"Hermès announces that interested buyers have approached it for its 45% stake in the Jean-Paul Gaultier fashion house. Discussions have been initiated". Hermès acquired 35% of the brand in 1999 (for 150 million francs - or about 23 million Euros), and subsequently increased its share to 45% in 2008 (paying 4.3 million Euros for the extra 10%). At that time the press declared that this investment would enable Jean-Paul Gaultier - whose turnover was 85 million francs (roughly 13 million Euros) in 1998 - to develop.
We have to be lucid and look at the facts objectively:
- Between 1998 and 2009, Hermès saw its turnover increase from 767 to 1915 million Euros: a growth of 250%;
- Over the same period, Jean Paul Gaultier's turnover increased from 13 to 22.5 million: an growth of 173%.
First conclusion: Jean Paul Gaultier is a really small company and did not really gain any advantage from Hermès' participation in its capital.
- Jean Paul Gaultier's turnover figure includes the 14.4 million in fees it earns for use of the Brand (which are, in fact, licensing royalties) - this represents 64% of turnover!
- This also means that its designer-wear and accessories represent only a third of its turnover!
Second conclusion: the brand has been unable to develop what is vital to the growth of all luxury brands today - its accessories.
- Over the past five years, the highest net income earned by Jean Paul Gaultier has been 7%, in an industry where it generally stands between 15% and 25%.
Third conclusion: Jean Paul Gaultier does not generate profit.
Of course, Jean Paul Gaultier himself is a legend as a creator and fashion editors constantly cite him as the most emblematic fashion designer of our times, but the quick analysis, above, shows that this is not enough to build an international luxury brand. There's even worse. As fashionmag.com says, "In 2005 Jean Paul Gaultier had fifteen of its own boutiques in the world. Today the total number of commercial establishments has been divided by two and the house has no secondary line".
It is therefore a waning brand that is up for sale. Who is likely to purchase it? No important luxury brand would find it interesting: strong image, but the brand is too small; not profitable; limited collection … and a creator who is omnipresent. As such, among the candidates for an upturn, we are likely to find Asian groups, such as Fung Capital, which just purchased Robert Clergerie, after acquiring (through its holding, Trinity) Cerruti 1881. These are real experts in building fashion brands and have a large distribution network in China - where Jean Paul Gaultier is not represented. Will we see Clergerie manufacturing Gaultier shoes?
