In the Black, YSL Plots Ambitious Growth

Valerie Hermann and Stefano Pilati plot expansion for luxury firm YSL.

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A Tribute 2 shoe.

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A driven but fun-loving executive, Hermann has kept a low press profile since she joined the company, but can now trumpet some of YSL’s achievements.

Powered by Pilati’s designs, YSL is ranked number-one within Gucci Group in terms of editorial credits, prorated versus advertising investments.

The Italian designer, who worked under Ford before taking the solo reins in 2004, took some lumps for his first collection of wide belts and tulip-shaped skirts. But it would prove influential, and his recent collections have received more critical acclaim, especially a breakthrough futuristic collection last year.

What’s more, the brand has achieved double-digit growth every year since 2005 without opening any retail stores — the only label in the Gucci Group to have that distinction.

To be sure, YSL’s retail network has been a bugbear for Hermann in more ways than one. The 61 company-owned stores quickly opened during the Ford era gave YSL an immediate platform to compete with other top brands, but also burdened the firm with the high fixed costs. (There are also seven franchise locations.)

Hermann and Lee were also saddled with a too-dark store concept that did not resonate with consumers. “When the first concept is a failure, you can’t have another,” she said.

Last year, Pilati unveiled the first new-look boutique at its historic Saint-Sulpice location in Paris, with ceilings and wall panels in the glossy lacquer that’s the color of YSL’s legendary Opium perfume as the central design element.

Hermann dubbed the new decor a success, citing double-digit growth at Saint-Sulpice. About a dozen locations now reflect the new interior design. The brand is present in about 250 wholesale doors.

Having fought its way out of the red, YSL can resume expanding its retail network. A unit in Seoul recently opened, and three more locations in Asia are coming in 2009: Hong Kong, Taiwan and Singapore, Hermann said.

At present, YSL’s business is concentrated in Europe, which in 2008 accounted for 57.8 percent of sales, versus 21.6 percent for North America, 13 percent for Asia-Pacific and 7.5 percent for Japan, where the brand logged a 10 percent sales gain last year.

YSL is absent from South America, has only two locations in China and is only this year making footprints in Southeast Asia — meaning plenty of scope for future geographic expansion, Hermann said, rattling off Las Vegas, Germany, Brazil and China as future possibilities.

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