Groupe Alain Manoukian

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Groupe Alain Manoukian

Domaine de Blanchelaine
BP 29 Mercurol
26 600 Tain l’Hermitage
France
Telephone: +33 (0) 4 75 07 50 50
Fax: +33 (0) 4 75 07 44 71
Web site: http://www.groupe-alain-manoukian.com

Public Company
Incorporated: 1973
Employees: 1,077
Sales: EUR 160.79 million ($150 million) (2001)
Stock Exchanges: Euronext Paris
Ticker Symbol: AMKN
NAIC: 4481120 Women’s Clothing Stores; 448110 Men’s Clothing Stores

France’s Groupe Alain Manoukian is a leading designer, distributor, and retailer of ready-to-wear fashions, with an emphasis on knitwear. The company operates an international network of more than 180 retail stores—some 120 of which are directly owned by the company, the remainder operated as “affiliates” under a franchise agreement. In addition to its retail network, Manoukian’s fashions are distributed through a network of third-party retailers. Manoukian’s operations remain heavily dominated by its French sales, which account for nearly 80 percent of revenues of more than EUR 160 million. The group has been expanding its international presence, however, particularly in Spain, Belgium, Portugal, Greece, and Switzerland, but also in the Far East, with stores in Japan, Hong Kong, Korea, and Singapore. Manoukian also operates an e-commerce capable web site. Long known for its fashions targeting the women’s 30- to 40-year-old market segment, Alain Manoukian has expanded its reach at the turn of the century, boosting its menswear line to account for 10 percent of total sales. The company also has launched two new labels, Seda Manoukian, targeting the 20- to 30-year-old women’s market, and the high-end Manoukian label, which targets the women’s 40- to 55-year-old segment. Listed on the Euronext Paris Secondary Market, Alain Manoukian remains controlled at more than 63 percent by the Manoukian family. Founder Alain Manoukian, together with wife Danielle and son David, continue to occupy the company’s top management positions.

Knitting a Fashion Empire in the 1970s

Alain Manoukian might have spent his career at his family’s shoe manufacturing company in Romans, in France’s Rhône Alpes region if it had not been for the design talents of his wife, Danielle. While Alain Manoukian worked at the modest shoe company, Danielle Manoukian opened a clothing shop at the beginning of the 1960s. Danielle Manoukian had come from a textile family, which made sweaters in Belgium. Manoukian began designing her own sweaters, selling them in her shop.

The Manoukians soon realized that Danielle Manoukian’s designs had begun to outsell the other sweaters sold at the shop. Encouraged by the success of Manoukian’s sweaters, Alain Manoukian decided to leave the family shoe business and set up his own company based on his wife’s sweater designs. With financial backing from his parents, Manoukian opened the first Alain Manoukian store in November 1972 in the town of Colmar.

The Manoukians met with quick success through the 1970s as the company developed a full line of women’s fashions, targeting the 30- to 40-year-old, mid-priced segment. While knitwear represented the company’s largest sales segment, reaching more than 75 percent of its sales, Manoukian also developed a strong line of coordinated separates to accompany its knitwear designs.

From the start, the company focused on the design and distribution ends of its business, contracting out to third-party manufacturers for the actual production. As Manoukian told Le Monde, “When one is at the same time producer, designer and retailer, one loses his soul.” Over the next decade the company built up a network of subcontractors in France, Belgium, and especially Italy.

The company grew quickly during the 1970s, becoming a noted name in French knitwear designs. Manoukian explained the reasons behind the company’s success to Le Monde: “Our strength is that we are retailers first of all. A manufacturer closed in behind the walls of his factory can’t recognize evolutions in fashion. Only distributors can ‘scent’ the customer’s desires.’

By the late 1970s, the Manoukians had begun to build a network of stores throughout France. In 1979, the company, seeking to increase its expansion, began developing a franchise network as well. By the early 1980s, Manoukian had expanded throughout much of France, opening its own stores—nearly 80 by the middle of the decade—as well as developing a 400-strong distribution network of franchises and third-party retailers. Supporting this growth was a FFr 50 million investment in a computerized distribution system.

With growing success in France, Manoukian turned toward international growth in the mid-1980s, a process begun in 1984, with store openings in Italy, Spain, and Switzerland. The United States became a prime target for growth, as the company opened stores in New York, Boston, Atlanta, Houston, and Dallas, among other places, including a flagship store on Manhattan’s Madison Avenue. To finance its continued expansion, Manoukian went public in 1985, listing on the Lyons stock exchange’s Secondary Market. The Manoukian family maintained control of the business, however, with 67 percent of its shares.

By 1986, Manoukian’s stock price had more than quadrupled, while its revenues continued to grow strongly, topping FFr 426 million (the equivalent of EUR 65 million), prompting many to label the company the “French Benetton,” in reference to the highly successful Italian clothing company. At the end of 1986, the company was poised to expand still further, when it granted a franchise license to Pennsylvania’s Retail Concepts Inc. to open as many as 200 Alain Manoukian stores in the United States. To maintain competitive pricing in the United States, Manoukian began subcontracting its clothing manufacture in Hong Kong for the first time.

Restructuring for Growth in the New Century

Manoukian sought to build on its brand name during the 1980s, joining the trend toward designer licensing—the company rolled out a line of Manoukian fashion eyewear, and also sought to extend its name to a variety of accessories. Meanwhile, Alain Manoukian attempted to duplicate its success in womenswear with a line of men’s fashions, debuting the company’s first 200-piece menswear collection in 1988 and launching plans to open as many as 200 Manoukian men’s stores in France, before rolling out the men’s concept to Japan, Spain, and the United States.

Manoukian’s enthusiasm for expansion spread to new targets at the end of the 1980s, including a drive into the children’s wear market. The company also began making acquisitions, buying up La Sweaterie and Imperial Classic, as well as an extension into silk-printing with subsidiary Société d’Impressions et Nouveautés, moves that led the group into manufacturing for the first time.

Yet by the beginning of the 1990s, Manoukian’s expansion appeared too ambitious, while its designs, described by some as outdated and overpriced, appeared to be falling from consumer favor. From profits of nearly FFr 29 million on sales of FFr 570 million in 1989, the company dropped into losses, to the tune of FFr 10 million on sales of FFr 650 million in 1990. Manoukian’s difficulties continued into the following year, with sales dropping back to just FFr 615 million and losses of nearly FFr 8 million.

Manoukian began restructuring in 1992, simplifying its organizational structure and refocusing its operations around its core knitwear and womenswear lines. The company now returned to its origins as a retailer and distributor, a strategy that included transferring ownership of its retail chain, previously held directly by the Manoukian family, to the company. As part of the restructuring, the company sold off a number of its holdings, licensed out its children’s clothing line, and pulled out of the U.S. market.

These moves helped Manoukian return to profitability by the end of 1992, posting profits of FFr 1.9 million on sales of slightly less than FFr 560 million. By the following year, the company had increased its profitability to more than FFr 23 million, despite a further drop in revenues to FFr 530 million. By then, Manoukian had taken steps to gain tighter control over its distribution network, beginning a program in 1993 of converting its franchises into “affiliates” placed under the company’s direction. Manoukian also began a program of acquiring a number of its affiliate stores, doubling the size of its company-owned network by the end of the decade.

By the middle of the 1990s, Manoukian was once again on a growth track, with sales rising from EUR 77 million (approximately FFr 510 million) in 1996 to EUR 90 million in 1997 and then topping EUR 105 million in 1998—with a goal of topping the FFr 1 billion (EUR 150 million) mark by 2001. Part of the company’s success came with the relaunch of its menswear collection, which rose to 6 percent of the group’s sales by 1998. Manoukian, backed by statistics showing that 60 percent of men’s clothing purchases are made by women, also rolled out a new retail concept, that of “mixed” stores, featuring both women’s and men’s clothing—and separate doors for each. The first mixed store opened in 1996, and by 1998 the company operated 15 mixed stores.

Company Perspectives:

As a very well known label, Alain Manoukian has all the attributes to continue developing and to become a European leader in medium- / top-of-the-range fashion. The Groupe Alain Manoukian, active in the French Stock Market since 1985 and with international presence in more than 28 countries, has always known how to adapt to changes taking place outside of the company and the ever-growing demands of the clientele. Since it started up, our company has been developing in order to remain at the top in a very competitive environment. It is thanks to the company-based culture that manifests itself through constant re-appraisal and research into how we can make improvements that the Groupe Alain Manoukian has known such success since its creation. And it is this culture and the enthusiasm of our teams which allows Alain Manoukian ‘s products and the label itself to lead the targeted market at the start of the third millennium.

Manoukian meanwhile had continued acquiring affiliate stores, giving it more control over its distribution costs and enabling it to post profit gains as well. The company began investing in its domestic distribution network, launching a EUR 60 million spending program to acquire a number of its affiliates and other retail locations in order to boost its total selling surface area to 14,000 square meters. By the end of 1999, that operation had been completed in large part, as the company’s French store network topped 100 stores, with an additional 31 affiliates. Internationally, Manoukian remained present, particularly in Spain, Portugal, Greece, and Japan, with an additional 100 franchised stores.

Yet Manoukian began building up its foreign holdings as well, particularly in Spain, where it made plans to add four new stores to its existing two by the end of 2001, and in Belgium, where the company added six new stores to its eight-store network in that country. At the turn of the century, the company’s foreign sales were slated to reach 25 percent of its total turnover. The company’s menswear also was building strongly, nearing 10 percent of total sales. By then, Manoukian had developed an additional retail format, for a series of new, large-scale “megastores” featuring 500 square meters of selling space, with the first of the new retail concept opening in Nantes, Mulhouse, and Lyon.

In 2001, Manoukian turned to a new market, that of the Internet, launching two new web sites. The first was an e-commerce site featuring more than 700 clothing items, and available in a number of languages. The second was a business-to-business site directed at potential suppliers, licensees, investors, and employees. The company’s e-commerce and overall retail operations were supported by a EUR 6 million investment in order to consolidate all of the company’s distribution and logistics operations into a single site. That investment was part of a EUR 18 million spending program in which Manoukian renovated a number of its existing stores, adding nine new stores and absorbing 14 of its affiliate stores.

Manoukian reached its goal of FFr 1 billion in turnover in 2000, a year ahead of schedule. The company’s double-digit growth rates—12 percent between 2000 and 2001—easily outshone the overall clothing sector in France, which was stalling at growth rates of less than 2 percent per year. Yet by the end of 2001, Manoukian had become mired in the sluggish retail sector. The group managed a modest sales increase, of more than 4 percent; much of this growth, however, came through expansion of the group’s retail network.

At the beginning of 2002, Manoukian took steps to revitalize its growth, setting a new goal of doubling its sales within six years and transforming itself into a global brand name. The company began a “reengineering” of its operations, including a restructuring of its management and other operations, designed to help it reach its goals. At the same time, the company moved to expand its retail offer. In 2002, the company launched two new clothing lines. The first, Manoukian Collection, targeted the high-end, 40- to 55-year-old women’s market. The second, Seda Manoukian, targeted the younger 20- to 30-year-old women’s segment.

The immediate effect of Manoukian’s restructuring effort was a dip in profits, in part because of disruptions in the group’s supply chain, which, coupled with a drop in sales, brought the group into losses by the end of the first half of 2002. The trend toward slowing sales was to continue through much of the year. Nonetheless, the Manoukian brand remained strong, with recognition rates as high as 97 percent in France, as the company looked forward to a return to growth in the new century.

Principal Subsidiaries

Alain Manoukian Belgium; Alain Manoukian España; Nederalma BV (Netherlands); SA Alain Manoukian; SA Alpek (Switzerland); SA Danly; SA Fam; SAM Services (U.S.A.); SA Funny et Cie; SA Soveprom.

Principal Competitors

Rallye S.A.; Redcats SA; Vivarte SA; La Redoute SA; ET AM Développement SA; Damart S.A.; KDI SAS; Sephora SA; Dyn SA; Promod SA; Zara SA; Tati S.A.; Du Pareil Au Meme SA; Cesar Industries S.A.; Lafuma S.A.; Spot SA; Armand Thiery SA; Cooperative Agridis SA; Catimini International SAS.

Key Dates:

1972:: Alain Manoukian opens the first store based on Danielle Manoukian’s sweater designs.
1979:: Manoukian launches a franchise network.
1984:: Manoukian begins international expansion, establishing company-owned and franchised stores.
1985:: The company goes public with a listing on the Lyons Stock Exchange’s Secondary Market, leading Manoukian to add children’s and men’s wear lines and to enter manufacturing for the first time.
1992:: Losses force the company to restructure and refocus on core distribution operations.
1996:: The company débuts the “mixed” clothing store concept, featuring women’s and men’s fashions in the same stores, with separate entrances for each department.
2001:: The company launches e-commerce and business-to-business web sites.
2002:: The company launches two new clothing lines, the high-end Manoukian Collection and the youth market Seda Manoukian.