MADRID, Spain — Many of the world's most legendary luxury brands strike a delicate balance between a strong heritage and a link to contemporary culture and society. In the lucrative market for leather goods, LVMH-owned Loewe, Spain's answer to Hermès, has a long history of beautiful craftsmanship and a strong link to the Spanish royal family. But despite this rich heritage, Loewe has for many years remained a sleeping beauty, failing to find a contemporary articulation that would quicken the pulse of the young fashion mainstream.

In 2008, Loewe's stewards at LVMH initiated a repositioning, appointing Stuart Vevers — whose background as the leather goods genius behind the repositioning of Mulberry made him a very good choice — as the brand's creative director. Then, last year, Lisa Montague, who worked closely with Mr. Vevers as chief operating officer at Mulberry, took the reins as Loewe's chief executive, reuniting the team that successfully put the British leather goods brand on the global fashion map.

While it remains to be seen whether Vevers and Montague will be able to replicate their success at Mulberry, there are signs that the Loewe's profile is on the rise: flip through the pages of influential magazines like French Vogue and Loewe is featured in editorial spreads alongside better-known fashion darlings like Givenchy and Gucci. Meanwhile Angelina Jolie, Madonna and Sienna Miller have been photographed toting around the label's best selling Amazona bag, a sure sign that less famous women will soon follow suit.

The numbers look promising as well. In 2009, as a result of global expansion, especially in China, the company's earnings rose 7.5 percent to reach an estimated €115m, a good performance in what was otherwise a very tough year for luxury brands, especially those without mega-brand status like Loewe. (Loewe declined to confirm or comment on these figures.)

With a Loewe flagship store designed by Peter Marino, due to launch in London's Mount Street this Spring, BoF spoke with Ms. Montague at the brand's Madrid headquarters to discuss the on-going repositioning, her working relationship with Mr. Vevers, and the legendary Spanish brand's plans for international expansion.

BoF: Your Gran Via store is so steeped in Loewe's rich past. It seems like the much over-used word "heritage" really applies here.

Lisa Montague: Yes, especially at Gran Via, which is the original store and is 70 years old. Loewe indeed has a glorious past, especially the time around the beginning of the last century, when it was granted status of purveyor of leather goods to the Royal Court. So in a way, that branch is like a historical showcase while the future of the brand can be seen here on Serrano Street, where we have our main commercial stores.

BoF: How do you see the opportunity that exists in the Loewe brand?

LM: As I see it, the opportunity at Loewe, is to take that legacy of the past and create a legacy for the future. As the head of the brand’s management, that’s my primary purpose: to deliver the potential of this brand. And while I think we have a long way to go accomplish that goal, we certainly have the ability to get there thanks to the unmatched skill-set in the company. At our factory in Madrid and the workshops in Barcelona, we have master craftsmen who have been in the business for 50 years, and they are passing on their skills to a younger generation, which is important because, of course, the danger is that as they start retiring the skill is lost. So because we have all that know-how, I think we owe it to the brand, to the industry, and to our customers to focus on that and capitalise on it. That’s where our strength is as a brand. And I think it’s second to none.

It’s very rare to find a house with that ability and know-how in house, that hasn’t been somehow diluted over the years. At Loewe, it has been very strongly protected. So that’s an amazing set of assets to work with.

Stuart [Vevers] told me before I joined, “You won’t believe the wealth of knowledge and know-how in the brand!” And indeed, until you get here and you see it, you don’t really understand, quite simply because it doesn’t really exist in many other places. For instance, we only buy the top 3 to 5 percent of available leather at the top end of the market. And because we only work with the best skins and we have the know-how to work with those skins, we can produce this incredible product. So we really have decided to focus on the leather craftsmanship at the core of the company to differentiate the brand. We can’t pretend to be something we’re not. We probably don’t compete very well in textiles, so were not focusing on that. But we can really compete in leather.

BoF: You mentioned Stuart Vevers. How does he fit into this vision? You have a brand with a great tradition, but presumably you need to give it contemporary resonance.

LM: That’s totally Stuart’s bag if you’ll forgive the pun. That’s exactly why he joined at the beginning of 2008, a year and a half before I came on board. He was attracted by the beauty of the brand and the opportunity to take something with the weight and power of Loewe’s heritage and make it relevant again to a new customer base. It’s already a much-loved brand here in Spain and actually in all of our markets, especially Japan. But particularly in this country, there’s a great passion and pride for the brand, people have grown up with it, it’s a very aspirational household name. So the challenge is to reawaken that passion and to ignite it in new markets, because the brand had become a bit dusty.

BoF: What exactly is Stuart’s creative vision? The Wall Street Journal christened Loewe’s Amazona “the anti-bling bag.”

LM: Well, that’s because with Loewe it’s all about quality, which is hard to replicate. The luxury is in the product and it’s not until you touch it that you understand. So it’s not about hanging things off the bag. Obviously, we do decorate the bags, but in the end it’s not about embellishment. It’s more about the inherent quality that’s built in and the way the bag is constructed. Stuart has always said that the Amazona is so beautiful you could turn it inside out, which in fact he did in the Fall/Winter 2010 show to prove his point slightly tongue-in-cheek.

BoF: Tell me a little about your working relationship with Stuart. You seem to make a great team.

LM: I believe in giving creatives their space. The way it works is I deliver a very strong, clear, direct business vision and he delivers a very strong, clear creative vision and we make sure that the two go in the same direction and are aligned, which is a lot of fun actually. And if we are ever not aligned then we make sure that we sort it out very quickly and then go forward together in the same spirit. I think it’s a very positive collaborative relationship that we have and I think we feel we are on even footing. We’re a true team, which is rare and one of the reasons I think we’ve come together again. We’re both very receptive to new ways of doing things.

BoF: Loewe seems to have a low profile in the Anglo-Saxon markets like the US and the UK. Do you have a plan of attack for the US?

LM: Indeed, we are not strong in the Anglo-Saxon markets, which makes it a great opportunity. Still, we are actually very happy with our results so far in the US. We have built a lovely business, small but beautiful, with Bergdorf Goodman and we are at some other top stores, a total of 10 in the entire US. But no, we do not have an aggressive expansion plan there. Our priority is to focus on the network we have at the moment. We have 140 stores that need to be renovated to fit the new Loewe — that’s quite a challenge. We want to update the existing stores before we add new ones. We have so much to do, we need to be careful not to do it in a scatter-gun approach, and that what we do, we do well.

BoF: How do you present the brand in a new market like China? How do you distinguish it from the Western luxury brands Chinese consumers already know?

LM: Actually, that’s a timely question. We recently went to Beijing to do a major brand presentation. So for the first time ever we took the October runway show from Paris for a second showing in Beijing, balancing it with a concurrent heritage exhibition, so it’s the old and the new. We also presented our leather icons series, which is our ready-to-wear face to the world. And lastly, we showcased our made-to-order business. It’s the ultimate Loewe experience, a once-a-year, by-invitation-only, leather and fur dominated collection of exquisite pieces handcrafted in Barcelona, delivered to order in the colour and material of the customer’s choice. Combined, these elements aimed to demonstrate to the Chinese customer the uniqueness of the brand.

BoF: How has the situation in Spain, one of the countries hit hardest by the economic downturn, affected Loewe?

LM: Yes, times are very difficult particularly in Spain, but also in Japan which has also been deeply affected. So two thirds of our business is in some of the toughest markets of the world right now. So it’s a challenge. I think it pushes us to be more creative, more innovative, more energetic.

In Japan, for instance, we have been hyperactive and throwing new ideas and events at the consumer constantly which has elicited a great response. So it’s not impossible to overcome the difficulties, but you can’t just sit back and complain, you have to do the exact opposite: show the brand.

BoF: Can you share with BoF some lessons you learned from your time at Mulberry?

LM: What I learned most of all from my previous experience is that we all worry about change, it’s human nature. People are afraid of change, generally. It’s hard to embrace change for the majority of people. And yet, if you are brave enough to push forward and do the right thing — which in this case means going to the heart of the brand — in the end, people are pleased with the results. It’s a fear-based misconception that you will alienate people by pushing things forward and changing things and refreshing them. Change can be very positive as long as it’s true to the brand and true to the spirit, to the culture and to the company.

So that’s the greatest lesson I learned: to be brave and bold. Because when you are trying to take a brand forward, inevitably you have to leave some things behind, which is not an easy thing to do.

Suleman Anaya is a contributing editor at The Business of Fashion.

CEO Talk is BoF’s forum for in-depth discussions with the fashion industry’s global decision makers, conducted by founder and editor-in-chief Imran Amed.

This interview has been edited and condensed.