Christian Dior S.A. - Company Profile, Information, Business Description, History, Background Information on Christian Dior S.A.

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History of Christian Dior S.A.

Celebrating its 50th anniversary in 1996, Christian Dior S.A. is one of the largest and most famous firms in the world of fashion. The company burst on the haute couture scene in the post-World War II era with a revolutionary "New Look" that took the world by storm. Though its founder and namesake only lived long enough to direct the firm's first ten years in business, subsequent decades launched the careers of such stars of the fashion firmament as Yves Saint Laurent and Pierre Cardin. Originally backed by French textile magnate Marcel Boussac, Maison Dior was acquired by financier Bernard Arnault in the 1980s, forming what Time magazine called "the jewel in Arnault's crown" of luxury goods companies.

Christian Dior S.A.'s couture and licensing operations generate about FFr 1.03 billion (U.S. $177 million) in retail and wholesale sales of apparel and accessories. A separate subsidiary, Christian Dior Perfumes, sells another FFr 9.3 billion (U.S. $1.6 billion) in fragrance each year. Furthermore, in the mid-1990s Dior controlled 41.8 percent of luxury goods giant LVMH Moet Hennessy Louis Vuitton through a 100 percent-owned holding company, Financier Jean Goujon. As the lead stakeholder in LVMH, Dior claimed FFr 30.8 billion (U.S. $6.3 billion) in consolidated sales. Despite the company's larger profits from LVMH and its perfume subsidiary, the focus of this essay will be on the much smaller Christian Dior Couture fashion design business. Nearly one-third of Dior Couture's sales come from licensing agreements, and of those FFr 328.4 million (U.S. $63.2 million) in licensing revenues, almost half are generated in Asia and over one-fourth are made in the United States. To emphasize quality and exclusivity over quantity, management whittled away at Dior Couture's more than 125 licensees in the mid-1990s.

A Winding Path to Fashion

The couture house is named for its founder, Christian Dior, a bon vivant born in 1905. As heir to a family fortune built on fertilizer and chemicals, Dior had little ambition to finish college, instead whiling away his twenties in Paris bars in the company of poets and artists. Dior dabbled in art, and in 1928, launched a gallery financed with a large gift from his father. But when heavy borrowing and the Great Depression combined to bankrupt the family business in the early 1930s, Dior's family was forced to sell homes, furniture, jewelry, and other heirlooms.

Dior moved in with a friend in Paris and decided to utilize his artistic talents in the fashion industry. Beginning in the mid-1930s, he designed on a freelance basis, selling drawings of hats and gowns to magazines and couture houses. He snared a full-time position with Robert Piguet's fashion design house in 1938, but was soon drafted into service for World War II. Assigned to "farm duty"--helping farmers' wives and other short-handed agriculturists tend their land--Dior was fortunate to be in unoccupied Provence when the German Army advanced in June 1940 and was subsequently discharged from the service. He returned to Paris in 1941 and found work as a design assistant with the couture house of Lucien LĂ©long, designing custom-made dresses, suits, and ball gowns for some of the wealthiest women in the world.

Postwar Origins of the House of Dior

In 1946, French fabric maven Marcel Boussac--then the nation's wealthiest man--offered to back Dior's launch of his own maison de couture. Though the new house of fashion became part of a vertically-integrated textile business, it was initially a vanity property for Boussac, comparable to his world-renowned stable of racehorses. Christian Dior Ltd. started out that year with 85 employees, capital of FFr 6 million, and "unlimited credit." In exchange for his creative genius, Dior negotiated a generous salary; a significant, though not controlling, stake in the firm; legal status as its leader; and one-third of pretax profits. It was quite an unusual arrangement, given Boussac's legendary--and eventually self-defeating&mdash⟩petite for control. The company was a majority-owned affiliate of Boussac Saint-Freres S.A.

The designer introduced his first and most famous line--dubbed the "New Look" by Carmel Snow of Harper's Bazaar--in 1947. The collection was a striking refutation of the war's deprivation: whereas rationing restricted the amount of fabric used in a dress or skirt, Dior used an extravagant 20 yards of only the finest fabrics in his long, wide skirts. With help from elaborate undergarments, the dresses emphasized the feminine figure, from the tiniest of waists to peplum- or tulle-enhanced hips and tight-fitting bodices, often with deep décolletage.

The line was an immediate and nearly complete success, garnering a clientele ranging from European royalty to Hollywood starlets and generating sales of FFr 12.7 million by 1949. Dior opened a New York outlet before the year was out and established London operations in 1952. From the outset, fully half of the company's sales were made in the United States. By the end of 1953, the company had operations in Mexico, Canada, Cuba, and Italy. Women who could not afford the haute couture copied it at home. Soon enough--and to Dior's chagrin--knock-off artists did the "dirty work" for them. Eventually, the maison fought fire with fire, establishing a prĂȘt Ă  porter (ready to wear, abbreviated in the trade as "rtw") line of somewhat less expensive versions of the couture line. The designer stayed with the "New Look" for seven years, becoming a virtual dictator of hem lines and lengths in the process.

Diversification, Licensing Speed Growth in the late 1940s

Again backed by the Boussac fortune, Dior launched Christian Dior Perfumes Ltd. in 1948. The namesake owned one-fourth of the new venture, a childhood friend who managed France's Coty perfumery held another 35 percent, and patron Boussac owned the remaining stake. By 1950, a licensing program devised by Dior General Manager Jacques Rouët put the now-famous name on dozens of accessories, including ties, hosiery, furs, hats, gloves, handbags, jewelry, lingerie, and scarves. While denounced by Dior's colleagues in the French Chamber of Couture as a cheapening of the high-fashion industry's image, this licensing scheme would become a cornerstone of the company's long-term success and a trend that would only grow stronger in the decades to come.

By the mid-1950s, the Dior empire included eight companies, 16 affiliates, and employed 1,700 people on five continents. In 1949 alone, Christian Dior fashions constituted 75 percent of Paris fashion exports, and five percent of all French export revenues. Though Christian Dior launched several successful lines--including the "A," "Y," "Arrow," and "Magnet"--from 1954 to 1957, none would surpass the initial introduction of the "New Look" in impact. By the time the house celebrated its tenth anniversary in 1957, it had sold 100,000 garments. Though in his early fifties, Dior was by this time preparing for his retirement, having suffered two heart attacks. A third seizure took his life in 1957, ironically while on a recuperative trip to Italy. Though his couture career spanned scarcely a decade, he had established himself as one of the modern era's best known fashion designers. Writing for Contemporary Fashion, Kevin Almond asserted that "By the time Dior died his name had become synonymous with taste and luxury."

New Generations of Design Leadership after Dior's Death in 1957

The founder's death left the house in chaos. Jacques RouĂ«t considered shuttering the worldwide operations, but neither Dior's licensees nor the French fashion industry--which owed 50 percent of its export volume to the House of Dior--would consider it. Instead, RouĂ«t--who would continue to guide the company's day-to-day operations into the 1980s&mdash′omoted 22-year-old Yves Saint Laurent, whom Dior had hired just two years previous, as lead designer. Launched in 1958, the young designer's trapeze line was successful, but his 1960 "bohemian" look met heavy criticism from the press, especially the influential fashion industry magazine Women's Wear Daily. When Saint Laurent was drafted into the armed service that year (he went on to found his own house in 1962), he was succeeded by Marc Bohan, another protĂ©gĂ© of Dior hired to head the London outlet shortly before the founder's death. Bohan would go on to serve Dior until 1989, far longer than the founder. Contemporary Fashion's Rebecca Arnold credited Bohan with keeping the House of Dior "at the forefront of fashion while still producing wearable, elegant clothes," and Women's Wear Daily, not surprisingly, claimed that he "rescued the firm."

Troubles at Dior's parent company, Boussac, would visit drastic change on the maison de couture in the 1980s. The roots of the problems reached back to the 1970s. Still owned and led by its octogenarian founder (known as "King Cotton" in his home nation), Group Boussac had by this time grown to encompass 65 textile mills and 17,000 employees. Despite its size, several imperatives of the maturing industry--consolidation, competition from imports, the shift to synthetics--had knocked Boussac from the top of France's fabric heap to a struggling number five by 1971. Reluctant to close money-losing plants and lay off workers, King Cotton did little to prevent his textile operations from suffering heavy losses in the 1970s. Money generated by his remaining one-third share of Dior helped to prop up the Boussac group for several years, and the parent company raised millions by selling its stake in Dior Perfumes. In 1981, the government-owned Institute de Development Industriel took control of the insolvent company, infusing FFr 1 billion (almost U.S. $200 million) in the company from 1982 to 1985. When Boussac finally went bankrupt, a group of investors led by Bernard Arnault acquired it for "one symbolic franc" in December 1984. The 34-year-old Arnault divested the textile group's industrial operations, focusing on its Bon Marché department store and Christian Dior.

Evolution into a Luxury Powerhouse in the 1980s

Under Arnault, Dior became the cornerstone of one of the world's largest and most important fashion companies. The new leader formed Christian Dior S.A. as a holding company for the fashion house, then used the holding company as a vehicle to purchase a controlling stake in Moet Hennessy Louis Vuitton in 1990. (His Au Bon Marché and Financiere Agache companies were also involved in the complex acquisitions.) Before long, Arnault had woven an intricate web of high-end brands, including the Christian Lacroix and Celine fashion houses; the Hubert de Givenchy fashion and fragrance operations; and the Dior fragrance business. By 1991, when Arnault sold a minority stake in Dior on the public market, LVMH had grown to become France's top luxury goods group and its second-largest publicly-traded firm.

Dubbed "king of luxury goods" by Time, Arnault took part in the supervision of Dior's design direction as well as its operations. Though the couture division was by this time an unprofitable operation, Arnault considered it a fundamental element of the Dior brand cachet. In 1989, he hired Italian designer Gianfranco Ferré to succeed Marc Bohan as the maison's artistic director. In keeping with his standing as the first non-Frenchman to guide the house, Ferré broke from the romantic and flirtatious traditions set by Dior and Bohan respectively, opting instead to continue in his own well-established vein with a collection described by Kevin Almond in Contemporary Fashion as "refined, sober and strict."

Arnault even served as managing director of Dior from the December 1990 firing of Beatrice Bongibault to September 1991, when he hired former Au Bon MarchĂ© president Philippe Vindry. Vindry's strategies included a ten percent average reduction in the retail price of Dior prĂȘt Ă  porter. (A wool suit still cost more than U.S. $1,500.) The change helped increase sales at Dior's headquarters store by 50 percent from 1990 to 1991. Vindry also reorganized Dior into three divisions: women's ready-to-wear (also encompassing lingerie and childrenswear), accessories and jewelry, and menswear. Management also strove to rein in internal management of the Dior brand and image by reducing licensees and franchised boutiques. Arnault and Vindry nearly halved the number of Dior licensees from 280 in 1989 to less than 150 by 1992, opting for quality and exclusivity over quantity and accessibility. By mid-decade, Christian Dior S.A. had added company-owned stores in Hong Kong, Singapore, Kuala Lumpur, Cannes, and Waikiki to its core shops in New York, Hawaii, Paris, and Geneva. This strategy held out the potential to increase direct sales and profit margins while maintaining high-profile locations. Francois Baufume, who succeeded Vindry as managing director of Dior Couture in 1993, continued to reduce licensees, which numbered around 120 by mid-decade.

Christian Dior Couture's sales increased from FFr 673 million ($129.3 million) in 1990 to just over FFr 1 billion (U.S. $177 million) in 1995, while net income grew from FFr 115 million (U.S. $22 million) to FFr 156 million (U.S. $26.9 million).

New Designer to Lead House in the Late 1990s

In 1996, Arnault "ruffled some French feathers" by appointing British designer John Galliano to succeed Gianfranco Ferré as Dior's head. Arnault noted that while he "would have preferred Frenchmen," he chose a Briton "for a very simple reason: talent has no nationality." The CEO even compared maison Dior's newest designer to the founder in a December 1996 Women's Wear Daily article, noting that "Galliano has a creative talent very close to that of Christian Dior. He has the same extraordinary mixture of romanticism, feminism, and modernity that symbolizes Mr. Dior. In all of his creations--his suits, his dresses--one finds similarities to the Dior style."

Additional Details

Further Reference

Adler, Jerry, "The Riches of Rags," Newsweek, December 16, 1996, p. 77."Boussac Bows Out," Economist, December 12, 1970, p. 85."Boussac Tries to Save His Empire," Business Week, July 3, 1971, p. 31."Boussac Unbowed," Economist, April 26, 1975, p. 115.Cattani, Jane, "Dior Lives," Harper's Bazaar, December 1996, pp. 195-198.Deeny, Godfrey, "Francois Baufume: Directing Dior," Women's Wear Daily, February 28, 1995, pp. 6-7.------, "A New Dior Taking Shape under Vindry," Women's Wear Daily, October 28, 1992, pp. 1-3."Dior's Birthday: Let 'Em Eat Cake," Women's Wear Daily, March 23, 1987, pp. 1-3.Duffy, Martha, "The Pope of Fashion," Time, April 21, 1997, pp. 112-113.Jacobs, Laura, "Dior's Couture D'Etat," Vanity Fair, November 1996, pp. 92-97.Kurzwell, Allen, "Dior: 40 Years of Triumph," Harper's Bazaar, September 1987, pp. 152-153.Middleton, William and Kevin West, "In Arnault's Worlds, Luxury and the Future Are Keys to Empire," Women's Wear Daily, December 9, 1996, pp. 1-4.Pochna, Marie-France, Christian Dior: The Man Who Made the World Look New, New York: Arcade Publishing, 1996.Raper, Sarah, "Dior Holders Are Feisty at First Annual Meeting as a Public Company," Women's Wear Daily, June 17, 1992, p. 15.Weisman, Katherine, "Arnault Sees Sales, Profits Growing at LVMH and Dior," Women's Wear Daily, May 31, 1996, pp. 2-3.

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