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French Couturier Christian Lacroix Goes Bankrupt

May 30, 2009

The famous French fashion house of Christian Lacroix announced this week that it files for voluntary bankruptcy in order to protect the company from creditors. Recession and the current financial crisis are being blamed for the one of France's biggest names financial trouble.

Christian Lacroix, being one of the favorite designers for many, is best known for his rich fabrics and bright colors as well as for outlandish, but still very beautiful haute couture. His invention is exaggerated puffed sleeve dress, commonly known as the "le pouf" dress, which became very popular in the late 1980s on the party circuit.

The fashion brand was founded in 1987, after Bernard Arnault, of global luxury giant LVMH Moët Hennessy Louis Vuitton, which is the owner of Louis Vuitton, Christian Dior and Givenchy, asked Christian Lacroix to create a bespoke couture house for his luxury goods giant. At that time Lacroix had just received a Council of Fashion Designers of America award for his creations at Jean Patou and the majority of experts foretold him the brightest future of the next big star after Yves Saint Laurent. However, no matter how sad it might be, the Lacroix house was never able to turn a profit, thus prompting LVMH boss to sell it in 2005 to Falic Group, an American duty-free retailer which has 125 people employed. Falic, in its turn, had been looking for a new buyer but could not manage to do so in time due to poor conditions on the market.

While it is for sure that Lacroix has been affected by reduced spending amid the economic crisis,the roots fo its troubles lay much deeper. According to Patricia Pao, executive of Pao Principle, a retail New York-based consultant group, "Lacroix, while beautiful, has long struggled to find an audience. If a line or item is a 'must have,' consumers will buy at full price regardless of the economy," she said. The major problem of Lacroix has always been that he could never really come to realization how to make his gourgeous pieces work for the modern working woman. The problem was, and still remains, that the designer kept creating clothes in a style of a Spanish matador, for example, with gypsy fringing, splashes of 18th century corsets and neon psychedelia (more often all in the same piece), which were never practical for wardrobes of working women. And what is even more, the items were not cheap, either.

To his credit it must be said that the designer created a pret-a-porte (ready to wear) collection for the couture house one year after the start. But even this did not appear to work in a long run. The clothes were marvellously beautiful but, still, the colors were too bold, they had too many puffball dresses and skirts and the prices were too high. After losing nearly $14 million in 2008 on sales of $42 million, Christian Lacroix has seen sales of its summer collection drop by 35 per cent this year.

The major luxury groups such as Louis Vuitton, Chanel, Gucci, and Hermès are now mostly prospering due to the diversity of their holdings. In spite of the recession and crisis, perfume sales, for example, are holding up relatively well. According to MHLV, sales in its fashion and leather accessoires sector went up by 11 per cent to 2.1 billion dollars in the first quarter of 2009. The report by Gucci Group, the luxury leg of French conglomerate PPR, stated a sales increase of 5 per cent to 1.1 billion dollars during the same period of time, with a 21 per cent raise in salef of the emerging market.

Haute couture, the basis of Christian Lacroix's operation, will never be able to make the kind of profit that perfume, accessories and ready-to-wear fashion make, and this turns out to be a major reason for the label's demise. While prices for dresses haute coutute often climb up to thousands of dollars, in reality there are very few pieces that are actually being sold. Unlike Chanel, christian Dior and Armani, which have a long ago created their bestselling perfumes and accessories, Christian Lacroix has continued to rely on its gorgeous, but very expensive dresses.

Tags: Career & Money