France’s “Alligator” Brand Wades Into New Waters
Best known for its preppy polo shirts, fashion giant Lacoste is diversifying: targeting women, children and branché (hip) youth in an effort to push yearly earnings toward the 1.5 billion euro mark.
France's world-famous "alligator brand," Lacoste inaugurated its first renovated flagship store on Paris's Champs-Elysées last week. The first of a new generation of boutiques, the shop will soon have sister outlets in Hamburg, Montreal and New York. "We are also looking for a symbolic location in Shanghai," says Christophe Chenut, CEO of Lacoste SA.
Between now and 2013, the fashion company will refurbish its 1,200 boutiques – to varying degrees. While some shops will get just a simple paint job, others are due for an extreme makeover.
For 10 years the group has been working on more specific product lines. Lacoste will stick with its signature cotton polo, but also introduce technical sporting clothes, a more chic collection called "Le Club," and "Lacoste Live," a line aimed at the branché crowd - young hipsters who love fashion. For this market, about 100 small shops located in fashionable locations such as the Marais neighborhood in Paris, London's Carnaby Street or New York's Soho, will be renovated.
In addition, the brand has just opened its first Parisian branch dedicated to children's clothes, "Lacoste Kids." Next up is the female market. "We're not offering women enough. They represent 80% of our clientele, while 80% of the products we sell are for men," Chenut noted.
The organization of Lacoste SA is an ideal case study. The company, founded in 1933 by tennis champion René Lacoste, has always operated on a system of licensing. Its income comes from royalties of an average of 8% of the bulk sales of its eight license holders. In 2011 it is looking to bring in 1.55 billion euros (a 10% increase from 2010.) Roughly 60% of revenue comes from the sale of clothes (made by Devanlay), 15% from perfumes (Proctor & Gamble) and the same amount from shoes. The remainder comes from glasses, leather goods, household linens and jewelry.
Lacoste and its main license-holder, Devanlay, which also manages the boutiques, are connected by complex capital links. Various heirs of René Lacoste together control 65% of Lacoste SA. The other 35% is owned by the Maus family, which controls 90% of Devanlay. Lacoste SA owns the other 10% of Devanlay.
Since the arrival of José Luis Duran, the former owner of Carrefour, as head of Devanlay in mid-2009, projects are multiplying. The Lacoste shareholders are involved in the management of the group, as are two of the founder's children: Michael Lacoste is president and Catherine Lacoste, a former golf champion, actively supports the company.
Lacoste SA remains an unlisted family group that doesn't publish its results. Despite recurring rumors, the Lacoste heirs don't have any intention of selling. "It's a company where you can build a long-term strategy. Being unlisted, the company isn't subject to the terror of quarterly results," said Chenut.
Faithful to a tradition of innovation -- René Lacoste was a professional tennis player for just five years and an inventor for 50 – Lacoste SA has entrusted designer Christophe Pillet with the company's laboratory. He manages a small team that, in conjunction with industrial partners, develops prototypes of all varieties: bicycles, surf boards, skis and a wooden tennis racquet, among others. They have also ventured into automotive engineering, maybe because René Lacoste's father ran the Spanish automotive company Hispano-Suiza. Some of these objects will be produced in limited edition and sold.
The trendy alligator brand spends between 5 and 10 million euros per year combating counterfeiting, which is often linked to the mafia and money laundering. In addition, more than 100 trials are ongoing against one of Lacoste's rivals, Crocodile international, which has become well established in certain countries. Alligator vs. Crocodile – the battle between the reptile brands has been raging for more than 30 years.
Read the original article in French.
Photo - Phil Roeder