Pierre-André Cauche of IKKS: "Premiumisation must strike a balance"
IKKS has recently embarked on a major internal transformation, affecting both its organisation and its collections, part and parcel of an ambitious expansion programme. The label, now owned by the LBO France investment fund, went through a troubled 2016 fiscal year, causing alarm among analysts. But as its CEO Pierre-André Cauche explained to FashionNetwork, IKKS is now set on a steady course.
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FashionNetwork.com: On 3rd May you staged an IKKS childrenswear show celebrating the label's 30th anniversary. What was the event's main message?
Pierre-André Cauche (IKKS): We took advantage of an agreement between all of Europe's IKKS childrenswear stores to kickstart the celebrations for the label's 30th anniversary. The children's line was the first we created, ahead of the womenswear line, which was launched in 1999. It gives us the opportunity to highlight our exclusive positioning on the children's market. Our brand identity is strong on design, and we have introduced a retail concept which is replicated in 220 stores, an exceptional achievement in the premium segment. In the autumn, we will present our anniversary collection, supported by strong advertising of course, notably with interactive tools, and we will also launch a new retail approach, testing it in a laboratory store.
FNW: About a year ago, in another interview, you mentioned the launch of a new premiumisation strategy for the label, with a more "distinctive" style heralding a new era, one that is "more marketing-focused". What stage have you reached today in this transformation?
Pierre-André Cauche: We are gradually fine-tuning our global strategy. We are working with several consultancy firms, which help us redefine our brand identity. When a company grows at the same rate we did in the last few years, there is always the risk of the brand image being watered down. We have joined forces with the Martine Leherpeur agency, working with them on a more inspirational brand image, on which our future institutional advertising is based.
Within this global approach, we are also working on what I would call tactical aspects. Premiumisation is one of them. It is something for which some sort of balance must be struck. Let's say we have already learned some lessons. Introducing high-end items, with a greater added value, is something that works well with certain product types, and not at all with others. It was well received on larger items, for example on embroidered jackets, and also on high-tech overcoats. And while we can be a bit more daring on dresses and shirts too, this won’t work on T-shirts and denim apparel. We are trying to find the right recipe, but many markets clearly aren't ready to pay higher prices yet.
FNW: Did you struggle with womenswear in 2016?
PAC: Well, 75% of our revenue is generated in France, and it is no secret that the market there was very stressed in 2016, across all segments but especially for women's ready-to-wear. As I said, the changes to our collections have enjoyed a mixed reception: a positive one in areas we identified as growth potential, while loyal clients found them disruptive. We didn't take these differences sufficiently into account and, in as complicated a juncture as the current one, it wasn't a good idea to unsettle clients, it would have been better to reassure them. So yes, we have underperformed compared to the womenswear market, and we are revising the timing and the collocation of the innovations we are planning to introduce.
FNW: IKKS's performance has attracted the attention of the financial press.
PAC: Since we were bought by LBO in 2014, the only perspective from which we have been examined is that of EBITDA figures. A short while ago EBITDA was 20%, and this was exceptional. Indeed, it fell in 2016, down to 13.5%, and frankly this too is an exceptional level. But we have suffered from a combination of like-for-like revenue decline and major investment expenditure, especially on our retail network. This scissor effect was particularly unpleasant in 2016. This is why we have been disparaged by the financial press. The same press that used to criticise the SMCP group's EBITDA shortfall two years ago, and is now extolling them. My own assessment is that, thanks to the transformation we have initiated, we will be better equipped for the future.
The full inteview with Pierre-André Cauche is available on FashionNetwork Premium.
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