens at loss-making fashion house Lanvin

The crisis facing France's oldest fashion brand Lanvin is deepening, with sales slumping, losses set to widen this year and staff worried about a strategy focussed on cost cutting, sources with knowledge of the situation told Reuters.

Founded in 1889, Lanvin is one of France's last major independent fashion labels in an industry dominated by multi-brand groups such as LVMH and Kering .

It has been in turmoil since the shock sacking in 2015 of star designer Alber Elbaz after a boardroom dispute. Elbaz was widely credited with infusing new life into the brand and being its driving force.

Designer Bouchra Jarrar, appointed in March 2016, has brought a more strict, tailored style that is very different from Elbaz's often ultra-feminine silhouettes, and the new approach has so far failed to lift sales, the sources said.

"The first collection went very badly, the second did not do better," one said, speaking on condition of anonymity because the company has not published figures.

Another source with access to the company's results said sales fell 23 percent last year to 162 million euros ($182 million). At their peak in 2012, they were 235 million euros.

Sales slumped a further 32 percent in the first two months of 2017, the source added, in contrast to strong performances at luxury rivals such as LVMH's Louis Vuitton and Kering's Gucci.

As a result, Lanvin fell into net loss of 18.3 million euros last year, its first in nearly a decade, from a profit of 6.3 million in 2015. The loss is seen widening to 27 million euros in 2017, the source said.

Lanvin and Jarrar did not respond to requests for comment.

The company, which currently has nearly 300 staff in France, has appointed advisory firm Long Term Partners to conduct an audit and has been cutting costs as a result, closing several non-profitable stores, the sources said.
The programme will reduce advertising spending and store investments, and a plan to lay off nine people is under way too, with more cuts in the pipeline for 2017, they added.

But some employees are leaving and the company faces a challenge to retain talent, the sources said.
Management wants to create a leather goods line for fashion outlets, but some industry specialists said using what are often cheaper, discount stores could damage Lanvin's luxury image.

"A jewel of the French fashion industry is under threat and staff are running out of patience," one of the sources said.

Controlling shareholder, 75-year-old Chinese media magnate Shaw-Lan Wang who is based in Taiwan, has been reluctant to invest in the brand for many years.

She would not let her associate Swiss investor Ralph Bartel, who owns 25 percent of Lanvin, inject more cash into the business to support the brand as it would dilute her stake, sources have said.

"He disagrees with the options chosen by the management and wants an urgent change in strategy," one source said of Bartel.

Wang and Bartel could not be reached for comment.