Helmut Lang Leaving Prada

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January 24, 2005

Helmut Lang Said to Leave Prada in the Latest Industry Departure

By SUZY MENKES, International Herald Tribune

PARIS, Jan. 23 - In another shock to the luxury industry's multibrand strategy, the Prada Group is expected to announce on Monday the departure of Helmut Lang from the house that bears his name, a person close to the company said on Sunday.

Mr. Lang, the Austrian-born designer who is based in New York, was considered a byword for urban cool in 1999, when Prada took a 51 percent stake in his brand. He would follow the designer Jil Sander out of Prada's door.

Ms. Sander left Prada for the second time in November, after having departed previously during disagreements over strategy with the chief executive, Patrizio Bertelli.

Mr. Bertelli was on his way to New York over the weekend to settle the details of the split, said people close to the company, who confirmed Mr. Lang's departure.

Mr. Lang had been at odds over a strategy to return his loss-making house to profitability - a situation that remained at a stalemate even after Prada bought out Mr. Lang's share of the business in December. Mr. Lang could not be immediately reached for comment. His staff said on Friday that he was not at his New York offices.

The departures at Prada follow a similar rupture at the Gucci Group last year, when the designer Tom Ford and the group's chief executive, Domenico De Sole, left after arguments with Gucci's parent company, PPR, formerly known as Pinault-Printemps-Redoute.

Luxury goods makers are being forced to divest themselves of small and unprofitable companies bought in the heat of the luxury expansion in the 1990's and focus on their core brands.

Bernard Arnault, president of LVMH Moët Hennessy Louis Vuitton, announced this month that Christian Lacroix, the couture house he founded in 1987 but which failed to turn a profit, was under offer to an American duty-free retail group run by the Falic brothers. Analysts think that both Celine and Givenchy might also be sold by LVMH, if the right bidder comes along.

Other recent upheavals include the sale of the Karl Lagerfeld brand to Tommy Hilfiger, the American company that is bucking the trend by trying to build a multibrand group.

Monday is the opening of the haute couture season, and the falling by the wayside of so many couture houses is another signal that the money is not in high fashion itself.

Two issues appear to be behind Mr. Lang's departure - the difficulty of building a prosperous business in a brand-saturated world and the problems faced when an independent and individualistic designer has to learn to work in a corporate culture.

A former Prada employee said that while Mr. Bertelli's goal was to bring synergy and expertise to fledgling companies, particularly by creating profitable accessories, the designers felt their goods had became assembly line products.

In the 1990's, the big brands battled over labels, often paying well over market value to acquire them. For example, the Italian leather goods company Fendi, which was bought jointly by LVMH and Prada, is now completely owned by LVMH.

The heavily indebted Prada has already divested itself of some retail and corporate real estate. And last month, Robert Polet, chief executive of Gucci Group, said that all its energies would be put into the core brand, while YSL and other emerging labels like Alexander McQueen and Stella McCartney would receive less attention and investment. The exception was the leather goods company Bottega Veneta, which was the fastest-growing brand in the group.

With Compagnie Financière Richemont, the second-largest luxury company in the world behind LVMH, turning in strong sales for the fourth quarter, luxury managers must also be asking themselves whether there is still money to be earned in clothes.

Richemont concentrates on watches and jewelry, with its star Cartier brand thought to bring in up to 70 percent of its profits. Other brands include Alfred Dunhill, Mont Blanc pens and Van Cleef & Arpels jewelry, as well as Chloé, as its only fashion brand.

Louis Vuitton is the undisputed cash cow of the LVMH empire and is thought to represent 68 percent of group sales.

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