Naf Naf Sa Business Information, Profile, and History

Company Perspectives:

The NAF NAF Group is winning back its clientele with both NAFNAF and Chevignon brands strengthened in France and abroad. The NAF NAF Group is poised to make its mark on fashion in the next millennium.

History of Naf Naf Sa

France's Naf Naf SA is one of France's top ten women's clothing retailers, operating retail boutiques throughout the country and elsewhere in the world. The company's main brand is its Naf Naf line of women's ready-to-wear fashions, targeting the 18-to-25-year-old segment. Naf Naf sales account for 80 percent of all company sales. The company also owns another strong brand, Chevignon, which targets the mid-to-high-end men's sportswear market, and particularly the 25 to 40 year set. Chevignon, representing 18 percent of company sales, has also gained considerable success on the international market. Since 1999, Naf Naf has been building up a third brand, Diapositive, targeting an older, more affluent female consumer. The company owns and operates a retail network of more than 150 stores, including 15 foreign locations, and acts as a wholesale distributor to franchised stores and boutiques around the world, as well as department stores and other retail clothing stores. All manufacturing is contracted out to third parties, principally in Asia. After weathering years of decline during the 1990s--where the company found itself faced with the arrival of heavy competition from such foreign rivals as H&M, Zara, Benetton, The Gap, Esprit, and the like--Naf Naf has fought back, retooling its design concept, rejuvenating its clothing line, refurbishing its boutiques, and restructuring its operations, including the closing of a number of its foreign retail outlets. The company has returned to sales growth and profits, nearing EUR 225 million in 2000, with profits of EUR 16 million. Naf Naf has been quoted on Paris' secondary market since 1993; it continues to be controlled and led by founding brothers Gérard and Patrick Pariente.

1970s Origins

Gérard Pariente began his career in fashion in 1973 with the opening of a small boutique, called Influence, in Paris's Sentier garment district. Pariente brought brother Patrick into the business (and later sister Carole as well) and the pair moved to new quarters, creating, in 1976, Influence Pok. The company then turned toward developing its own clothing designs.

Two years later, the Pariente brothers launched their first clothing collection, adopting for their designs the NAFNAF brand ("naf naf" is a way of writing "woof woof" in French). In 1979, the company formally adopted its brand name, incorporating as Naf Naf SA. The Pariente brothers proved complementary business partners, with Gérard taking responsibility for the company's clothing and store designs, and Patrick handling the company's business development.

The NAFNAF label, geared specifically to the young adult market, caught on with in its French market. Through the 1980s, NAFNAF had so successfully imposed itself on the market that for many it came to symbolize French youth fashion. The company recorded a number of milestones during the early 1980s that helped boost it to the ready-to-wear forefront. The first great success came with its launch of the so-called "boiler suit." The design, which featured bright colors and the company's logo at the time (a truck stamped with the company's telephone number) was a huge hit in France, selling more than three million pieces.

The company's breakthrough came one year later. Under the guidance of Franck Davidovici, Naf Naf rolled out a new advertising campaign--and logo--in 1984 that won it that year's Art Director's Club award. Featuring a little pig and sporting the slogan "le grand méchant look" ("the big bad look"), the advertising campaign propelled Naf Naf to the top ranks of Paris's youth clothing market. Naf Naf quickly took its little pig overseas, where Naf Naf became one of the most popular youth brands. Naf Naf capitalized on its growing fame in 1985 when it launched the first of a wide series of licensed products. The granting of licenses helped the company place its name on a wider variety of products--such as eyeglasses, handbags, shoes, leather goods, and even stationery--and into a wider variety of retail settings, while allowing the company to avoid the risks of developing these products itself. Licensing also enabled Naf Naf to step up its international expansion. In 1986, for example, the company granted a master license to the Japanese market which gave its brand instant access to that rather insular market, while also helping to build the brand name throughout the Asian region.

The year 1986 also marked the Pariente brothers' return to retailing. The company opened its first NAFNAF shop in Paris' rue Passy, and soon followed that opening with more; by 1990, the company owned and operated a chain of 45 retail outlets throughout France. Aiding that expansion was another design success--the launch of the "puffy jacket" in 1988 gave the company a new clothing hit and became one of the most popular clothing items of the season.

Encouraged by the success of its brand name, Naf Naf rolled out a new clothing line, NAFNAF Jeans, and then, in 1989, expanded its licensed products range to include swimwear, socks, shoes, lingerie, and even home furnishings such as table settings. Another product, developed in partnership with L'Oréal, was the company's first fragrance line, called "Une Touche de NAFNAF" ("A Touch of NAFNAF"). That perfume, which was sold primarily through department stores and other large retail stores, became the top-selling fragrance in its mass-market sector after its 1991 launch.

1990s: Going Public and Expanding

The popularity of its top brand encouraged Naf Naf to ramp up its expansion. By 1992, the company celebrated the opening of its 100th store in France. The company also took control of parts of its foreign distribution activities, setting up subsidiaries in the Netherlands, the United Kingdom, Germany, and Belgium to take control of its growing retail operations in those countries. In the face of a growing economic crisis in the first year of the 1990s, Naf Naf remained one of the healthiest retailers in its sector, owing especially to its policy of relatively low prices. By the time of the company's 20th anniversary in 1993, its sales had topped the FFr 1 billion mark.

Naf Naf went public that same year, taking a listing on Paris' secondary market. The Pariente family nonetheless retained control of more than 70 percent of the company's shares. That year the company also introduced itself to Canada through a licensing agreement for that country. At home, Naf Naf inaugurated a new, 30,000-square-meter headquarters, warehouse and distribution facility in Epinay-sur-Seine, outside of Paris.

If Naf Naf had successfully established itself as a leading brand name for the young women's market, it had been less successful convincing its customers' male counterparts to sport its little piggy logo. In 1994, Naf Naf took a different tack, acquiring fellow 1980s clothing icon Chevignon. That company had been founded at the end of the 1970s by Guy Azoulay, who began selling "vintage" leather designs to emulate the biker look of the American 1950s. The company, incorporated as Charles Chevignon in 1979, became one of the 1980s' hottest-selling brands in France, and its customers eagerly bought up the company's "American" designs. Chevignon was to become so closely associated with the United States that by the 1990s it was forced to emphasize to the French market that it was, in fact, a French brand.

In the meantime, Chevignon's sales grew quickly through the 1980s, leading the company to expand into other clothing areas, such as children's clothing, through its Kids and Togs Unlimited brands, launched in 1984. The company also expanded its brand name into other products, through licenses for handbags and accessories. Chevignon, like Naf Naf, also entered the retail arena during the decade. The launch of its Girl line, an attempt to diversify beyond its core young men's market, encouraged Chevignon to launch a new "mega-store" retail format in Paris in 1990. The company also launched a line of shoes under license.

Chevignon's international expansion also began to take on speed at the beginning of the 1990s as the company opened a flagship store in New York, then in Tokyo, finally extending its brand name to more than 20 countries worldwide. Back in France, the company achieved a different kind of notoriety when former French tobacco monopoly SEITA launched a new line of Chevignon-branded blond filtered cigarettes (meant to counter the gains of Marlboro and Camel in a French market traditionally dominated by stronger brown cigarettes, such as Gauloises and Gitanes). The linking of cigarettes with the popular youth-oriented clothing brand caused a public outcry and, with the French government threatening to place a ban on all Chevignon advertising, the branded cigarettes were dropped.

Chevignon continued to expand internationally, riding licensing agreements to bring the brand to Argentina, Columbia, Hong Kong, and Turkey. Yet the company was nonetheless facing declining sales as a result of the recession and dampening consumer interest, dropping from a high of more than FFr 600 million in 1990 to just FFr 380 million in 1993. In 1994, Azoulay and the Pariente brothers agreed for Naf Naf to acquire Chevignon.

Despite the opening of two mega-stores in Paris in 1995, Naf Naf itself was shortly to enter a long period of difficulties. The arrival in France of aggressive new competitors such as H&M, Zara, the Gap, Benetton, Esprit, Mandy, and others challenged Naf Naf directly in its core young women's market. Where rivals such as Zara featured constantly rotating clothing designs, Naf Naf proved slower to respond to shifting fashion trends. At the same time, the company began suffering logistics problems that led to sell-outs on its more popular items. A more difficult factor for the company was the loss in popularity of its brand, no longer considered a ready-to-wear fashion trendsetter. Meanwhile, much of the company's international operations were failing, particularly in Belgium and the United Kingdom, where its Naf Naf retail stores were posting losses, dragging down the fortunes of the company as a whole.

Revitalized for the New Century

Naf Naf responded by undergoing a vast restructuring. The company moved to revitalize its image, dropped its longstanding little pig and "grand méchant look" tagline--now considered too "infantile"--and revised its clothing fashions to target a slightly older, 18 to 25-year-old women's market. Accompanying the roll-out of its new advertising and marketing concept, Naf Naf moved to refurbish its retail concept, developing new retail store designs. The company also took the knife to its international retail network, slashing the number of its foreign stores as it worked toward restoring its foreign subsidiaries to profitability.

Naf Naf began to show progress by the end of its 1999 year, reducing losses to just EUR 3 million. By 2000, the company's efforts were beginning to pay off as revenues once again showed steady growth, nearing EUR 225 million, and net profits reached EUR 4 million. The company began to reinforce its growth with a new series of stores openings, now targeting French towns of populations of 50,000 or more. After revitalizing its core brand, Naf Naf turned to Chevignon, adopting a new brand identity of "fighting modern times" and opening new retail stores in Bordeaux and Toulouse. The company also launched a new subsidiary, Chevignon Accessories. Meanwhile, Naf Naf was developing a new label, Diapositive, acquired in 1999. Although still a small part of the company's sales, the new brand gave Naf Naf a foothold in the lucrative mid- to high-end women's ready-to-wear market without compromising the image of its more youthful NAFNAF label. These changes combined to give Naf Naf an encouraging vision of its place in the new century. By 2002, the company expected sales to top EUR 300 million for the first time.

Principal Subsidiaries: Diapositive; POK (UK) Ltd.; NAF NAF Boutiques Ltd.; NAF NAF Belgique SA;; NAF NAF Boutiques SA; NAF NAF Group Ltd. (UK); NAF NAF Italia Spa; NAF NAF Int'l. BV (Netherlands); NAF NAF Hellas SA (Greece); NAF NAF Espagne SA; NAF NAF Distribution SNC; NAF NAF Jeans SA; Chevignon Accessories SNC; NNC Production SNC; Chevignon SA; POK Boutiques BV; Ching ON Ltd. (Hong Kong); Jet Top Ltd. (Hong Kong); NCKids SARL; Bava SA; Beral SA.

Principal Competitors: H&M Hennes & Mauritz AB; Groupe André SA; Benetton Group S.p.A.; The Gap, Inc.; Zara SA; Marks and Spencer plc; Esprit Holdings Limited; Diesel SpA; New Look Group plc; NEXT plc; Promod SA; Camaieu SA.

Chronology

• Key Dates:
• 1973: Gérard Pariente opens retail clothing store, Influence, in Paris.
• 1976: Gérard is joined by brother Patrick Pariente,and the company opens a new store, Influence Pok.
• 1978: The Pariente brothers launch a new clothing brand, NAFNAF.
• 1979: The company incorporates as Naf Naf SA; Guy Azoulay founds Charles Chevignon.
• 1981: Chevignon launches successful vintage leather line
• 1983: Naf Naf achieves market success with launch of its "boiler suit."
• 1984: Naf Naf rolls out its hit advertising campaign, "le grand méchant."
• 1985: Naf Naf begins licensing NAFNAF brand name.
• 1986: Naf Naf opens first NAFNAF retail store.
• 1988: Naf Naf achieves new success with launch of the "puffy jacket."
• 1989: Chevignon opens the first Parisian mega-store.
• 1991: Naf Naf and L'Oreal roll out "Une Touche de NAFNAF" fragrance line; Chevignon opens a store in New York.
• 1993: Naf Naf creates subsidiaries in Spain, the Netherlands, and Germany; Naf Naf goes public on Paris secondary market.
• 1994: Naf Naf acquires Chevignon.
• 1998: Naf Naf begins restructuring program.
• 1999: The company acquires S. Clair (Diapositive) SA.
• 2001: Naf Naf opens new Chevignon stores in Bordeaux and Toulouse.