YSL Plans to Weather the Downturn

Hermann credited product expansion, particularly in the high-margin leather goods business, for propelling the brand into the black — with tight cost controls playing a supporting role. "We went from a situation where it was mainly ready-to-wear and one bag, to ready-to-wear, bags, shoes and small leather goods," Hermann said in an interview, seated in the meeting room situated between her office and that of creative director Stefano Pilati, her design counterpart in the turnaround effort. "Are we a monoproduct brand? Not any more."

The executive was referring to the Mombasa, a hit bag from the Tom Ford-era YSL that was the couture brand's first real volley into accessories. (Previously, costume jewelry by the late couturier’s muse Loulou de la Falaise was the main statement.) While Ford’s horn-handled shoulder jewel is still available in stores, it’s the Muse, Muse 2, Downtown and Tribute bags that have given YSL further legitimacy, along with influential shoe styles such as the Tribute, a platform sandal.

When Hermann arrived at YSL from Dior, succeeding Mark Lee, leather goods accounted for 31.9 percent of the company's revenues, with rtw at 44.5 percent, shoes at 13.1 percent and other products, including royalties, at 10.5 percent. Last year, leather goods generated 35.9 percent of revenues, with rtw at 30.8 percent, shoes at 16.7 percent and other products at 16.6 percent.

While product expansion, including the Edition 24 line of wardrobe staples, plus evening and unisex capsules, bumped up the top line, Hermann nurtured the bottom line with close attention to open-to-buys, inventory levels, pricing and margins. Healthy sell-through took priority over loading up stores with merchandise. "The best way to improve the results was to increase the turnover, with a good margin," she stressed.