Brands & Branding and Private Labels Case Study

PPR's Balenciaga Brand: The Turnaround

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Abstract:
Pinault-Printemps-Redoute (PPR), a multinational holding company is a major player in the French luxury goods industry. With a unique combination of various businesses, PPR emerged as a global player in the business segment. The company includes retail companies such as Printemps, Redcats, Fnac, Conforama and 10 luxury brands under the Gucci Group: (1) Gucci; (2) Yves Saint Laurent; (3) YSL Beaute; (4) Balenciaga; (5) Sergio Rossi; (6) Boucheron; (7) Bottega Veneta; (8) Bedat & Co.; (9) Alexander McQueen; and (10) Stella McCartney. It acquired Gucci in 1999, after a legal battle with Gucci's competitor LVMH (Louis Vuitton Moet Hennessy). In 2001, Gucci acquired the Balenciaga Fashion House, which was in losses then. The company was in crisis when its Creative Director Tom Ford and Chief Executive Officer (CEO) Domenico De Sole quit the company after the parent group PPR refused to grant them managerial autonomy. In 2004, the company appointed Robert Polet as Gucci's new CEO. Polet formulated a three-year strategic plan to revive the company's loss-making brands such as Balenciaga, Yves Saint Laurent and Alexander McQueen. The company appointed Nicolas Ghesquiere as Balenciaga's Creative Director. The Spring/Summer 2006 collections of Ghesquiere, were appreciated by the media as well as the fashion world. The company is expected to undergo a turnaround with profit generation and revival by 2007.

Pedagogical Objectives:

• To highlight the problems of PPR, the crisis in Gucci and the efforts of Balenciaga to revive its fashion house
• To discuss Balenciaga’s sustained efforts to gain recognition and whether this turnaround would bring profits for the fashion house.

Keywords : PPR (Pinault-Printemps-Redoute); Gucci; Balenciaga; Fashion retail industry; Tom Ford; Domenico De Sole; Nicolas Ghesquiere; Competition; Restructuring / Turnaround Strategies Case Study; Acquisitions; Expansion strategies; LVMH (Louis Vuitton Moet Hennessy)