Hermes and Gaultier : Mo’ Money Mo’ Problems?
Hermès announced on Friday that it started talks to sell its 45% stake in the Jean Paul Gaultier fashion house. Hermès has already received expressions of interest from several international luxury firms that develop global brands, and from non-luxury Asian firms that know the region, for its holding in the Gaultier brand, which has been recovering from a sharp drop in sales after the financial crisis hurt its bottom line.
Jean Paul is looking to raise capital to develop his ready-to-wear line more aggressively in Asia and North America, and Hermès would only sell shares to a partner who would agree to such a strategy, according to Damien Bachelot, president of Aforge, a French mergers and acquisitions firm that manages financial transactions for the designer. JPG may also seek to raise additional capital separately; he doesn’t want to sell, but on the other hand he wants to have a partner.
No option is closed, despite a 19% slump in Gaultier sales in 2009, which rebounded last year.
Christelle Denef, a spokeswoman for Hermès, declined to comment, but said the announcement did not necessarily mean the company would sell its entire stake. Jelka Music, a spokeswoman for Gaultier, declared that they are aware that Hermès has been approached, but it is too early to say what will happen.
Jean-Louis Dumas, the former patriarch of Hermès, recruited Jean Paul, who had a reputation as the bad boy of fashion, in 2003 to design ready-to-wear collections. While Gaultier brought buzz to the house, Hermès never built it into a hard-charging high-fashion group that would take on the likes of Gucci, owned by PPR, or Christian Dior, owned by LVMH. In fact, the LVMH chairman, Bernard Arnault, passed over JPG and hired the British designer John Galliano to revitalize the Dior fashion house 15 years ago. Soon after, JPG began to self-finance his own line. LVMH, which has aggravated the Hermès family by taking a stealth 20% stake in the company, is not interested in buying Hermès shares in Gaultier. Gaultier’s seven-year honeymoon with Hermès faded after Mr. Dumas’ death last May. Two months later, the designer ceded his role and was eventually replaced by Christophe Lemaire, who had been designing for Lacoste since 2000. Hermès bought 35% of the Gaultier brand in 1999 for $23 million, and took another 10% share from the designer in 2008 for about 3 million euros. The Gaultier fashion house gets most of its revenue from ready-to-wear licenses and perfumes, and to a lesser extent, from sales of accessories.
The announcement comes amid the changing makeup of the luxury industry.