WWD.com November 26,2012
PARIS — Will Nicolas Ghesquière find a backer and strike out on his own with a signature label, or wait for the right fashion house to rev up?
The designer — who is to officially exit Balenciaga on Nov. 30 after an acclaimed 15-year tenure at the Paris house — is bound to weigh several options, observers said.
“There will be a lot of brand owners who will be scratching their heads wondering how they can attract him,” said Pierre Mallevays, managing partner of Savigny Partners, a London-based boutique investment bank specializing in luxury goods. “Major fashion talents can truly have a transformational impact on brands,” he continued, citing as examples Alber Elbaz and Phoebe Philo, who respectively catapulted Lanvin and Celine to critical and commercial success.
As for the possibility of finding a fund to mount a signature fashion house, Mallevays downplayed that likelihood.
“I don’t see private equity or hedge funds backing (a Ghesquière) brand, because of time horizon and fashion risk,” he said, pegging the required investment for such a high-end designer brand at around 50 million euros, or $63.7 million at current exchange, over five years — with no guarantee of immediate financial return. “Only a strong group with a confident vision and the means to boot would seriously contemplate that. The temptation for any such potential backer will be to try to apply Ghesquière’s talent to an established brand with operating leverage, not just to a start-up, however prestigious.”
Luxury titan Bernard Arnault, chairman and chief executive officer of LVMH Moët Hennessy Louis Vuitton, is said to be keeping close tabs on the hot French designer, having courted him aggressively last year as a possible successor to John Galliano at Christian Dior.
Contact between LVMH and Ghesquière dates back at least a decade, including a long-ago proposition for him to become Givenchy’s couturier, a Paris-based source said.
According to another source familiar with the luxury empire, building a signature fashion house for Ghesquière is seen as a less favorable option than plugging the star talent into one of Arnault’s galaxy of global brands, which include the likes of Louis Vuitton, Fendi and Celine.
Indeed, one of the few times Arnault launched a fashion brand from scratch was in 1987, when he launched a couture house for Christian Lacroix, eventually off-loading the troubled firm in 2005 to Falic Group, the Florida-based travel retail firm.
LVMH officials declined all comment, and Ghesquière could not be reached for comment.
Stefano Corneliani, senior analyst at Intermonte SIM in Milan, agreed that designer start-ups are a rarity in today’s climate.
“The market is overcrowded, and one in a thousand succeeds. To build a business from a designer name doesn’t work — it’s the other way around. You invent a business proposition, then you tap a designer,” he said, citing Geox and Tod’s as examples — where designers are not even paramount. “You start with an idea, such as the breathable shoe for Geox and the formal casual designs for Tod’s, and back that up with strong marketing and media communication,” he explained.
Corneliani noted that “Cyclopean investments are needed the smaller you are, and you are lucky if you break even in five or 10 years.”
He noted that Ghesquière could work for a typical Italian brand that would want to become more international, pointing to Hogan and its recent collaborations with Karl Lagerfeld as an example.
Sources close to Ghesquière said he intends to take some time off, though he has already been approached regarding several projects, some of an artistic nature. He is said to be seriously considering mounting a signature brand, while remaining open to opportunities working for another couture name.
Karine Ohana, a managing partner at boutique mergers and acquisitions firm Ohana & Co. in Paris, agreed private equity would be a remote possibility for Ghesquière given the importance of deal size and exit strategies for such funds.
“I believe only private investors that have a good trust and understanding with the designer can back such a lifetime project,” she said, noting that Tom Ford has a private family among his backers, and Proenza Schouler is “beautifully developing through a private fund as well.” (In July 2011, Proenza Schouler disclosed a partnership with a group of 20 investors led by financier John Howard and Andrew Rosen, the Theory founder and co-ceo who’s known for nurturing emerging talent.)
As for Ghesquière, Ohana said he has attained international renown and “stands among the most talented and reputed worldwide fashion designers today….He is probably perceived as one of the very few who are perpetuating the French couture image, glamour and know-how, in line with Dior, Chanel, Yves Saint Laurent and Lanvin.”
Executive search professionals agreed designers of Ghesquière’s stature rarely come onto the job market.
“I would expect that if Nicholas Ghesquière wasn’t already in talks with or committed to another brand at his departure from Balenciaga, there would be some brands or backers lining up to court him. I say ‘some’ because only a heavyweight with pull and power would have the confidence and seductiveness to even approach him,” said Mary Gallagher, European associate for New York-based search firm Martens & Heads. “Over the years, he has become as legendary as (Balenciaga founder) Cristóbal himself and would imbue star power to a brand.”
Gallagher spied few openings at present that would match the scale of Ghesquière’s talent — and likely his demands. “But with certain brands we’ve seen how someone’s sudden availability can force a situation,” she said, alluding to Raf Simons landing as Galliano’s successor at Dior not long after he was ousted from Jil Sander. “And, depending on when a creative director’s contract is up for renewal, Ghesquière could be on deck for a maison.”
To be sure, several of Ghesquière’s designer peers are keen to see him back in action.
Told about speculation that the designer could mount his own brand, Lagerfeld told WWD he thought it was “not a bad idea,” suggesting it might be time to stop reheating heritage brands and create some new fashion houses.
Elbaz said it “makes him sad” to see “someone so talented” on the sidelines. “It was always Balenciaga, but he always made it himself, too,” he enthused.
Elbaz noted, however, that it is not uncommon today for designers to take a hiatus from design, as has been the case in recent years for Philo, Jil Sander, Hedi Slimane and Veronique Branquinho, to name but a few. Slimane, for example, after exiting Dior Homme, spent five years devoted to photography before taking up the role of creative director of YSL earlier this year.
After being ousted as the designer of Yves Saint Laurent Rive Gauche women’s ready-to-wear in 2000, Elbaz took an extended break (besides one turbulent season for Krizia Top in Milan) before landing at Lanvin.