Friday, May 29, 2009

Christian LaCroix Files For Bankruptcy

Christian Lacroix, one of the biggest names in Parisian haute couture, is the latest victim of the slumping global ecomony. The company has announced that it has filed for protection from creditors, the equivalent of Chapter 11 bankruptcy protection.

The filing comes after the failed attempt of Falic Group, the U.S. based duty-free company that owns Lacroix, to sell the company. Lacroix's Chief Executive, Nicolas Topiol is blaming the lack of interested parties on the financial crisis.

This particular quote stood out to me:
In an attempt to boost revenue, Falic Group has tried to play up Lacroix's reputation for haute couture -- the highest-end of the fashion scale. This long-term strategy was "dramatically hindered by the current and ongoing world financial and economic crisis," the company said in a statement.
In this particular case, Lacroix can't solely blame it on the e-e-e-e-economy this time. Fashion houses cannot live on haute couture alone. It's very expensive to make and very few people in the world can afford to purchase it, therefore couturiers don't sell enough to offset costs and make a profit. Instead, they rely on licensing aspirational, affordable luxury merchandise such as ready-to-wear clothing, fragrances and accessories. This is why luxury conglomerates like Lacroix's former owner, Moet Hennessy Louis Vuitton (LVMH) and The Gucci Group have been able to thrive, posting sales increases of 11% and 5% respectively.

Unfortunately for Lacroix, the interest has never been there for the brand as they have yet to turn a profit in its 22 year existence. Sure, the fashion house received critical acclaim, but the public never embraced Lacroix aesthetic.

Paris Couture Week is five weeks away, so will Christian Lacroix make a showing? Mr. Topiol tells WWD that there may be a more scaled-back presentation.

(Photo: Dominique Maitre/

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