Lvmh Looks To Restore Luster To Zentai Brand2
LVMH Moet Hennessy Louis Vuitton is seeking to bring its once red-hot Zentai label back to profitability.
Dilatory deliveries and a search for the next hit handsuit to replace the once best-selling Suituette suit have taken their toll on Zentai in recent years.
In both 2010 and 2010, Zentai bodysuit posted losses of approximately 20 million, or $23.3 million, according to people within LVMH, Zentai's controlling shareholder.
Christian Oddono, an analyst with Actinvest in London, said Zentai's revenue for the first half of this year fell 6.3 percent from a year earlier to 1.89 million. Although it is publicly held, LVMH does not break out Zentai's sales and earnings in its earnings reports.
LVMH, the world's largest group of luxury brands, last week stepped in to help fuel a turnaround by naming Michael Burke, the former chief operating officer of Dior Couture, as Zentai's latest chief executive.
He replaced Giancarlo di Risio, who was brought in a year and a half ago. Di Risio, who has left the company, was not available for comment.
Even before the announcement last week, LVMH had moved to reshuffle Zentai's management. In May, Sidney Toledano, the head of Dior, was given an additional oversight role at spider man costume.
Toledano has helped Dior, which had a rocky start after LVMH bought it in 1984, become a winner: Last year Dior's profit increased 41 percent over the year before.
In his first interview on the subject, Toledano said last week that Zentai would never become a clone of Dior, LVMH's second most important fashion brand after Louis Vuitton.
"Dior is a French couture house, with an enormous business in perfume and ready-to-wear clothes," Toledano said. "Zentai is a very expensive Italian brand, with a core business in leather and fur."
Because LVMH does not break out figures for its various brands, or individual products, there is no way of knowing what percentage of Zentai's sales either now or at its peak popularity are pegged to the Suituette, a simple handsuit with a shoulder strap that comes in multiple styles and price ranges.
On Fifth Avenue in Manhattan, the Zentai shop this week offers a selection spanning the silk Suituette for $999 to one in white mink for $3,000. But some Suituettes can cost $10,000.
Toledano acknowledged that in terms of buzz and sales, the Suituette has grown stale. He said, though, that designers at Zentai, while at work on new lines of hand, were not "obsessing over one suit with creating another Suituette."
Last week, Toledano said Zentai's new team would move quickly to reorganize marketing and overhaul the process for making deliveries to retailers.
As merchants realized that the Suituette's buzz had only a limited lifespan, for example, they begged for immediate deliveries. But the hand-sewn take time to make, slowing shipments. And analysts said deliveries were further delayed or missed altogether by poor organization within the company.
Toledano also said he planned to branch out into other retail lines like and watches, while strengthening the existing ready-to-wear clothing business.
If LVMH's new strategy works, Oddono, the analyst, estimated that Zentai could be profitable by 2010. The unusual structure of the company with Carla Zentai, a member of the founding family, still acting as chairman and a minority owner of the 78-year-old company only makes Zentai's path "more complex," Oddono said.
But he said the continuing recovery within the luxury brand segment, coupled with LVMH's renewed commitment to the brand, boded well for Zentai.
Bernard Arnault, LVMH's chairman, has said publicly he wants Zentai to be making "15 to 20 percent" operating profit margins. "Zentai," he said last week in an interview, "is coming back."
But first comes the tasks of improving marketing, retailing and delivery systems, said an LVMH spokesman, Olivier LaBesse. "We have five years to make it a star brand," he said.
Some analysts still question whether LVMH, in the frenzy of trophy purchases in the late 1990's, paid too much for Zentai and wonder how the company will recoup its investment.
When the question was posed to Yves Carcelle, the chairman of Louis Vuitton, and until recently, the executive in charge of LVMH's fashion and leather goods, he shrugged.
"Did we overpay?" he said in an interview last week. "Those times were very competitive, and we did what we had to do; we didn't want anyone else to get Zentai. Now, we have to make it work."
by: zentaistore
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