How many lives can a fashion brand have?
By Dana Thomas
A little more than a year ago, the beloved French fashion house Sonia Rykiel — founded in 1968 by a flame-haired feminist to empower women, passed on to her daughter in 2007 and sold to Hong Kong investors in 2012 — went into liquidation. At the time, it appeared to be a sad denouement for the once-revolutionary ready-to-wear brand.
But now the house of Rykiel is about to rise again, under new owners. Or is it? Fashion history is littered with tales of newfangled entrepreneurs who have swooped in to save old brands, only to leave them in tatters. Will Rykiel be one of them or the exception that proves the rule?
“The Sonia Rykiel brand is not damaged. It still has strong values,” said Michael Dayan, who, along with his brother Eric, made a fortune in outlet e-tailing and bought Rykiel late last year. The Dayans have big plans for the brand. A revamped womenswear line. A menswear line. A perfume. Perhaps even a boutique hotel.
However, they have no experience in luxury fashion, and as Serge Carreira, a business lecturer at Sciences Po, put it, “luxury fashion is a very specific and demanding sector, and a challenging business,” even before the COVID-19 slump.
“There is a fascination and attraction to owning a luxury brand — it brings a lot of glam and fame, and it has been a booming industry and a very profitable industry,” Carreira continued. “But luxury takes time; it’s not a fast move. It’s a kind of game. And the return on investment is not guaranteed at all.”
Rykiel has already been through this once. In February 2012, when the Rykiel family sold the company to the billionaire brothers Victor and William Fung of the Hong Kong manufacturing firm Li & Fung, there was lots of talk of potential, with grand plans to “ensure the longevity of the brand,” as Nathalie Rykiel, Sonia’s daughter, said at the time. But the company was plagued by a series of outside economic troubles and in-house management issues. In seven years, sales dropped from 83.7 million euros in revenue and 1.4 million euros in losses to 35 million euros in revenue and 20 million euros in losses before finally filing for bankruptcy.
The Dayans brush all that off like a piece of lint. They say they are different. They say, as far as they are concerned, “Sonia Rykiel right now is like a startup,” as Eric put it. And the Dayans know all about running startups.
The sons of Moroccan immigrants, Eric, age 40, and Michael, who is 38, grew up in the 12th Arrondissement, a middle-class quarter on the east side of Paris. Michael studied law, passed the bar and went into practice. Eric enrolled in business school, dropped out and worked for the family’s destocking business. In the mid-aughts, Michael quit law and, with Eric, their brother David and their friend Thierry Petit, took the family business online.
The flash sale site they founded, showroomprive.com, “made money from the beginning and grew every year,” Michael said. In 2010, they sold a 30% stake to the Palo Alto-based investment fund Accel Partners for 37 million euros. In the fall of 2015, the company was listed on the Euronext stock market and by the end of the year had a market capitalization of 655 million euros. “It was one of the first French digital startups to do an IPO,” Michael said.
For the next two years the brothers took what they describe as “a break,” to spend time with their families and explore other avenues. They invested in Back Market, a French website that sells reconditioned electronic equipment, and BlaBlaCar, a French online marketplace for carpooling. Then they heard about the Rykiel woes. “It made us dream,” Eric said.
Although they have never worked in the luxury sector, they were sure they could run Sonia Rykiel. After all, at Showroomprive.com, they launched #collectionIRL, an in-house womenswear label. “We are ambitious,” Eric said. “And we have experience.”
The first round of takeover offers came in July. Bidders included former Balmain Chief Executive Emmanuel Diemoz, French real estate entrepreneurs Nicole Levy and Julien Sedbon, and a Chinese investor. The Dayan brothers were not among them. “The timing wasn’t great — it was July, vacation time,” Eric said. “The information escaped us, and we missed it.”
In the fall, David saw that French court was about to choose a new owner for Sonia Rykiel. He asked Eric and Michael if they were still interested. They were. “This was on a Thursday,” Eric said. “And the court date was Monday, at 11 a.m.”
The brothers spent the weekend hunkered down with their lawyers, their bankers “and a lot of coffee,” Eric said. They drew up a business plan, got the bank to cut a sizable check and went to court. In their dossier, they asked for the company name, the unsold stock, the licenses (eyewear, homeward, linens and children’s) and archives, which are stored in a warehouse near Tours, in the Loire Valley.
They skipped the real estate, including the company’s flagship store and headquarters on the Boulevard Saint-Germain, a property still owned by the Rykiel family. Like showroomprive.com, they wanted to make Sonia Rykiel primarily an e-commerce fashion brand. Luckily, as it turned out. “With coronavirus, it would have been a heavy lift with the boutiques,” Eric said. “We were lucky not to take them.”
The courtroom was standing room only. The brothers’ bid was one of nearly two dozen that included two American funds, a Chinese fund, a Korean family fund and Sonia Rykiel’s former son-in-law and former CEO, Simon Burstein, of the Browns retailing family in London. The judges opened each packet, one by one, and read the price and pitch out loud.
“We kept holding our breath, wondering: Are we still in the race?” Michael remembered.
In the end theirs was the highest bid — 10 million euros, according to a source who attended the hearing — and, after a three-week review, the court approved their proposal. When asked about what she thought of the new buyers, Nathalie Rykiel, who did not pursue buying back the company from liquidators, said by email: “I am looking forward to seeing how this new chapter will evolve.”
Since taking over, they have rebooted the brand’s social media accounts. On Instagram, they are posting pictures from the archives: old ads, runway shots and portraits of Sonia Rykiel, with some of her bon mots, like, “If you are beautiful, enjoy it; if you’re not, play with it.” Michael said, “We’ve had thousands of likes, and notes of support. People love Rykiel and happy to see it back online.”
They are staffing up the company (when they bought it, there were no employees) and are interviewing designers for the creative director post. “We would like to hire a woman,” Michael said. “We want that sensibility.” They will start with knitwear, since Sonia Rykiel was known as its queen.
“It’s going to be great,” Michael said, with an air of unquestioned confidence. “You’ll see.”