Proenza Schouler recently sold a minority stake to private equity firm Castanea Partners and hired new interim chief executive officer Ronald L. Frasch. Castanea and other Proenza Schouler executives are searching for a permanent CEO. Frasch said the company needs to manage its expenses better.
While Proenza Schouler plans to expand in several areas, the primary focus will be on handbags. The company’s handbag business has slowed down over the past year and a half, even though it is the highest-margin segment of its business. Frasch says that area has the greatest opportunity for growth.
The PS1, the bag introduced in 2008, was the only handbag Proenza Schouler has produced that has performed very well. Darren Spaziani, the accessory designer who created it, now works for Louis Vuitton, and Proenza has a new accessories designer hired from Louis Vuitton.
Frasch wants to focus on dresses, knitwear, men’s wear, and shoes. He says customers want to see Proenza promote fashion more. However, the company plans to focus mostly on handbags. Opening new stores will not be an immediate priority. Frasch wants to focus on merchandising and marketing. He wants to create a go-to category that defines the brand.
Proenza decided to sign with Castanea rather than LVMH Moet Hennessy Louis Vuitton in part because they could not agree with LVMH on the value of Proenza. LVMH thought Proenza was valuing itself too high. Proenza was able to agree with Castanea on a value that it said was on the higher end.
Castanea made a seven-year commitment to Proenza, rather than a more common three- to five-year commitment. The group might remain with Proenza longer if that is necessary to reach its goals.
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