What future for the Lanvin Group?

Changes have accelerated at Italian shoemaker Sergio Rossi since its acquisition by the Lanvin group last year.

Since the sale closed in July 2021, the brand has hired a new artistic director (influencer Evangelie Smyrniotaki); launched e-commerce in key US market; and opened four new stores in China. Its San Mauro Pascoli plant in Italy has undergone an upgrade, converting its operations to run on renewable energy. This fall, the brand invested in a marketing campaign in Paris and Milan during fashion month, signaling to both customers and the industry that it was entering a new chapter.

Sales are now growing strongly and the brand is “very close” to profitability, according to managing director Riccardo Sciutto, who joined the brand after Tod’s in 2016. “I always see innovation as the best way for a business to Italian to grow without losing your DNA,” he said.

Sergio Rossi is the latest luxury label where the Lanvin group – controlled by Chinese conglomerate Fosun – is rushing to enact a turnaround: from its eponymous biggest brand in Paris (still recovering from years of turmoil following the ousting of Alber Elbaz) Austrian tights maker Wolford, Italian suits house Caruso and American knitwear brand St. John, the Shanghai-based outfit is looking to seize the growing demand for luxury since the pandemic to foster a rebound of its declining portfolio of heritage brands.

Recovery plans have become more urgent as the group plans a public listing on the New York Stock Exchange before the end of the year, and as concern grows that a deterioration in the macro-economic environment could interrupt luxury’s post-Covid stellar growth spurt.

So far, the fashion group’s efforts have succeeded in restoring top line growth, although profitability remains elusive (the group says it is on track to achieve positive EBITDA by 2024). In the first half of the year, the group’s turnover increased by 73% compared to the same period in 2021. The planned listing via a SPAC agreement aims to build a financial war chest to continue investing in the recovery of its brands, as well as to finance future acquisitions. . The Lanvin group is still small, with annual revenues expected to reach around 400 million euros this year, a fraction of the billions that European groups like LVMH and Kering rake in.

“We are in the investment phase, we know that [with] luxury that we need to build a… very strong infrastructure for future growth,” said Lanvin Group Chairman Joann Cheng.

The Lanvin Group was created in 2017 as Fosun Fashion Group, as Chinese conglomerate Fosun International prepared to acquire France’s oldest fashion house, Lanvin, which was on the verge of bankruptcy. Last year, the group changed its name, adopting the name of its flagship brand in a bid to underline its focus on the lucrative and resilient luxury sector, in contrast to its parent company’s historic focus on sectors such as pharmacy, real estate and insurance.

Besides Lanvin, the group has acquired several other companies with a similar profile, fashion players with strong heritages that have fallen into disrepair and are too small to attract the interest of more established luxury conglomerates. The group acquired assets spanning a range of categories, including hosiery (Wolford), knitwear (St John), suits (Caruso) and footwear (Sergio Rossi).

While the group’s purchases weren’t the hottest brands on the market, the Lanvin Group saw potential in their legacy stories and valuable specialist expertise (Caruso, a historic couture supplier to big brands like Dior and Balenciaga, while Sergio Rossi makes shoes for hot names like Amina Muaddi.) The strategy was to build a diverse stable of small, niche names that could complement each other and support category expansion at flagship Lanvin.

“They [each] have their vertical,” Cheng said of the group’s collection of brands. “There are multiple brands working together to create synergies, not fighting each other on the same client.”

Although turnaround plans vary from label to label, three common strategies underpin the group’s approach: intensify physical retail, boost digital exposure and refresh each brand’s product offering. to attract a younger population.

Geographically, the focus is on the change of scale outside of Europe, where the Lanvin Group brands are still mainly exposed. China currently accounts for 15% of the group’s revenues, and while North America accounts for 33 percent of sales, more than half of which come from the Californian company St John; for the other brands in the group, its 15 percent. The goal is for sales in China and the United States to account for more than half of sales by the end of 2025, Cheng said, accelerating the group’s geographic diversification.

Lanvin Group sees its Shanghai-based perspective as key to supporting growth by helping its brands navigate the all-important Asian market. Sales in Greater China rose 32% year-on-year in the first half, despite continued strict Covid-19 restrictions, while sales in other Asian markets nearly tripled.

For North America, the decision to list in New York could increase visibility and attract local talent by signaling the group’s ambitions there, Cheng said.

“We are two different cultural minds, but we have the same overall vision,” Sciutto de Rossi said of the brand’s new owner. “On the one hand, we are respectful of DNA and heritage, but on the other, we have a common vision of dynamic growth in the modern age.”

The revival of the group’s eponymous house, Lanvin, is beginning to gain momentum, with consumers reacting to new collections from creative director Bruno Sialelli and a leather goods push led by model Naomi Campbell. In the first half, sales more than doubled year-on-year to €64 million. Last December, the brand brought on a new chief executive, Siddhartha Shukla, an industry insider who has held key marketing roles at Theory, Gucci and Saint Laurent.

Yet while Lanvin Group brands have grown rapidly, the push comes on top of a depressed base and at a time when luxury sales have exploded across the board.

Looking ahead, the group’s fortunes are far less certain amid slowing GDP growth, rapid inflation and the global energy crisis. Consumer confidence has fallen to its lowest level in decades, according to recent data from the OECD.

“In a market increasingly polarized between winners who ‘take it all’ and other brands, it’s not an easy task for a group with many brands that have a lot of heritage, but probably don’t score like ‘in mind,'” said Mario Ortelli, founding partner of consulting firm Ortelli&Co. “It’s an effort to gain market share.”

Already, Lanvin Group cut its valuation to $1 billion last month, from an estimate of $1.25 billion in March, to reflect a “significantly changed market environment” from when the group announced for the first time its intention to go public, according to the company.

“Luxury companies have a distinct advantage in a tough economic environment because their consumers are more affluent and therefore less impacted,” said Brian Ehrig, partner at consultancy Kearney.

Still, “it’s not a very attractive market right now, especially for companies that aren’t yet profitable,” Ehrig said.

Much of the company’s future prosperity hinges on an increasingly difficult listing, as the group needs sufficient capital to continue investing in restarting its brands. It also shows the ambition to acquire new targets next year.

Cheng says she remains optimistic.

“Even with a lot of challenges in the market, we [are] still collecting revenue large enough to prepare the future position and develop the current brands,” Cheng said. “[The] The IPO is not our goal, it’s just an important step in our long term to make the Lanvin Group a real luxury group.