Monday, 7 September 2009

into the black and into the red at YSL

there was an article last week about how the luxury business is being put to the test in current economic climate. PPR was singled out for study, and it was mentioned that YSL made an operating loss of $24m for the first 6 months of 2009. it was only back in march that they were celebrating YSL's breakeven when financial results were released for 2008.

.: yves saint laurent by irvine penn, 1983 :.

gucci group bought YSL from it's founder in 1999 for a hefty $1bn. it was then announced that YSL would be profitable by 2003, but they grossly underestimated the amount of work to be done. YSL was loss making for 10 years, only breaking even in year ended 2008 by reporting a slight operating income of €300k. it must have been a hefty blow to them to see results going into the red again for the first 6 months of 2009.

the losses are significant at YSL. in 2008, YSL beaute (perfumes and cosmetics division) was sold to loreal for $1.8bn. if gucci group spent $1bn acquiring YSL and sold a division for $1.8bn and still make losses today, it is significant.

.: 2008 revenue streams by product category :.

to be fair, they have made significant changes to the business mix. back in the 80s and 90s, YSL was all about couture and ready-to-wear (RTW). RTW is important as it provides vision, but accessories is the ultimate cash cow of luxury retail. the introduction of it bags and shoes, such as the muse and trib2, contributed to more than half of YSL's total revenue. accessories provide entry level products for the aspirational consumer.

.: ysl suede tassels loafers from matchesfashion.com :.

.: 2008 revenue streams by region :.

i believe the reliance on european and north american markets could be the factor leading to their continual losses. the credit crunch affected these 2 regions most, and from previous analysis of LVMH and hermès, they too experienced negative growth in these regions, but strong demand from non-japan asia propped up the business. this region however, only represented 13% of total revenue in 2008 at YSL.

asia could be a difficult market for YSL as cheap licenced products lines are rife. asian consumers could be more reluctant to fork out $2,000 for a YSL bag, when down the road genuine licensed YSL polo t-shirts is on sale for $30. licensing is a good revenue source but it can also be damaging to image (look at pierre cardin) and pricey to buy back. when tom ford first took over gucci, one of the first projects he embarked on was to buy back all the licenses. costly, but it reaped rewards now.

.: ysl rive gauche menswear spring summer 2010 :.

i ask the question, who is the YSL man of today? i hope i am not ruffling feathers, but looking at their spring summer 2010 collection and financial results, have they lost the way? the house of YSL has a rich history, and gucci group must have saw potential to buy it 10 years back. they tried to turn the house around to appeal to the younger clientele. they've even gone on twitter this year. is it too little too late?

.: vintage ysl dress from 1980s, £360 from yoox.com :.

.: vintage ysl dress from 1970s, £475 from yoox.com :.

if gucci appeals to the younger audience (20s to mid 30s?), i believe YSL is better off catering for the mid 30s to 50s, the age group the house originally targeted before gucci group bought it.

.: christy turlington for YSL rive gauche fall winter 2009 :.

casting christy turlington, who turned 40 this year, was a great choice. going on twitter? i am getting mixed signals.

i am a bit lost too, i forgot what was my intention of this post. but i wanted to say i love YSL, i love stefano pilati. i really do. i hope they can turn things around, soon.


source / source / source

9 comments:

  1. but Pilatis designs dont connect to the 30-50 y/o females! his collection are growing more monochromatic and colder each season. YSL was always so full of joie de vivre.

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  2. of course you would have to do post on ysl, when im really trying NOT to be two clicks away from having a package at my door.
    i love that dress.

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  3. -h: gorgeous isn't it. another reason to love yoox, they do vintage!

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  4. Very good analysis Joe. The YSL men store Place Saint Sulpice in Paris is closed. It was the first concept store designed by Hedi Slimane. it sounds like in another century! Pierre

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  5. pierre: i heard about that store closure, but it was reported that they were moving to another bigger location, and to get the store designs to be in line with other stores. not sure if it is really due to their losses, could be that they managed to get cheaper rent in new location now, and leases were very high when they first opened that store in slimane times..

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  6. I think the brand as a whole has become increasingly lacklustre. As you pointed out recently its marketing and ad campaigns have become tired and seem to lag behind the competition.

    RE: the menswear. YSL will always have luxury appeal like many other Parisian houses but as a contemporary menswear label it's not growing/embracing new masculinity in the same way as say Dior Homme or even Givenchy.

    /Male-Mode.com

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  7. OOOOO, glad I found you (thanks to PretAPorterP. Am digging your blog.

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what's he wearing?