Weighed down in particular by wholesale and the Chinese market, Lanvin Group (eponymous brands Wolford, Sergio Rossi, St. John and Caruso) suffered in the first half. Although the second half of the year is likely to remain difficult, management is stepping up initiatives to turn things around in the medium term…
Lanvin Group, whose portfolio includes the global luxury fashion brands Lanvin, Wolford, Sergio Rossi, St. John and Caruso, did not shine in the first half of 2024. Sales fell by 20% to 171 million euros.
Admittedly, the group points out that “thanks to effective measures to improve cost efficiency across all brands, gross profit amounted to 98 million euros, maintaining a gross margin of 57.5%, reflecting Lanvin Group’s resilience and potential for sustainable growth in a challenging environment”.
The net loss, however, amounted to €69.38 million, compared with €72.23 million in the first half of 2023.
A suffering wholesale channel
“The difficulties encountered by the wholesale channel compounded the problems associated with the slowdown in the global luxury goods market in the first half of 2024. We have devoted much of the first half to our marketing plan, but we have also given priority to streamlining our cost base to adapt it to the current market environment,” commented Eric Chan, CEO of Lanvin Group.
There are a number of cyclical explanations for the underperformance of the Group’s half-year sales, namely the weakness of the global luxury goods market and difficulties in the wholesale market. Sales in this channel plummeted by 30% (compared with a 14% fall in directly-operated stores).
But the Group also suffered from a number of pebbles in the shoe for some of its Houses. At Wolford, an “integration problem with its new logistics supplier” “considerably delayed shipments”. And Sergio Rossi had to implement “a strategically planned reduction in third-party production ”.
Geographically, sales were badly hit worldwide, but even more so in the EMEA region (where they collapsed by 27%) and in Greater China (-24%). In North America and Asia excluding Greater China, declines were more limited (-11% and -7% respectively).
Lanvin, Wolford and Sergio Rossi hardest hit
Looking at the individual Maisons in more detail, Lanvin, Wolford and Sergio Rossi were the hardest hit by the economic downturn.
Lanvin’s sales fell to 48 million euros (versus 57 million euros in the first half of 2023). Its gross margin , however, rose from 56% to 58%, “due to increased sales at full price and strategic inventory management”.
Contribution loss widened from €5 million to €9 million in the first half of 2024.
Wolford’s sales fell by 28% to 43 million euros. Gross margin fell from 72% to 63%, and the contribution loss was 8 million euros.
Sergio Rossi saw an even more drastic fall in sales (-38% to 20 million euros) in the first half of 2024. Its wholesale business, which includes third-party production, plummeted by 60%!
St.John Knits and Caruso in better shape
By contrast, St.John Knits, the American womenswear brand, and above all, Italian menswear manufacturer Caruso, are faring a little better.
St.John Knits sales fell by 14% to €40 million in the first half, but its gross margin rose sharply from 62% to 69%, thanks to “an increase in full-price sales” and “a better distribution channel mix”. The contribution margin, meanwhile, remained stable at 12%, thanks to “improved marketing efficiency, which mitigated the decline in sales”.
Finally, Caruso virtually maintained its sales (-1%). While its production activity for third parties“showed some weakness”, this was offset by that of its own brand Caruso, “which grew by 21%, thanks to strong sales of its ready-to-wear and made-to-measure products”.
Caruso’s gross margin rose from 26% to 29%, “thanks to improved internal production efficiency and reduced subcontracting”. Its contribution profit also increased, from €4 million to €5 million.
Long-term growth
“We faced a tumultuous market in the first half of 2024,” admits Zhen Huang, President of Lanvin Group. While we expect this situation to persist in the short term, we remain committed to the long-term growth ofour Group and to our path to profitability.”
“To ensure the long-term competitiveness of our brands worldwide”, the Group is blowing a wind of change. Three major appointments have thus been announced in recent months, including those, in June 2024, of Peter Copping as Artistic Director of Lanvin and Regis Rimbert as CEO of Wolford. In July, Sergio Rossi announced thata new Creative Director, Paul Andrew, would join its ranks in the second half of the year. A project to optimize production and supply chain management is also underway at the shoemaker.
Outlook for 2024
Lanvin Group has no illusions for the latter part of the year. The group “expects a difficult second half of 2024”, but “will remain proactive in its cost reduction and operational efficiency efforts”.
Lanvin and Sergio Rossi thus plan “to place greater emphasis on marketing initiatives to chart their creative paths for 2025 with the additions of Peter Copping and Paul Andrew, respectively”.
Overall, the group “will continue to focus on sales expansion opportunities through marketing campaigns to maintain the momentum of its brands” and “a tactical approach to expanding its store networks”.
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Read also > Lanvin: Peter Copping as artistic director, the hope of a revival
Featured Photo: © Lanvin
