Furla and Longchamp: Quiet Success Stories

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Furla and Longchamp: Quiet Success Stories

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LONDON — Over the past 12 months, as the global luxury market gained momentum and recouped some of the luster it had lost over a rocky few years, much was made of blockbuster companies that made impressive recoveries or unveiled new strategies. But while such Cinderella stories have been shaping the public narrative, there were a number of companies that didn’t have to wait for 2017 to post double-digit returns. In fact, they had what could be characterized as a very good downturn.

They just aren’t very sexy brands, so people weren’t paying attention.

European and privately owned, middle-market brands such as Furla and Longchamp have long operated under the fashion radar. Now, these fast-growing accessories houses are drawing increased scrutiny as rivals eye their expansion efforts and try to tease out the secrets of their success — and view them as possible acquisitions.

But, said Jean Cassegrain, chief executive of Longchamp and a grandson of its founder: “We would never sell our brand. Our independence is what has allowed us to build Longchamp into the company it is today.” It recorded 553 million euros, or $642.5 million, in sales revenue in 2016.

Longchamp is primarily known for Le Pliage, a nylon tote bag that comes in myriad colors; the large size is $145 in the brand’s online store. (Retail analysts estimate that 11 bags are sold every minute.)

The label was founded in 1948 in Paris by Mr. Cassegrain’s grandfather, also named Jean, and is one of the few remaining luxury brands owned and operated by one family. Mr. Cassegrain’s father, Philippe, is chairman, and his mother, Michelle, led the brand’s European stores until her death in December. His sister Sophie Delafontaine is artistic director, while his brother Olivier is managing director of retail in the United States, and has been overseeing the construction of a 4,000-square-foot store on Fifth Avenue that is scheduled to open in the spring.

The business has more than 300 stores worldwide and last month opened a flagship in Tokyo (Japan is the brand’s third-largest market).

“As a family business we are able to really think long-term and invest heavily as and when we need to, without having to report every gain or loss or constantly give good news to the stock market,” Mr. Cassegrain said. “That is a luxury, and not one in this trading climate ever worth giving up.”

A report released by Bain & Co. last month suggested that the global luxury market had moved into recovery mode after several years of stagnation, largely driven by shoppers born after 1980. Still, department store brands continue to decline, buckling under the pressure of underperforming stores and the growing dominance of digital rivals and e-commerce platforms. Haute luxe players are faring better — Gucci has proved a case in point — though companies with a focus on prices at the lower end of the spectrum appear determined to cultivate growth through acquisitions.

Nowhere has this been better encapsulated than the competition brewing between the North American rivals Tapestry (known as Coach, the name of its primary leather goods company, until last month) and Michael Kors, both brands eager to transform themselves into leading multibrand forces in the global luxury field (and to placate anxious investors) with an expansive portfolio of labels catering to a broad range of bank balances.

One can only imagine what they think of Furla, the Italian accessories brand controlled by the Furlanetto family. It celebrated its 90th anniversary this year and, like Longchamp, has quietly and without fanfare continued to expand at a rate that makes it the envy of many rivals, doubling its turnover in the past three years.

After record revenue and profit in 2016, the company announced a sales surge of 23.5 percent in the first half of 2017, to €238 million, bolstered by store openings and strong travel retail sales. (Revenue growth in Asia in the same period was a noteworthy 63 percent.) Like Longchamp, Furla has focused heavily on developing its distribution network, operating its own stores where appropriate and avoiding the allure of discounting and outlets.

“Obviously we are being very strategic in how we expand, helped by having owners that give our vision their full backing, but much of this growth really does lie in the appeal of our product,” said Alberto Camerlengo, who was appointed chief executive this year after six years as Furla’s general manager.

Recently the brand, known largely for its handbags (the medium Metropolis tote, for example, is $448 in the Furla online store), has added footwear, scarves and watches to its collections. “We see new product, done well, as a way of sharpening shoppers’ perception of our brand, rather than weakening it,” Mr. Camerlengo said.

Unlike Coach and Michael Kors, neither of which place much stock in the importance of manufacturing provenance, the “Made in Italy” label remains at the core of the Furla philosophy, helping to enhance its aura of exclusivity.

“I think the power of heritage can be underestimated,” Mr. Camerlengo said. “Especially in new markets, the fact that we are proudly Italian continues to hold great appeal.”

Mr. Cassegrain of Longchamp agreed. The vast majority of its goods are made in the company factory in the Loire Valley of France, something he says means a lot to foreign customers. (He cited sales growth of 50 percent in China last year).

“We pride ourselves in our roots and where we come from, but we aren’t cold and aloof like other rivals,” he said with a grin. “We show that European brands can offer something warm and joyful, yet practical, too. Chic and casual cross-generational and cross-purpose bags are a status symbol that anyone can get on board with, even if to some it appears a bit old-fashioned.”

Although the brand recently has started to branch into higher-priced leather goods and ready-to-wear, Mr. Cassegrain stressed that its core ethos — pricing predominantly based on manufacturing costs rather than marketing aspirations — would not be changed anytime soon.

Mr. Camerlengo of Furla said, “Luxury is still very tribal, wherever you operate and whoever you appeal to.

“But in an ever more complicated world, people want to be more specific and individual in the message they send when they use your product,” he said. “It is about showing you have the right attitude. We believe that our family values have kept us firmly on the right track.”

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