Etienne Aigner AG

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Etienne Aigner AG

Marbachstrasse 9
81369 Munich
Germany
Telephone: +49 (0) 89-7 69 93 0
Fax: +49 (0) 89-7 60 77 85
Web site: http://www.aignermunich.com

Public Company
Incorporated: 1979
Employees: 145
Sales: EUR 44.0 million (2001)
Stock Exchanges: Frankfurt Neuer Markt
NAIC: 316992 Women’s Handbag and Purse Manufacturing; 315292 Fur and Leather Apparel Manufacturing; 315992 Glove and Mitten Manufacturing; 315999 Other Apparel Accessories and Other Apparel Manufacturing; 316991 Luggage Manufacturing; 316993 Personal Leather Good (Except Women’s Handbag and Purse) Manufacturing; 316999 All Other Leather Good Manufacturing

A horseshoe logo marks the products made by Etienne Aigner AG, a Munich-based manufacturer of quality leather goods such as handbags, belts, and shoes. The company promotes its logo as the symbol of a prestige brand that combines traditional handcrafted quality with innovative Italian-influenced fashion. The firm is named after a Hungarian-born designer and leatherworker who won acclaim in the 1950s for the quality of his products. Two completely independent firms—Etienne Aigner Group in the United States and Etienne Aigner AG in Germany—now carry on the Aigner tradition. The German firm, which markets its products in Europe, Africa, Asia, and Australia, has expanded well beyond the trademark leather goods of its namesake. The company’s product lines include “Fashion Accessories” (scarves, neckties, and umbrellas) and “Treasure” (costume jewelry and sterling pieces). In addition, Aigner licenses its name for the manufacture of men’s and women’s clothing, cosmetics, eyeglasses, and watches. Aigner operates its own retail stores in many key markets, but the franchise system remains a central part of its sales strategy. The company expanded its franchise system and its product lines in the 1970s, and, after weathering difficult years in the mid-1980s, entered a particularly profitable period in 1989. The late 1990s presented challenging economic conditions for luxury consumer goods, but the company is asserting itself in the new millennium with a revamped retail store concept and innovative young designers.

Origins of the Aigner Brand: 1904-65

Etienne Aigner was born to a Hungarian Jewish family in 1904 and grew up in Budapest, the second of three children of a lawyer. While still in school, he began working in the bookbinding trade. His creativity manifested itself as he invented new binding methods and experimented with making his own paper. The bookbinding work brought him his first experience working with leather.

In the 1930s Aigner moved to Paris with his brother Lucien—who later became a well-known photojournalist—and continued his work as a bookbinder until the start of World War II. He learned the latest techniques for treating and working with leather during this period. When the German occupation began, however, Aigner fled Paris and in 1943 headed for the mountains with French Resistance forces. After the war, he returned to Paris, abandoned bookbinding, and embarked on a career in fashion. He applied his leatherworking skills to create fine belts and handbags, selling them to retailers such as Dior, Lanvin, and Rochas.

Aigner moved to New York in 1950, where he joined his brother and sister. In New York he presented a collection of leather goods under his own name, and the Etienne Aigner brand was born. As a logo he adopted a stylized version of his monogram—the letter “A” in the form of a horseshoe. Aigner sold his designs to a local manufacturer, but soon found that his handcrafted approach and “haute couture” style clashed with the mass production mentality of the New York fashion industry. So he set up his own business in his bedroom, making belts in a single color, rich burgundy, because it was the only material he could afford. The belts were well-received and could be found in most leading department stores by the mid-1950s. As his financial situation improved, Aigner was able to expand his offerings to include other colors and also added hemp materials to the product line. The quality of his goods won him the nickname “The Man with the Golden Hands.”

Growth of a German Fashion Company: 1965-88

The Etienne Aigner brand made its way back to Europe thanks to a German textile businessman named Heiner H. Rankl. Rankl stumbled upon the Aigner logo at a fashion show in Canada and, after long negotiations, won production and sales rights for the brand in Europe. The Etienne Aigner AG was founded in Munich in 1965. The company developed a leather collection around a trademark look: tortoiseshell leather with open edges. When some aspects of the New York designs, such as metal studs, proved too rustic for European tastes, Rankl adopted a more Italian style for the German company. The U.S. Etienne Aigner, meanwhile, continued on its own track, and was sold to dress manufacturer Jonathan Logan in 1967.

Aigner expanded its product line and its geographical reach during the 1970s. In 1972 a subsidiary company, Etienne Aigner Italy S.r.l., was founded near Florence to be responsible for production of all Aigner leather goods. The leather product line expanded to luggage and shoes. In 1973 the franchise system was started, allowing the brand to go international. A new division, “Fashion Accessories,” was introduced in 1974, adding scarves and neckties to the Aigner collection. The following year Aigner entered the cosmetics market with the founding of subsidiary firm Etienne Aigner Cosmetics GmbH near Munich. The firm’s debut fragrance was “Etienne Aigner No. 1.” Aigner branched out into clothing in 1978 when a fashion collection was presented in a style of “sporty elegance.” Finally, the “Treasure” division was founded in 1982 to sell watches and jewelry.

Aigner gradually came under new ownership in the early 1980s. The firm had been incorporated in 1979 under Rankl. A few years later two brothers from Düsseldorf, Wolfgang and Reinhard Rauball, gradually started taking control of the company. The Rauball brothers took over Aigner in two steps in 1981 and 1983 through their firm Iona Industries. They then took the company public in 1983.

Difficult years followed as Aigner posted losses in the mid-1980s. But the firm continued to develop and hone its product line. In 1987 Aigner granted a license for eyewear. Metzler Optik AG became a long-term partner in the Aigner Eyewear collection. A year later the firm divested itself of its cosmetics subsidiary. Etienne Aigner Cosmetics GmbH was sold to the U.S. Fabergé Group (Elizabeth Arden), but kept producing fragrances and perfumes under a license for the Aigner brand name. The cosmetics firm changed hands several times in subsequent years, first through a sale to Unilever, then a management buyout by Werner Negges, who had headed the cosmetics division since 1981. In 1996 Negges sold full control to Myrurgia S.A., a Barcelona-based cosmetics manufacturer. Throughout the ownership changes, the cosmetics firm continued selling fragrances for men and women at its perfume shops through a license agreement with Etienne Aigner AG.

Prosperity Under New Ownership: 1989-97

The year 1989 marked a turnaround in Aigner’s fortunes, as the company paid a DM 5 dividend to shareholders after four years without a dividend. That same year control of the firm passed into new hands, when the Munich-based firm VVB Vermögenstreuhand GmbH took over the Rauball brothers’ Iona Industries. It was unclear, however, just who was behind the firm that had taken control. Even the chairman of the executive board, Wolfgang Mueller, said he was not informed about exactly where the trail of ownership led. The matter was not cleared up until five years later.

Aigner’s performance improved dramatically in the years after the sale. Dividends increased each year for six years in a row, growing from DM 5 in 1989 to DM 33 plus a DM 25 bonus in 1995. Net income also grew steadily, from DM 6.7 million in 1991 to DM 17 million in 1995, although net sales showed much more modest growth, reaching DM 99 million in 1996 after fluctuating around DM 91 million in the early 1990s. In 1990, the company also gave away its men’s and women’s fashion lines in licenses.

In 1994, legal proceedings against a Munich businesswoman for tax violations brought to light the actual ownership behind Aigner. Eva Brandi was the CEO of a Munich meat and sausage chain known as Vinzenz Murr. Investigations into her finances revealed that, through indirect holdings, she was the majority stockholder in Aigner. Brandi’s tax advisor and relative, Karl Maierhofer, had succeeded Reinhard Rauball in 1989 as chairman of the supervisory board. Now that Brandi’s position with respect to Aigner was out in the open, she became a member of the supervisory board.

Company Perspectives:

Aigner is the exclusive, international brand for discerning men and women. With its range of leather goods, fashion clothing and accessories, it offers a complete world of carefully blended products from head to toe. Its elegant sporty style has a distinctly Italian feel. The brand’s core is a symbiosis of tradition and innovation, combining classical and modern styling. A style which transcends both time and geographical borders. The horseshoe —a symbol of good luck —and the Bordeaux red livery are the brand’s distinctive symbols around the world. The Aigner emblem stands for the high quality standard set by the company and its employees; for the customer it represents authenticity, lifestyle and satisfaction.

The Aigner vision: we want those people who attach great importance to superior quality and timeless values to be able to fulfill their wishes perfectly with the Aigner brand.

Once You Have It. You Love It.

The proceedings had little affect on Aigner’s positive performance. Despite losing three of its Asian stores—one due to the collapse of a warehouse in Seoul and two to an earthquake in Kobe, Japan—Aigner raised its dividends and reported a 25 percent increase in net income in 1995. Analysts praised the company’s low debt and substantial cash reserves. Chairman of the Executive Board Wilhelm Mueller suggested that Aigner might consider an acquisition.

But operating conditions worsened in the late 1990s. In 1996, changes in the exchange rate pushed up the cost of goods from Italy, where Aigner got three-quarters of its products. Net income dropped slightly that year. In 1997, sales were flat at 99 million DM, and an economic crisis in Asia was beginning to hurt Aigner’s performance. The company retained a 33 DM dividend that year, since net income was fairly high at 17.4 million DM, but in 1997 no dividends were paid as Aigner posted its first loss in a decade. About 40 percent of the company’s sales came from Asia, and the poor economic climate there contributed to a 3.9 million DM (EUR 0.2 million) loss for the year.

Financial Recovery with a Stronger Retail Presence: 1998-2002

Aigner emerged from the difficulties of the late 1990s under new leadership. Bernd Ehrengart replaced Wilhelm Müller as chairman of the executive board in 1998. But after conflicts with the supervisory board, Ehrengart stepped down and Udo Dengs, an Aigner board member, took his place. Under Dengs, the company’s approach was “to find the heart of Aigner, its roots, and to interpret them in a modern age.” The company’s designers came out with new product lines such as the “Evolution” line of 1999, which was made with distinctive vegetable-tanned leather, and the “Daily Basis Retro” collection of 2002, which replaced the usual homogenized, durable leather with a leather that retained small imperfections and developed a patina with use.

A new design concept for franchise shops was unveiled in 2000. The shops were to have a warm, uncluttered, friendly feel, with panels in deep burgundy to acknowledge that color’s central place in Aigner’s history and products. The company began playing a larger role in retail operations in order to present the “World of Aigner” in a more uniform way. Although franchise operations remained an important part of the retail strategy, Aigner took direct control of several pilot shops in premier locations in major German cities and elsewhere. Thirty-six new outlets opened in 2000, followed by 27 new shops the next year. A highlight of the 2001 store openings was a shop in the premium Ginza shopping district in Tokyo. Several shops opened in China and Korea that year as well.

Improved financial results seemed to indicate that Aigner was on the right track. After posting a slight net loss in 1999, the company made a EUR 2.0 million profit in 2000. High prices for leather put pressure on profits, but the company’s new product lines, which combined a younger feel with traditional quality, helped boost sales 26 percent over the previous year. Aigner paid a dividend in 2000 for the first time since 1997. In November 2000 the original Etienne Aigner, founder of the prestige brand, died in New York at age 95. He had not played a role in either the U.S. or the European firm for several decades.

Aigner welcomed a new licensee for its line of clothing in April 2001. The Italian fashion company GIC SpA Modyva replaced former partner Gerry Weber International. Aigner also gave a license for timepieces to Peter Eichner Time + Design GmbH in Pforzheim, Germany. Retail expansion that year was particularly concentrated in Asia, with exports increasing to Korea, Indonesia, Taiwan, Malaysia, Thailand, and the Middle East. New locations were also opening in Prague and Moscow. In total, 66 shops were constructed or renovated under the new design concept in 2001, and ten outlets were planned for 2002 in China alone. The investment in construction and renovation kept net profits down, but sales were up 15 percent in 2001.

In 2002 Aigner focused its renovation efforts on the home showroom in Munich. The shop was closed for two months in the summer to be remodeled into the premier showroom for the Aigner collection. At the time, sales in Germany were uncertain, but sales in the broader home market, including Austria and Switzerland, were fairly stable. Those three countries accounted for around 45 percent of Aigner’s total sales. But some franchise partners in the home market, as Dengs told the press in August 2002, did not understand “what we mean by prestige.” Therefore, Aigner planned to broaden efforts to implement the new shop concept in Germany. With more direct control over stores in key markets, Aigner would be able to ensure its image as a prestige brand for fashion-conscious customers. The company’s success depended on winning consumers with the right balance of quality, tradition, and modernity.

Principal Subsidiaries

E.A.-Mode-Vertriebs-Gesellschaft mbH; E.A. Cosmetics Distributions GmbH (50%); Etienne Aigner Italy S.r.l.

Principal Divisions

Leather; Fashion Accessories; Treasure.

Key Dates:

1904:: Etienne Aigner is born in Hungary.
1950:: Aigner presents a fashion collection of leather goods in New York.
1965:: Heiner Rankl obtains rights to the Aigner name and founds Etienne Aigner AG in Munich.
1973:: The Aigner brand goes international through the franchise system.
1981:: Aigner is sold to the Rauball brothers.
1983:: Aigner goes public.
1989:: After a period of losses, Aigner is sold to VVB Vermögenstreuhand of Munich.
1996:: Dividends go up for the sixth year in a row.
1998:: Aigner posts losses amid the Asian economic crisis.
1999:: Udo Dengs becomes CEO.
2000:: Aigner presents a new store design and takes direct control of some retail shops.