AP

Restraint, Lacroix-style

IN THE end a shortage of cash brought out the best in Christian Lacroix, a fashion designer whose couture house filed for bankruptcy in May. Unable to spend freely on what was probably his final show on July 7th, he presented restrained, wearable clothes in just a handful of colours—a far cry from his usual baroque fantasies.

Mr Lacroix's fashion house had lost money every year since it was founded in 1987 inside LVMH, a luxury-goods group. LVMH's plan was to create a fashion house which would sell products from haute couture to handbags and perfume. But Lacroix never had a hit perfume or an “it” bag. In 2005 LVMH sold the firm for a nominal sum to the Falic Group, owner of Duty Free Americas, a retail chain.

Mr Lacroix persuaded the Falic Group to take the brand further upmarket. The new owners closed two cheaper but profitable lines, Jeans and Bazar, and raised prices for ready-to-wear. A plan to develop accessories never took off. That left the firm particularly vulnerable to the recession. Department stores in America have sharply reduced orders. Last year Lacroix made a loss of €10m ($15m) on sales of €30m.

High-end fashion turns out to be more susceptible to downturns than leather goods or other accessories. Even haute couture, says Luca Solca, an analyst at Bernstein Research, is not immune to the downward pressure on prices exerted by high-street brands such as Zara. Moreover luxury firms need their own shops to weather adversity. “If you rely mostly on wholesale channels such as department stores you are highly vulnerable,” says Pierre Mallevays of Savigny Partners, who oversaw the sale of Christian Lacroix by LVMH and recently advised the Falic Group on options for the firm.

Outsiders seldom succeed in turning around a luxury brand. Permira, a private-equity firm which bought the Valentino fashion house in 2007 for €5.3 billion, is another cautionary tale. Valentino is trying to renegotiate its debt and Permira has reportedly written down its investment by roughly half. But the economic crisis is likely to produce attractive acquisition opportunities for luxury's three giants—LVMH, PPR (another French conglomerate) and Richemont (a Swiss firm)—although they are all likely to stay well clear of Mr Lacroix.