The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
PARIS, France — For chief executive Francesca Bellettini, the key to managing a business like Yves Saint Laurent — easily the fastest growing major luxury fashion brand in recent years — is balance. Indeed, the brand's revenue is fairly evenly spread across product categories, nationalities, geographies and channels.
The strategy is clearly paying off. Last Thursday, the brand once again reported double-digit revenue growth. In the first quarter of 2016, sales at YSL were up 26.5 percent year on year on a constant exchange basis, hitting 269.3 million euros and making it the star performer in parent company Kering's luxury portfolio. But as Bellettini knows well from her time at fellow billion-euro brand Bottega Veneta, which is now struggling to maintain momentum (over the same period, Bottega Veneta revenues contracted by 8.3 percent), it can be difficult to sustain rapid growth once a brand reaches this scale.
What's more, Yves Saint Laurent recently lost Hedi Slimane, its star designer who spearheaded a complete overhaul of the brand when he joined in 2012 as the company's creative and image director, helping to turn Saint Laurent into a commercial juggernaut with an aesthetic revamp and a product strategy focused on creating perennial icons, including its best-selling leather jackets and jodhpur boots.
While Bellettini declined to discuss the reasons for Slimane's departure, it is understood that the company failed to agree new terms to renew Slimane's contract, which expired at the end of March and, earlier this month, Yves Saint Laurent appointed Anthony Vaccarello as the brand's new creative director. (Previously, Vaccarello was the creative director of Versace's Versus brand, as well as the designer of his own namesake womenswear collection, but going forward, the designer will focus solely on Saint Laurent.)
What you can expect from now is an evolution. The brand is established, the codes are established and the DNA is understood.
Some industry observers have wondered whether Vaccarello, a relative newcomer to the top table of luxury megabrands, will be able to fill the enormous shoes left empty by Slimane. Others believe the departing designer has left behind such a strong template in terms of branding, product strategy and retail concept that the business is well positioned for the foreseeable future. (This has certainly been the case at Dior Homme, another brand revolutionised by Slimane, which is still performing well under the direction of his former assistant, Kris van Assche, who has adhered fairly closely to the formula put in place by Slimane.)
BoF's Imran Amed sat down with Francesca Bellettini to learn more about the strategy behind Saint Laurent's success and how the company plans to maintain momentum in the post-Hedi Slimane era.
BoF: You’re a great proponent of balanced growth. Why is this such an important part of your business approach?
FB: Saint Laurent is never too skewed vis-à-vis anything — vis-à-vis a product category, vis-à-vis a channel — because we really believe in balance. It's part of the DNA of the brand. We are a French couture house. We are the only French couture house to be relevant in both men's and womenswear. Since the start, Monsieur Saint Laurent found nothing extraordinary in seeing a man and a woman wearing the same clothes. In the end, it's not the same clothes, but just to say that both genders are equally important.
There are not that many brands that have such a balance in their DNA . I think the solidity of the business and that, in addition to a growth in revenues, we are now also posting growth in profitability, is due to the fact that we really stay focused on balance.
BoF: How does this balance manifest itself in practice?
FB: It is important to look at the figures by geography, but it's even more important to look at sales by nationality. Today we have 143 stores, quite well distributed by geography. What makes me particularly proud is that we also have a balanced business by nationality. Just over 15 percent of our clients are European, about 20 percent are Chinese, 20 percent are Asian, almost 15 percent are Japanese, 17 percent are American, and the rest come from all over the world.
So it’s not only that the business is proportionate and balanced by geography, but also, the people who spend in our store — either in their local market or abroad — are quite balanced. In these [past] years, business with local clients has been the real focus. If you are appealing as a brand to the client in the local market, then they will also shop the brand abroad.
For us in the industry, when you see a product season after season it becomes something that you have already seen. But this is the way to build icons.
The way clients approach a brand is very different when they are at home, [compared] to when they are travelling. Sometimes they are also different clients. We have the typical opportunistic shoppers that speculate on exchange rates and on strength, but when you are relevant for clients in their market, then they recognise you both in their market and when they travel. This is why, when you have a focus on your local clientele and the business with the locals, which then transforms to business with tourists when they travel.
We are also quite balanced in terms of business by channel. Our revenues are split about 65 percent retail, 30 percent wholesale and another 5 percent comes from royalties. We are not a brand that aspires to be 100 percent retail and direct, because I believe that wholesale channels, when managed [properly], are incredibly healthy. Moreover, a lot of local clients have very solid relationships with key wholesalers in their markets, and it’s totally fine by me that they prefer to shop at their premises, as long as we establish a very good relationship with those partners and we’re able to offer a Saint Laurent experience together with them.
BoF: Even with a balanced approach, retail has been a key driver of growth. How are you thinking about future retail openings in a challenging macro environment?
FB: From February 2016, we are now [turning] over more than 1 billion euros on a 12-month rolling basis. Usually, when you have brands of this size, their retail network is about 200 stores worldwide. If you look at Saint Laurent, we have 143 stores. This tells you a lot about how we approach the channel. Our first goal for our stores is that they are profitable. I cannot go to Mr Pinault [chairman and chief executive of Kering] and ask for [capital expenditure] if I cannot show that the stores I have are profitable.
Since 2011, we have added about 20 stores per year in order to have a flagship in every capital city of the world. We closed the stores that were not performing and opened new ones that were better located or a better size.
Going forward, our strategy is not to have 50 or 100 stores in China, but clearly over the next few years we could go from 15 stores to about 25 stores, when the right opportunities come up, as well as continuing to open stores in Japan where we only have 25 stores and only one flagship. We have, in the plans, the opening of a second flagship in Tokyo.
So again, step by step, making sure that whenever we approach a city or a new market, we don’t go with any decision pre-taken, but we approach it with a very open mind — a strategic mind — looking at what makes sense. Where? Which location? How big? This quarter, we opened our first store in an airport in Singapore. Doing travel retail, approached either on a wholesale or a retail basis, is also an incredible opportunity.
When you look at all that, I feel very confident [about] the future, because no matter what is happening in terms of the macroeconomic environment, there are still a lot of opportunities that even on a local basis can be organically grabbed.
BoF: It strikes me that merchandising — a really product-focused approach — has been another one of the pillars of the success of Saint Laurent. Some editors may have found it a bit boring, but the buyers were very excited about it. Can you speak to that strategy?
FB: You might call it merchandising, but in reality it's knowing your industry. For every luxury brand, about 70 percent of the clients are new every year, because we are in an aspirational business.
Of course, for us in the industry, when you see a product season after season it becomes something that you have already seen. But this is the way to build icons. A product that you repeat in the collections, that has contact with your DNA, that has been part of your history — it's this kind of product that clients recognise as more successful within your collection. There has to be an understanding from all the functions in the company of what you’re talking about, starting from the creative function, the merchandising function, the production — everybody.
What I think we have been able to do in the past four years is, again, to create a balanced portfolio. A strong ready-to-wear collection that is half women’s, half men’s, representing 25 percent of total revenues. You hear some people saying that our consumers approached brands starting from a wallet. It’s not true for Saint Laurent.
In the past, we have had a very successful shoe collection (now about 15 percent of revenues) and a very successful leather goods collection (now representing 50 percent of revenues), but nowadays I see that the consumer approaches Saint Laurent from every product category depending on what they want. Why? Because in each and every one of them, we offer a balanced collection, from entry level to higher price points, and from different occasions and views. You need to take a position sometimes and you also need to give consumers things they don’t even know that they want.
At the end of the day, what makes a product successful is that people decide they want to buy it. And, if you think that 70 percent of clients are new every year, it takes time before everybody has understood that this is a good product for your brand. You need to be careful of not entering into this stress and anxiety of having to change and having to do everything new, every season, because half of the people haven’t even had the time to look at it and to experience it. It’s a cascade. First it’s for the people of the industry and then it’s for the people that look at the industry. For me, this is a balance between creativity, merchandising and business.
Mr Saint Laurent himself said in the 1970s, “Why should we change a product when it’s already perfect?” So, those people who were criticising the fact that some of our products were recurring and that we had a permanent collection probably didn’t remember that it was actually part of the DNA of the brand.
BoF: That brings me to what is a time of great change at Saint Laurent, with the recent departure of Hedi Slimane and the arrival of Anthony Vaccarello. Why is this change happening now and what we can expect under Mr Vaccarello?
FB: Well, Anthony will shortly speak for himself with his first collection and I think that will be the number one, biggest response.
What has been done by the company with Hedi since 2012 was to bring back into the brand a sense of modernity, content, that youth spirit, bringing clarity to the brand strategy and the brand DNA, to be relevant for today. This is why the acceleration has been so big.
It's the same thing that was done in 1966. The brand was born in 1961 and then in 1966, Mr Saint Laurent created the pret-à-porter collection with Saint Laurent Rive Gauche to dress the street.
If you look at the panorama of our industry after the crisis of 2009, a lot of brands started to talk about content, artisanal content and our industry. I don't want to say it became a little bit boring, but sometimes it became a little bit heavy. I mean, you had to think before buying a luxury product. I think the biggest success of what was done at Saint Laurent was to bring back a little bit of coolness, easiness, freshness — not only to Saint Laurent, but to the whole industry. It also gave courage for other brands to not only talk about the content of product, which in my view is something that people should get for granted when shopping for luxury, but to bring back the fun, the product that you want to wear everyday, the product that makes you happy, that makes you look younger, that makes you look happier and more successful.
So, what you can expect from now on is an evolution. The brand is established, the codes are very well established, and the brand DNA is finally understood.
BoF: There have been some questions about the new branding brought in by Hedi Slimane, however, and its future under Vaccarrello. Will that continue going forward?
FB: This rebranding was done to bring clarity to the brand, not for disrespect or an irreverent approach. It was done because Yves Saint Laurent is the name of our founder and our maison is called Maison Yves Saint Laurent. That has always been and will always be.
In 1966, when the prêt-a-porter collection was launched, there was also the haute couture, so Mr Saint Laurent decided to launch it under a different brand name that was Saint Laurent Rive Gauche. Nowadays (and also in 2012), we don't do haute couture, so we rebranded our prêt-a-porter with Saint Laurent Paris, using Paris and not Rive Gauche, because Paris is a much more international concept nowadays.
This had to be done, because I think consumers were a little bit confused. The brand went across many periods, the brand had tons of licenses that had nothing to do with what we were doing. Now that is all cleared.
So all of this is set, the house is now well established, the codes are well established, But we are fashion and we need an evolution. The brand will evolve under the creative direction of Anthony, who, like every creative director will be free to express his own creativity and the language of the brand in his own way, while always respecting the DNA of the maison.
BoF: Can we also expect the permanent collection, developed under Hedi Slimane, to continue going forward?
FB: Even today, what you call the permanent collection is something that has been evolving season after season. Remember that when you talk about permanent products, it's really never exactly the same thing, because it's something that evolves.
If you look, some products in our collections are products that existed before Hedi Slimane. So even with the arrival of Hedi Slimane, this product didn’t change. They evolved, they are part of the universe, they remained part of the collection, they still represent a good portion of our sales and we keep them because they make sense. So I can tell you that everything that makes sense will be kept, evolving together with the brand.
Evolution happens without people realising it and then, when you look back four or five years, you see how much has changed. Even if you look at store concept for example and the first store that we opened and the last store that we opened — of course overall they are the same, but in reality, if you had a very careful eye, there has been a super strong evolution in the colours, in the materials, in what we did.
So this is why, from now on, with the brand clearer than before thanks to all the cleaning that has been done, the job Anthony will have to do is a stronger evolution with creative content. What is very important is that every product speaks to the brand, to the DNA of the brand — it has to have that edge that is a combination of couture content and modernity.
BoF: Another thing that has been confusing for some people is what to make of the last collection of Hedi Slimane, shown in what felt like a couture context. What was that collection and how did it fit in to the strategy of the business?
FB: It was the last collection of Hedi, and after what we did in Los Angeles in the Palladium, we felt it didn't make sense to do another big show in Paris and we felt that an intimate approach was more appropriate. It was not an haute couture collection — it's a prêt-a-porter Saint Laurent Paris collection. We simply decided to leave the big stage in LA where, for the first time, we showed men's and women's together. We called women's collection 'Part 1'.
In fact, this collection is called 'Women's Part 2,' and it was a way not to overshadow what was done in LA, but still to give a last relevant message to the house. So it's absolutely not an haute couture collection, we don't do haute couture. We thought that doing it in our premises in Paris was the easiest way to make it coexist with the big show in LA. Another show at Le Carreau du Temple would have been a little bit confusing.
BoF: Looking ahead, as you oversee this quite astounding growth trajectory, what do you think is the biggest challenge facing Yves Saint Laurent in the context of a market that’s shifting, where people are changing their show schedules, people are combining men’s and women’s collection, and people are talking about delivering the product immediately?
FB: The biggest challenge for all of us is to lose a little bit of focus and to go too much behind the trends, instead of thinking about what is relevant the brand. I appreciate and stand behind each and everybody's strategy, as long as it is consistent with what you want to do. There is no dogma, there is no right or wrong. What is important is to make sure that you know what is right for the brand and you listen to your consumer, but at the same time you are also able to drive your consumer to what you think is right.
I think that in a context like this one, where there is a lot of uncertainty, we are performing very well in every market and every product category, but we see what is going on. And one of the reasons why Saint Laurent is performing so well is also because we are catching up — because in reality today we have achieved a size and a profitability that is right for our brand awareness and our brand name, so when you’re catching up, you go faster at the beginning.
So now that we are a big brand, to continue to grow requires a lot of focus and a lot of attention on the principle and on the organic business. The challenge we face the most is not to take an opportunistic approach, not to ride any wave that seems appropriate simply for opportunistic revenue growth.
Being able to partner with the right people and being able to attract the right talent in the brand — for me, this is also a big challenge we’re facing. When you talk about service, nowadays recruiting talent is, I think, the biggest challenge that each of us has. It’s difficult not only to attract them, but to retain them. What would make every brand and every group more successful is if you’re able to keep the talent that you have.
This interview has been edited and condensed.