Changes have been coming fast to Italian shoemaker Sergio Rossi since it was acquired by Lanvin Group last year.

Since the sale closed in July 2021, the brand has hired a new artistic director (influencer Evangelie Smyrniotaki); launched e-commerce in the key US market; and opened four new stores in China. Its factory in Italy’s San Mauro Pascoli has undergone an upgrade, converting operations to run on renewable energy. This autumn the brand invested in a marketing push in Paris and Milan during fashion month, a signal to both customers and the industry that it was entering a new chapter.

Sales are now growing strongly and the brand is “very close” to profitability, according to chief executive Riccardo Sciutto, who joined the brand from Tod’s in 2016. “I always look at innovation as the best way for an Italian company to grow without losing your DNA,” he said.

Sergio Rossi is the latest luxury brand where Lanvin Group — controlled by China’s Fosun conglomerate — is racing to put in place a turnaround. From its largest, namesake brand in Paris (still on the mend from years of turbulence following the ouster of Alber Elbaz) to Austrian tights-maker Wolford, Italian suiting house Caruso and American knitwear brand St. John, the Shanghai-based outfit is seeking to seize on surging luxury demand since the pandemic to nurture a rebound at its portfolio of flagging heritage brands.

The turnaround plans have become more urgent as the group plans for a public listing on the New York Stock Exchange before the end of the year, and as concern mounts that a deteriorating macro-economic environment could cut short luxury’s stellar post-Covid growth spurt.

So far, the fashion group has restored top line growth, even if profitability remains elusive (the group says it’s on track to be EBITDA positive by 2024). In the first half of the year, group revenue was up 73 percent on the same period in 2021. The planned listing via a SPAC deal aims to build a financial war chest to continue investing in turning around its brands, as well as funding future acquisitions. Lanvin Group is still small, with annual revenues expected to hit around €400 million this year, a sliver of the billions European groups like LVMH and Kering rake in.

“We are in the investment phase, we know that [with] luxury we need to build a … very solid infrastructure for future growth,” Lanvin Group chairman Joann Cheng said.

A new fashion group

Lanvin Group was first formed in 2017 under the name Fosun Fashion Group, as the Chinese conglomerate Fosun International was preparing to acquire France’s oldest couture house Lanvin, which was on the brink of bankruptcy. Last year, the group rebranded, adopting the name of its flagship brand in a bid to highlight its focus on the lucrative and resilient luxury sector in contrast to its parent company’s historic focus on industries like pharmaceuticals, real estate and insurance.

In addition to Lanvin, the group acquired several other companies with a similar profile — fashion players with a strong heritage that had fallen into disrepair, and were too small to attract interest from luxury’s more established conglomerates. The group snapped up assets spanning a range of categories, including hosiery (Wolford), knitwear (St John), suiting (Caruso) and footwear (Sergio Rossi).

While the group’s purchases weren’t the buzziest brands in the market, Lanvin Group saw potential in their legacy narratives and valuable specialist expertise (Caruso is a historic tailoring supplier for top brands like Dior and Balenciaga, while Sergio Rossi manufactures shoes for hot names like Amina Muaddi.) The strategy was to build a diversified stable of smaller, specialist names that could complement one another and support category expansion at flagship Lanvin.

“They [each] have their vertical,” Cheng said of the group’s collection of brands. “There are multiple brands working together to create the synergies, not fighting with each other on the same customer.”

A brand revival playbook

While turnaround plans vary at each label, three common strategies underpin the group’s approach: ramping up physical retail, boosting digital exposure, and refreshing each brand’s product offering to appeal to a younger demographic.

Geographically, the focus is on scaling outside Europe, where Lanvin Group’s brands are still primarily exposed. China currently accounts for 15 percent of group revenues, and while North America is 33 percent of sales, over half of which is driven by California-based St John. For the group’s other brands, it’s 15 percent. The goal is for sales in China and the US to make up more than half of sales by the end of 2025, Cheng said, accelerating the group’s geographic diversification.

Lanvin Group sees its Shanghai-based perspective as key to supporting growth by helping its brands navigate the all-important Asia market. Sales in Greater China grew 32 percent year-on-year in the first half, despite continued strict Covid-19 restrictions, while sales in other Asian markets nearly tripled.

For North America, the decision to list in New York could boost visibility and attract local talent by signalling the group’s ambitions there, Cheng said.

“We are two different cultural minds, but we have the same global vision,” Rossi’s Sciutto said of the brand’s new owner. “One side is respectful of the DNA and the heritage, but on the other side, we have the common vision for dynamic growth in the modern era.”

The revival of the group’s namesake Lanvin house is starting to gain steam, with consumers responding to new collections by creative director Bruno Sialelli and a leather-goods push fronted by supermodel Naomi Campbell. In the first half, sales more than doubled year-on-year to reach €64 million. Last December, the brand tapped a new managing director, Siddhartha Shukla, an industry insider who has held key marketing roles at Theory, Gucci and Saint Laurent.

A challenging market

Still, while Lanvin Group’s brands have been seeing rapid growth, the surge is coming on top of a depressed base and at a time when luxury sales have been surging across the board.

Looking ahead, the group’s fortunes are far less certain amid slowing GDP growth, rapid inflation and a global energy crisis. Consumer confidence has plummeted to its lowest level in decades, according to recent OEDC data.

“In a market that is polarised more and more between winners that are ‘take-it-all’ and other brands, it’s not an easy task for a group with many brands that have got a lot of heritage, but probably don’t score as ‘top-of-mind,’” said Mario Ortelli, founding partner at advisory firm Ortelli&Co. “It’s an effort to gain market share.”

Already, Lanvin Group trimmed its valuation to $1 billion last month, down from a $1.25 billion estimate in March, to reflect a “significantly altered market environment” compared to when the group first announced its plans to go public, according to the company.

“Luxury companies have a distinct advantage in a challenging economic environment because their consumers are more affluent, and therefore less affected,” said Brian Ehrig, partner at consulting firm Kearney.

However, “it’s not a very attractive market right now, especially for companies that are not yet profitable,” Ehrig added.

The company’s future prosperity rests heavily on the increasingly challenging listing, as the group needs to secure ample capital to keep investing in its brands’ reboots. It’s also touted ambitions to acquire new targets as early as next year.

Cheng says she remains optimistic.

“Even with a lot of challenges in the market, we [are] still raising quite significant proceeds to prepare for the future position and to grow the current brands,” Cheng said. “[The] IPO is not our purpose, it’s just a one milestone during our long run to build up Lanvin Group as a true luxury group.”

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