Crisis on the Catwalk

By Kate Novack

At least along the runways, the stars were in alignment last week. The usual stable of celebrities and editors lined the front rows at the couture shows in Paris. Sofia Coppola ogled John Galliano's Empire-waist Josephine dresses at Dior. At Armani's haute-couture debut, Penelope Cruz perused her options for the red carpets at this year's awards ceremonies. Even Vogue editor Anna Wintour was back in town after sitting out the past two spring couture seasons. But those who wanted to see the real action needed to keep an eye on the new faces in the crowd.

Among the ones to watch were those of three brothers from Florida who were attending their first haute-couture parade. Just one day after buying the house of Christian Lacroix from the French luxury group LVMH for an undisclosed sum, Simon, Jerome and Leon Falic took their seats at their new employee's show. It was among the most anticipated events on the week's calendar, not just because of Lacroix's reputation as one of fashion's most intriguing talents but also because talk of the LVMH-Falic deal had been circulating since early January. The Falics, who own a chain of airport duty-free shops, have no previous experience running a fashion house. The looming question: Would they allow Lacroix to continue his haute-couture line which, like most others, is a perennial money loser? Or was their aim to milk Lacroix's name to cash in on his ready-to-wear clothes and accessories or introduce assorted baubles?

That three newcomers suddenly hold such sway over the future of haute couture--the handcrafted, custom-made clothes that purists consider fashion's highest art form--was just one of many reminders last week of the fashion industry's turmoil. And the dislocations are by no means confined to the rarefied levels of couture. Tremors are shaking up ready-to-wear too. In the late 1990s luxury groups like Gucci and Prada began snapping up stakes in labels by ultracool but often young and untested designers. Now the money men are losing patience and no longer want to wait for a hefty return on their investments. At the same time, restive designers are tiring of bottom-line pressures from their conglomerate owners or are frustrated by what they see as insufficient financial support from them.

So last week, Helmut Lang, the Austrian-born ready-to-wear designer and reigning minimalist of the '90s, resigned from his own company, which is owned by the Prada Group. The move ended a feud with Prada CEO Patrizio Bertelli over how to reverse losses at Lang's line. In the mid-'90s, Lang's sales were as high as $100 million. When he sold a 51% stake in his namesake brand in 1999, Lang touted Bertelli as a guy who "understands the culture of a high-end product," and said, "His line is very, very well managed." Bertelli, who later purchased the remaining 49% of the brand, was just as excited about the combination. His big plans for the Lang line included Prada-produced accessories, a beefed up advertising budget and at least a dozen freestanding stores in the U.S., Europe and Asia. Instead, Bertelli is left with a house in which business dropped to $37 million in 2003 and the task of making the Lang brand profitable without Lang.

It's a daunting challenge, but Bertelli, who is the husband of Prada designer Miuccia Prada, already has some experience with trying to keep a line going after the designer has departed. In November designer Jil Sander walked out of her Prada-owned company for the second time. Back in 1999, less than six months after striking a deal with Lang, Bertelli bought a 75% stake in Sander's coveted ready-to-wear label. The deal made the Prada Group Italy's largest private luxury-goods conglomerate. Echoing Lang, Sander said she had picked Prada from a string of suitors because her company and Prada shared a "common understanding of fashion." Just four months later, Sander stormed out of the house she had founded 27 years earlier when she was 30, claiming she was fed up with Bertelli's controlling ways. She later returned, but the reunion was short-lived. Bertelli is now looking to a team of internal designers to carry on that label.

Even if those labels fail, ready- to-wear will survive. Couture's future is chancier. Those catwalk confections don't turn a profit. From inspiration to hand-sewn conclusion, each runway spectacle can cost about $3 million to produce while the number of clients willing to pay $60,000 or more for a dress dwindles. With the U.S. dollar steadily weakening against the euro, such dependable American customers as Suzanne Saperstein, the fashion-mad wife of billionaire media tycoon David Saperstein, are tightening their Hermes belts or dropping out of couture altogether.

So are more and more fashion houses. In recent years, Yves Saint Laurent, Ungaro and Versace have shuttered their couture operations. Last year, according to analysts' estimates, Lacroix generated about $39 million in sales from its couture, ready-to-wear and licensing businesses--with a loss of $13 million. Those in the designer's inner circle say Lacroix is bitter about the way LVMH'S chairman, Bernard Arnault, handled the sale, although Arnault shows little regret. "For 17 years we have worked to transform the company, and we have not been successful," he says. "It's time to focus on our core businesses and those brands like [Louis] Vuitton that have the most potential."

Some houses, however, still view Paris' biannual extravaganzas as a valuable way to build a brand's prestige and in turn boost its real cash cows--perfume and accessories. "For now we do think we want couture," says Leon Falic, 34, of the plans he and his brothers have for the Lacroix brand. "We see the house at the same level but expanded--more stores, more advertising--and product categories like handbags should be expanded."

Despite the tension surrounding the sale, and Lacroix's moodiness even when all is well, his collection was devoid of angst or melancholy. Lacroix seemed to delight in showing off his artisans' skill with feather petticoats, elaborate embroideries and lace appliques--all the details that are so costly and integral to couture. He showed his hand as a master colorist, trotting out unexpected combinations like a sari-style chiffon gown in grapefruit hues of pink and yellow, trimmed in turquoise, or pieces in pastel blues set off with deep, rich black-currant-colored velvet trim. He even resurrected his signature '80s silhouette, the pouf skirt. "I feel serene," he said after the show.

With all the upheaval, Giorgio Armani, 70, must have been experiencing some Zen sensations of his own when he made the jump into couture. Is his move a lark? An ego thing? A way to boost the eventual sale price of his business, one of the largest independent fashion companies in the world? No one knows for sure. But the Italian is a pragmatist who has launched high-end-apparel, jeans and home lines by interpreting his distinctive aesthetic at a variety of price levels. "Couture has followed a path that is overly theatrical and too much about a big show," he explained on the eve of his debut. "There is nothing sincere for the woman who would like to buy a dress." The collection's 35 gowns--and they were all gowns; he showed nothing for daytime--seemed aimed at filling that gap. Although the prices in the Armani Prive collection--from about $10,000 to $90,000--are lower than the industry standard, Armani didn't skimp on beading. With an atelier of 25, he created sculpted dresses with fishtails and intricately worked bodices. "I hope that people have understood that I can do something other than a man's suit on a woman," he said. Penelope Cruz seemed to get it. "I have four films coming out," she said backstage after the show, "and so I sat there and thought about which gown for which opening in which country." She was particularly taken by a black number with pleating through the bodice. Don't be surprised if it turns up on a red carpet this awards season.

Some couture lovers hope that Armani's first outing will prompt other Italian designers, such as Dolce & Gabbana, to attempt handcrafted lines too, bringing with them the excitement of new names. But Armani says he's not interested in being couture's knight in shining armor. "I am not the savior of anyone," he says. "No one in France needs me as a savior."

In the end, it may be luxury-goods manufacturers who ride to couture's rescue. All during couture week, companies like Baccarat, Christofle and Chopard, the high-end watch and jewelry maker, operated around the edges of the runway events, throwing parties and sponsoring venues for young designers who preferred to show their luxe ready-to-wear creations during couture week, when it's easier to attract a good crowd, than during the busier ready-to-wear schedule in March. Chopard was especially visible, offering space to several young designers. Caroline Gruosi-Scheufele, Chopard's co-president, hints that a company like hers might someday launch its own couture line. "Why not?" she asks. "All the couture houses launch watches. I don't see why it couldn't go the other way."

Meanwhile, Leon Falic is trying to reassure his couturier. "I understand if he is nervous," Falic says of Lacroix, who still has to negotiate a contract with his new owners. "I think he will be very happy with us. We are very direct people. We're accessible. It's a family company, and we are all very family oriented." And unlike most fashion "families," still fully functional. --Reported by Sarah Raper Larenaudie/Paris

With reporting by Sarah Raper Larenaudie/Paris