La Chemise Lacoste

Suzy Bibko talks with Bernard and Michel Lacoste and discovers how a weekend business built around an alligator becomes a clothing empire in the short span of 39 years

Few people in the worldhave never seen an 'alligator'shirt. But how many people know that the company behind one of the world's must successful emblems is family run and owned? And why exactly do they have an alligator on all their products? Started by tennis champion René Lacoste in 1933 as a weekend business, his sons Bernard and Michel have taken La Chemise Lacoste to a level far beyond Rene's expectations – and taken a bite out of the competition through licensing a unique product, good business sense and an open management style.

The 'Alligator'
Tennis champion Rene Lacoste was born in France in 1904. He won the French Open three times in his career: in 1925, 1927 and 1929. He also won Wimbledon in 1925 and 1928, the US Open in 1926 and 1927, and was on the winning French Davis Cup team in 1927. It was during the Davis Cup tournament in 1927 that he became known as the 'Alligator', a nickname that soon after became an emblem recognised throughout the world.

René was nicknamed the 'Alligator'by the American press after he had made a bet with the Captain of the French Davis Cup team concerning a suitcase made from alligator skin. The captain promised to give the suitcase to Rene if he won an important match for the team. The public loved the nickname, which conveyed the tenacity Rene displayed on the tennis court where he never let go of his prey. The name stuck and Rene's friend Robert George drew an alligator for him that he then had embroidered on the blazer he wore on the tennis court.

A few years later, in 1933, Rene Lacoste and Andre Gillier, the owner and President of the largest French knitwear manufacturing firm of that time, set up a company to manufacture an alligator embroidered shirt. Rene designed this shirt for his own use on the tennis court. Unlike the woven, long-sleeved, starched shirts men wore at that time while partaking in sports, Rene's shirt was white, slightly shorter than its counterparts, had a ribbed collar, short sleeves with ribbed bands and was made of a light weight knitted fabric called 'Jersey petit pique'. Finally, here was a shirt that was breathable, absorbed perspiration, allowed freedom of movement and was made of a soft material – and it carried the symbol of one of the great tennis players. Almost overnight the shirt revolutionised men's sportswear. Indeed, the style has been copied by clothing companies across the world. More importantly, this was probably the first time a brand name had ever been visible on the outside of an item of clothing.

The second generation
While Rene was mainly involved in the world of tennis, his efforts and success did not go unnoticed by those in other sporting fields. An attentive spectator at the Davis Cup matches was Simone Thion de la Chaume, the first French woman to win the Girl's British Junior golf title in 1924. Her success on the links did not stop there, though. Simone went on to win the British Women's golf title in 1927, the French International Championship in 1930, 1935, 1938 and 1939, and the French National Championship in 1936, 1937 and 1939.

Simone and Rene married in 1930 and the worlds of tennis and golf were linked by the Lacoste name – a tradition that is still carried on in the company today. Simone and Rene had four children: Bernard, Francois, Michel and Catherine. Catherine followed in her mother's footsteps, taking up golf as her profession. And like her mother, she was highly successful at it. Indeed, she won the World Team Championship in 1964 at the age of 19 and racked up 14 more major title victories over the years, among them the US Women's Open title in 1967. The Lacoste link with sport was certainly getting stronger. Once again, people could associate the name directly with the brand, especially as Catherine wore the clothing on the golf course. Today, Catherine keeps her link with the company as a member of the Board of Directors.

Bernard followed in his father's footsteps, albeit off the tennis court. After graduating from Princeton University with a degree in engineering, he went to work for General Motors for seven years. General Motors then offered him a position with their international team of managers, a job that would involve spending every few years working in a different country, acting as an 'ambassador' for General Motors. However, Bernard decided to leave General Motors and instead run the family business, La Chemise Lacoste. Bernard recalls, "At that time, in 1963, I wasn't too keen to settle abroad. At the same time, my father was operating La Chemise Lacoste as a weekend hobby because he had another important business – he was president of a large company (2, 000 employees) that made technical parts for the aviation industry. My father said that La Chemise Lacoste was spoiling his weekends and he was going to sell the company unless one of us wanted to run it. So I said I was prepared to take over.

"The company was very small at that time, making only a little over 300, 000 units of shirts. I felt that this was an opportunity for me to be my own boss. I also had the feeling that the evolution of life was going to relate to sports. Sportswear offered medium-term potential and I said 'it's time'". Thus, Bernard became Chairman of the company in 1963 at age 32, the position he still retains today. Rene became an active director, giving Bernard guidance along the way, but never taking part in the day-to-day running of the company.

Michel, Bernard's brother, became active in the company in 1964, though not on a full-time basis as he was working in a French bank at the time. Rather, Bernard often consulted him on company matters and helped in decision-making. In 1976 Michel joined La Chemise Lacoste on a permanent basis as Director General. "Bernard was kind enough to ask me to join the company on a more permanent basis because the company was growing, " recalls Michel. "At the same time, the trademark, maintenance and counterfeiting work was growing, too. We decided it was worthwhile for me to join the company". Today, Michel retains the same position.

Francois, Rene's other son, is not active in the company. He has chosen to have his son, Jean-Marie, sit on the board for him.

Alligator empire
Today, Bernard runs the company with his brother Michel, his "right hand man", and together they have built an alligator empire – a far different company than the weekend business their father started in 1933. Almost 70 years after the company was created, 25 million different products, representing a wholesale turnover of €800 million, are sold every year under the Lacoste brand, in 109 countries, in a network of sports shops, specialty stores, 718 Lacoste boutiques and 1, 666 'corners' (Lacoste-specific areas of department stores). "We have tried to have a presence everywhere if only for trademark protection reasons", explains Bernard. "If you don't exploit a trademark in a country you can lose your trademarks rights".

La Chemise Lacoste has grown steadily over the past 39 years, funding expansion through profits (see Fig. 1). The company is focused on controlled growth rather than on being the biggest. Bernard says, "We just don't want to grow to be big. We have a policy of trying to grow 5-10% each year and we have more or less achieved this result. We have been doing it by trying not only to be a large sportswear company but also by trying to be a brand for those times when people are enjoying happy moments in life". The company has also developed an international network through a close-knit partnership system. This system adds local expertise to the company expertise and helps to ensure that La Chemise Lacoste is on track in each of the countries it operates.

The company is privately-owned, with 65% of it held by Lacoste family members. The remaining 35% is owned by Devanlay SA clothing manufacturers, of which La Chemise Lacoste owns 10%. Devanlay, another family-owned company, has been with Lacoste since the beginning (though the name has changed over the years), a fact that Lacoste prides itself on. Working with the same company for 69 years has ensured that the standards of quality are being met and maintained, and "further reinforces the community of interest"in the Lacoste brand.

The business approach
When Bernard came on board in 1963, the company's profits were about one-100th of what they are today. No one can argue that this is not phenomenal growth in 39 years. How does a weekend business become an empire in such a short time?

To start with, La Chemise Lacoste's success was due to its product. The shirt designed by Rene in 1933 was something new and had never been seen before. By inventing the shirt, René really invented 'sportswear'. Until then, clothing for sporting activities had really been rather formal and not much different than everyday wear. Furthermore, the new type of clothing also had something no other clothing had – an alligator emblem representing a great athlete. Bernard says, "We have something that is a strong advantage but at the same time can be a disadvantage: the unique idea of my father to affix his signature to the outside of his products. So, if the alligator is on products that are liked, it's wonderful. However, if we put it on the wrong kind of product it could be a disaster". Thus, the emblem is one of the keys to the company's success.

La Chemise Lacoste also has a very unique approach to business in that it is a 100% licensing business – it neither manufactures nor sells any products. Rather, it licences products in the area of clothing, shoes, leathergoods, perfumes, optical frames and sunglasses, watches, home textiles and belts. La Chemise Lacoste owns and protects the trademarks, and does some but not all of the product development work. Bernard says, "We are also very careful in coordinating and developing the image of the brand. All of our partners give us money annually to help us ensure a very good and high quality image. The partners remain in charge of the product; however, no product is put on the market without prior approval by someone at La Chemise Lacoste who has the authority to do so".

La Chemise Lacoste is a strong brand, recognised at a high level throughout the world and especially in France. Bernard explains, "We want to be a brand for certain activities. We constantly try and follow the evolution of style of people who want to wear our clothes. You can do that by opening your eyes, seeing what is selling on the market and making market studies. We must be able to follow the evolution of the market. The customer is always right, so you have to choose who your customer is and then deploy to his taste while also trying to influence him in a positive way with our proposals, our own tastes and the tastes of our designers".

Michel concurred: "It must be evident for anybody who sees one of our products that it is one our products and fits with what he expects us to be. We must be careful to be consistent and we must ride in front of the wave and not behind it in all fields of product development, merchandising, marketing and communication. We must be one step ahead and never look behind to decide where we are going". Of course, setting a style is the most difficult part of fashion, but La Chemise Lacoste seems to have beaten the odds.

That being said, having a unique product and good sense of the market does not always guarantee success. La Chemise Lacoste has been lucky in that Bernard had good business sense right from the start. His training at General Motors gave him a sound understanding of business and management. "I had the feeling that the area of sportswear and casual wear was going to be one of the main development sectors in consumer goods", explains Bernard. "Also, being a member of General Motors, which at that time had about 600, 000 employees, probably made me much less anxious about developing La Chemise Lacoste. So, I perhaps had it better than other young Frenchmen at the time in terms of a business outlook. I had the knowledge that France was actually a small country and that if La Chemise Lacoste was going to be a larger company, we had to expand to Europe and then afterwards be more ambitious".

Furthermore, the company believes in the team approach, valuing comments, ideas and opinions from other employees, executives and shareholders. Michel says, "I think that when you put something on the table, sometimes a difference of opinion can take five minutes to resolve, sometimes two days. But in the end, all decisions that are made have the approval of Bernard, the other executive directors and the approval of the relevant team – and we live by it". Bernard added, "Human beings alone can do things but a team of people is much stronger and more efficient".

Michel further explained, "I think the way we are structured allows us to take decisions very quickly. If it's a big decision, we might need to talk to the directors. If we feel the need to inform some or all of the shareholders, we speak to however many of them we feel are necessary. We tell them what we're planning to do and why, and ask for their comments and input".

Bernard feels strongly about the need for open communication – between him and his brother as well as between all employees. He says, "I have one policy that I try to follow: that my office door is always open. I think this is very important. What is bad in any company and any family is when doors are closed and you cannot talk to one another. As long as there is communication you can always find solutions".

Family, non-family and successors
La Chemise Lacoste employs two non-family executives: Jean-Claude Fauvet (Executive Director) and Marc Lumet (Executive Director). Fauvet and Lumet have been with the company for about 20 years and 10 years, respectively. They were brought in for their expertise in the commercial, marketing, development and communication fields and to help the company grow. It was a conscious decision by Bernard and Michel to bring them on board, as La Chemise Lacoste prides itself on having an open style of management.

This policy still guides the company today. Neither Bernard nor Michel feels that their children must work for Lacoste. Instead, they both would rather have their children choose their own career direction. Bernard said, "It has always been my feeling, and Michel agrees, that it is very important in life to do things you like. I think it is a mistake to feel content – to do something you don't like just because you are the son or daughter of the owner. " Thus, it is more important for Bernard and Michel's children to be happy in an unrelated career rather than joining La Chemise Lacoste just because it is the family company.

Furthermore, Bernard and Michel agree that if a family member does want to join the company, they need to have some experience. Michel said, "The company needs a certain number of people in certain fields of expertise. If and when family members have that sort of expertise and are willing to come on board, they are welcomed because it is clear that being the grandson or granddaughter of Rene Lacoste means something in the day-today work. It helps. But that is not the fundamental element. Rather, the fundamental element is that you need to have expertise and the company needs to need that expertise".

Bernard is now 70, but has no immediate plans for leaving the company. However, when he does, his brother Michel, now 59, will take the reins. Several thirdgeneration family members work at the company and may follow in Bernard and Michel's footsteps, but there is no written plan for the future. Bernard said, "I think that to be a shareholder of a company does not mean that you have to be an executive of the company. There are too many examples of it going wrong in family businesses. Operating a company and owning it are really two different things. So, perhaps a Lacoste will take over, perhaps not".

Bernard's attitude exemplifies the company's overall approach to business. Because the company is rather small in terms of the number of employees (about 80), they feel they do not need to have rigid, well-defined positions to fill – unlike a company like IBM or General Motors. The decision-making at La Chemise Lacoste is very consensual – Bernard does not rule with an iron fist. Instead, everyone brings input and expertise to the table and the decisions follow naturally. Thus, when Bernard decides to lessen his work load or retire, everyone feels it will fit into the scheme of things naturally.

The family does, however, hope that the company will continue to be family-owned. The shares owned by the family cannot be sold to outsiders – there is a stipulation that they must stay within the family. Michel said, "So far this hasn't proven to be a problem". However, no one knows what the future holds.

Commitment to sport
La Chemise Lacoste was built on sport and the brand is still closely tied to sport. "We think it is one of our duties to help the sport go on developing and to further this aim, part of our profits go towards the development of the sport", explained Bernard. Thus, besides licensing sportswear and products, the company also sponsors sports figures in the areas of tennis, golf and yachting – roughly 100 athletes at all levels of which about 20 are top-level athletes, including Alex Corretja and Colin Montgomerie. These players wear Lacoste products and promote the Lacoste brand. Therefore, the company must ensure that each sponsored athlete conveys the proper image, on and off the field. Michel said, "They must not only play well, but have the right charisma, elegance and moral integrity as they are ambassadors of the brand".

Working together
Bernard and Michel enjoy working together. Their fields or interest are different and that seems to work well for them and the company. On business matters they listen carefully to what each other says, respecting and trusting each other's opinions and valuing their respective fields of expertise.

Michel has great respect for what his brother has done: unlike in many familyowned businesses, "Bernard's job was not to continue with a tradition. Rather, it was to build a large company on the basis of an idea that had germinated. My father had tried commercial exportation before Bernard came along. But for my father, La Chemise Lacoste was a tiny business and development had not been explored. Bernard's job has been more than just achieving growth".

Bernard and Michel have taken Lacoste to a level far beyond what their father probably ever dreamed. Before their father Rene died in 1996, he told Bernard that he was delighted with the evolution of the company. It seems the tenacity of France's original alligator has lived on his sons.