Resurrecting the Queen’s heritage brand in the M&A scene

MILAN — There is one person who is not surprised by Schiaparelli’s upward trajectory and current heat: Arnaud de Lummen.

The brand’s fall haute couture show took place in Paris earlier this week, attracting the likes of Selma Blair, Doja Cat, Maria Sharapova and Kylie Jenner. The founder of private equity firm Luvanis paid tribute to Schiaparelli owner Diego Della Valle for adapting to one of the key requirements of reviving a heritage brand: patience.

De Lummen should know. He has been a driving force in brand revivals, for example by relaunching Vionnet ready-to-wear in 2006 and selling it to Matteo Marzotto and Gianni Castiglioni three years later. He also revived the prestigious 19th-century Moynat trunk maker, selling it to Groupe Arnault in 2010.

Sourcing traditional brands is a journey with potential pitfalls. The key steps needed to avoid failure are “a long-term perspective that may involve decades, a lot of research on trademarks, intellectual property, possible licenses and copyrights,” de Lummen said in a joint interview with Marco Consonni, a partner at Milan-based law firm Orsingher Ortu , which has been working with Luvanis for years to solve these problems.

“You need experience, reviving a brand is a very long and complicated process, I wouldn’t encourage anyone to do it from scratch,” Consonni said.

The current slower M&A scene may also discourage potential buyers. “I wouldn’t say there is price aversion, but a lot of acquisition projects are delayed or deferred,” de Lummen said. “But this is not a general trend, the luxury industry is global and there are always parts of the planet where things are slowing down and parts where things are going well.

“We used to have a lot of requests and interests from Asia, which is still true. But we see that potential buyers are more cautious about assets, the quality of brands, whether they are dormant, revived or already well-performing. But we also talk to institutions, distributors, investors in the Middle East on a regular basis, and right now the activity, which is very strong in Dubai, is very, very strong. Especially in the beauty industry, for example everything around perfumes,” de Lummen said.

The Middle East and Dubai in particular have become home to Russians fleeing their country after the start of the war in Ukraine, leading to booming business growth in the region, where stores are packed with customers and new restaurants are opening, attracting investment that may otherwise have been aimed at mergers and acquisitions, he continued. Wars and inflation are affecting business, he added that “large conglomerates in Asia are now focusing on what they usually have in their basket. And they are a little more cautious when it comes to each new addition.

De Lummen revealed that he is reviving a brand that has been in Luvanis’ portfolio for over 10 years: Rose Bertin. The French designer and merchant was Queen Marie Antoinette’s favorite dressmaker for about 15 years and had a boutique in Paris that was Colette’s “ancestor,” he explained. “She was the most famous and respected fashion designer in Paris at the time, so much so that she was called the Minister of Fashion and is in all the history books.” By the way, he said that a few years ago a manga comic was released in her name and as Rose Bertin’s mission in the “Assassin’s Creed Unity” game series.

“She chose the scents for the queen’s clothes because at that time, they were perfuming dresses, so that’s something we’ll launch in about a year,” he said, along with makeup products, without revealing the name of the partner in the new venture. Bertin also dressed the queens of Spain, Sweden and Portugal; Grand Duchess Maria Feodorovna of Russia, and European aristocrats and celebrities of the time.

There’s a “game change” happening, with investors looking at traditional brands in the cosmetics world as well, as they see a shift from prestige to niche and ultra-luxury brands. He cites Creed, an example of which dates back to 1760 and was acquired by Kering Beauté last year.

There is virtually no marketing or advertising involved in communicating niche fragrances, unlike prestige brands, he continued. “In perfumery, we have seen retail prices multiply by about three to five times, and of course, when you sell something at a higher price point with less marketing, if you can tell a story about your brand, that is better,” de Lummen said, adding that consumers are also changing, “they are changing perfumes more often and even the very young are willing to spend money, so it is a very dynamic sector.”

De Lummen said Shinsegae International, the South Korean fashion and luxury conglomerate that bought Paul Poiret, has the right to focus on the brand’s cosmetics, makeup and skin care because the late Poiret was the first fashion designer to branch out into perfume.

While private equity firms are also eyeing the beauty industry, they are generally more cautious than in the past, Consonni said, and less interested in looking at traditional or luxury fashion brands because their five- or six-year ownership period won’t be enough to revive storied labels.

“With heritage brands, there are a lot of intangible assets,” de Lummen said. Turning heritage brands into a business “is like giving value to a painting or work of art. Private equity funds or billionaires outside the fashion world will appreciate these numbers. You have to have faith, believe in brands and have a long-term vision, looking forward but also looking back. “I’m sure Rose Bertin will still be in the history books 50 years from now and we’ll still be talking about her.”

It can take 10 or more years to bring “sleeping beauties” back to life “if the planets are in the right alignment, which is why it’s usually industry leaders with a long-term perspective who are successful in cultivating brands and putting in the time to do so,” he opined.

“When Bernard Arnault bought Moynat, he bought it for his grandchildren. When you have a heritage brand that was founded 50, 100, 200 years ago, you have a different approach to timing, dynamism and longevity. The majority of the LVMH Moët Hennessy Louis Vuitton portfolio is made up of heritage brands, and a few of their duds, like Fenty, are not,” he said.

In addition, mistakes are easier to mitigate with a legacy brand, he said. “Maybe the designer isn’t right, but the brand will survive, and you’ll have a story to tell. A legacy brand can survive the death of the founding designer. If you’re investing in a celebrity brand, or one that’s built on new trends or new technology, you have momentum to grab, which means you’re likely to invest more in marketing and brand recognition.

“When you have a strong brand with a strong heritage that is displayed in museums, it has credibility and is part of the culture. Look at the number of exhibitions by Dior, Chanel, Balenciaga. People who buy things from Chanel or Dior feel like they’re also buying a part of the culture.” Additionally, designers are often more inspired by archives, “knowing where to start and making it their own, rediscovering the heritage, adapting the style,” rather than working from a blank page, de Lummen said.

Fashion is more erratic than shoes, leather goods, jewelry, and fragrances. “Big leaders like Chanel and Gucci can go through bad times because they have big businesses in other categories. If you’re a newcomer and you hit a bad time, you’re more fragile. If you have a hot collection that sells really well, it might be one season, maybe two. And then when all of a sudden big money comes in, you tend to make a business plan based on that success. Generally speaking, “private equity funds are interested in fast-growing brands,” but that momentum can be short-lived.