The future is uncertain for AZ Factory, the fashion start-up backed by luxury goods giant Richemont and founded by the famed designer Alber Elbaz who died in April last year aged 59. Key members of the dream team Elbaz brought together in the months before his passing have decided to leave or have left the company, several sources close to the fashion brand have said.
Richemont, which derives most of its revenues from megabrand Cartier, can afford to stomach AZ Factory’s losses for some time. They represent only a few tens of millions of euros – small change for a group that made 2.1 billion euros in profit in its last fiscal year. Still, the story of the coming apart at the seams of AZ Factory serves as a microcosm of the problems with Richemont’s management of fashion. It also provides more ammunition to those investors who argue the group needs to narrow its focus to its watches and jewelry core businesses.
POINTY SNEAKERS
The story starts in January 2021, when Elbaz, a much-feted designer who had infused new life into Lanvin from 2001 to 2015, promised a fashion revolution with the launch of his new inclusive, technology-driven brand. AZ Factory would tell stories around products instead of collections. Elbaz wished to challenge the century-old tradition of dressing women only of a certain size and create a new business model better fit for the Internet age where trends are driven in real time by social media and algorithms, and by consumers of all shapes and sizes.
Highlights from AZ Factory’s launch included pointy sneakers that elongated silhouettes, dresses using figure-shaping technology and chic pajamas featuring prints of Elbaz’s drawings. “We are on a journey to design beautiful, purposeful, solutions-driven fashion that works for everyone,” Elbaz wrote on his brand’s website. “We are life, not just lifestyle, a place to experiment and try new things, our way. We believe in fashion that cares.”
Elbaz, who also designed for Yves Saint Laurent, was known for his short, ultra-feminine cocktail dresses and his passion for innovative, new fabrics that made his looks stand out. Suzy Menkes, the fashion critic, had described Albaz in his heyday when season after season he produced beautiful, simple and well-cut dresses as “every woman’s darling”. In early 2021, the fashion world applauded Elbaz’s return six years after his exit from Lanvin. He was sacked after disagreements with its Shaw-Lan Wang, the Taiwanese Chinese-born lady who owned the brand then.
Former clients and fashion critics were enthusiastic about his new project. Then, shockingly, in April 2021, just as Elbaz seemed on the cusp of realizing his dream, he died of complications from the coronavirus. The designer, who oozed charm and creative vigor despite being constantly anxious about his health, was publicly mourned by the fashion world. After his passing, AZ Factory staff spent their energy promoting his designs on the brand’s website, and at online retailers Farfetch and Net-A-Porter. They also worked tirelessly on putting together a spare no-expense homage show that closed Paris Fashion Week in October 2021.
That show proved to be the biggest ever organized to pay tribute to a designer. Everybody who was anybody in fashion was there and the French establishment too. French First Lady Brigitte Macron sat next to Richemont CEO Jérôme Lambert and other group executives and senior advisers such as Alain-Dominique Perrin. There was a notable absence though: Richemont Chairman Johann Rupert. Rupert never attends fashion shows. That detail speaks volumes about his lack of personal interest in fashion and Richemont’s struggle with other fashion brands such as Chloé and Dunhill.
In March this year, to keep Elbaz’s memory alive, dresses from the show were presented at an exhibition at Paris’ fashion museum Palais Galliera. However, two months earlier something happened at AZ Factory that would change the brand’s destiny.
Rupert decided he needed a new CEO to run his darling, lossmaking British luxury brand Dunhill and picked young Laurent Malecaze who had been chosen by Elbaz to lead AZ Factory. To replace Malecaze, Richemont chose Mauro Grimaldi who worked for Printemps and a few brands like Emilio Pucci and Elie Saab. On his LinkedIn account Grimaldi still describes himself as strategic adviser. Not a word about AZ Factory.
The AZ Factory story is revealing of how emotion, not reason, drive certain of Rupert’s business decisions. The 72-year-old South African billionaire still refuses to let go of Dunhill even though it is known as one of the UK luxury brands that has lost the most money in the past four decades. Rupert is emotionally attached to Dunhill because it was the first luxury fashion brand his father Anton bought in the 1980s. Like AZ Factory, he feels committed to it. And it seems that no one will make him change his mind.
EXODUS
People close to AZ Factory say the exodus of staff coincided with the arrival of Grimaldi at the brand. “No one can contradict him,” one person close to the brand said. Once the one-year homage work was done, some people left because they felt that the company was starting a new chapter post-Elbaz for which they did not sign up. They had joined to work with Elbaz and Malecaze not with Grimaldi.
“At least Laurent had a vision,” one person who worked for AZ Factory said. “Mauro does not. He is very much into “tick the box,” the box of inclusivity, the box of upcycling, etc… Fashion does not work like that. And he thinks and talks about price all the time. But how can you build a collection just around price. He does not understand fashion.” Richemont declined to comment for this report. Grimaldi spontaneously declined an interview request by Miss Tweed at the Hyères fashion festival last October.
Departures started in May, June of this year, according to accounts reported to Miss Tweed by several people inside and outside the company. AZ Factory’s head of marketing and communication – a key member of staff - Charles-Henry Paradis, a former close associate of Elbaz who worked for Christian Louboutin, is on sick leave since the summer. Bastide Rey, who was studio director and had left Dior to join Elbaz with whom he worked before, left to join Alaïa.
The influential French fashion PR company Lucien Pages chosen by Elbaz no longer wants to represent AZ Factory, an industry source said. It stopped working for the brand after its last Paris Fashion Week show by guest designer Lutz Huelle. The catwalk was held at Richemont’s Fondation Cartier for Contemporary Art in Paris, a place considered ill-suited for such events due to its layout. That said, being already part of the Richemont stable, it allowed the group to save money.
Making matters worse, the film of the show was poorly produced. Strutting models were filmed from one angle only. It was obvious the brand could only afford one cameraman. At times other cameras would appear on the film and in the background, you could see computers and metallic boxes on the first floor. Somebody who understands fashion and knows how important such films are for a brand’s image – as it is posted everywhere on social media and on the website of the Federation de la Haute Couture et de la mode - would never allow such a thing to happen, critics say.
“It is never good when it becomes pretty evident that a brand is trying to cut costs and save money,” one former AZ Factory associate said. “Remember this is a business about image, so when you start doing things that affect image, it’s bad news.”
NEW BUSINESS MODEL
After the one-year homage period was over, around January this year, AZ Factory decided to become something else: a platform for young designers. Since no one could replace Elbaz, it chose to invite young designers to tell their story and use AZ Factory’s infrastructure to help promote their work. Only it never quite made this strategy clear both internally or externally.
To this day, the brand continues to sell Elbaz-designed clothes while selling capsule collections by guest designers. If AZ Factory has turned itself into an incubator of young designers, it should describe itself as such, industry insiders say. Only on the brand’s website, customers still read that invited designers are asked to reinterpret Elbaz’s vision. Yet, this attempt at homage confuses the brand’s message, another signal of the lack of strategic focus on fashion from the very top management at Richemont, senior fashion executives say.
The first guest designer was South Africa’s Thebe Magugu, who won the LVMH prize in 2019 and is known for his authentic voice and natural sense of elegance. His dress for the homage collection was one of the most beautiful and featured on posters advertising the Palais Galliera exhibition.
And then came other designers such as Lutz Huelle, known for his denim looks and mix of fabrics. Huelle is also working with Charles de Vilmorin who designs for Rochas and for his own brand. And then there was Ester Manas, whose designs and vision Miss Tweed highlighted last year as among Belgium’s most promising. Manas is known for ruched stretch-mesh dress that fit every body types. Then there was Cyril Bourez, a little-known designer who produced a collection with upcycled products and offered customers made-to-order items.
Other designers are scheduled to come present their work on AZ Factory in the next few months. “If AZ Factory has become an incubator for young designers, it should present itself as such,” one industry insider said. “But for the moment it is still presenting itself as the offspring of Elbaz, paying homage to him while at the same time turning itself into a platform for young designers.”
The company describes itself thus on its website: “Now, AZ Factory welcomes Amigos, guest creatives, to co-create stories and products. We provide them with a platform to develop and share their visions of what fashion means today and to them, by appropriating and reinterpreting the codes that have made AZ Factory unique from day one. With this new approach, AZ Factory offers a new perspective on today’s fashion, driven by the perspectives of uniquely positioned individuals, rather than heritage houses exclusively.”
The business model of promoting the work of young designers cannot be profitable, industry specialists say. When a brand changes designer every two months, customers do not have the time to get accustomed to his or her work and build loyalty to it. AZ Factory is not like Moncler or other well-established brands that invite designers to offer something new every other month. The company is just two years old.
Department stores do not want to work with AZ Factory because they do not want to commit to designers whose work remains untested in terms of demand, fashion retail experts say. AZ Factory is bound to end up with unsold stock which it will have to sell at a discount – the kiss of death in terms of image. Currently, on the AZ Factory website, several previous collections, from Elbaz’s work to that of Magugu, are sold at a discount even though now is the time to sell at full price before Christmas. “Private sale,” the website calls it.
LET IT GO
Industry analysts predict Richemont will keep AZ Factory going for some time but eventually, it will have to let it go, unless it turns it into a foundation that sponsors young designers. But that would not make that much sense either. Unlike LVMH, Richemont does not have dozens of fashion brands for which it needs to build a pool of promising designers.
Some investors argue that Rupert should have closed down AZ Factory right after Elbaz passed away. Back then, it was already clear that it was going to be an impossible mission to make the brand take off and flourish without its founding designer. If Rupert ended AZ Factory, fans would have called it cruel. Rupert, who highly regarded Elbaz and believed in his vision, chose to remain true to his word and fund Elbaz’s newborn baby no matter what. It is still the case now, when it seems evident that the company’s new business model post-Elbaz will struggle to turn a profit.