Business: Dior’s Biggest Summer Sale

Plenty of bidders for a fashion house with a troubled owner

For more than three decades the label, familiar to people willing to splurge on furs or lingerie, sports shirts or neckties, has been synonymous with quality, style, high price and, above all, French refinement and good taste. At the same time, Christian Dior has developed into a booming international company with more than 1,000 employees, sales last year of $220 million and handsome (but undisclosed) profits. Yet today an unfortunate link with a troubled textile behemoth makes Dior’s future uncertain.

The Paris-based company is the personal property of Marcel Boussac, 89, an ostentatious millionaire entrepreneur who did so well in textiles after World War I that he became known as France’s “Cotton King.” In 1946, seeking to revive the war-tattered clothing market, he teamed with a young designer, Christian Dior, to found a fashion house. The next year Dior presented his first collection: the long, ample “new look” that established his reputation and set fashion trends for a decade. Under the management of Jacques Rouet, now 60, it flourished, even after the death of Dior in 1957. But Boussac’s textile empire, consisting of a score of companies under the name Comptoir de l’Industrie Textile en France (C.I.T.F.), declined steadily.

Poor management failed to respond to competition, first from European neighbors, and more recently from Third World countries where labor costs are lower. To keep C.I.T.F. going, Boussac mortgaged more and more of his possessions, which include race horses, half a dozen chateaux and the morning Paris newspaper L’Aurore. Finally, unable to borrow further, he reluctantly allowed the company to be taken over by a court-appointed receiver who will decide what, if anything, can be done to salvage C.I.T.F.’s 11,500 jobs. Last week, in an effort to keep C.I.T.F. alive, Boussac offered to give up his entire $170 million personal fortune to help pay the company’s debts of more than $100 million. But a group of creditor banks refused to allow this, explaining that most of Boussac’s property was already tied up as collateral against previous loans. The French government, in keeping with Premier Raymond Barre’s free-market philosophy, will not come to the rescue with taxpayers’ money.

Inevitably, the house of Dior will have to be sold to help Boussac pay off. That prospect pleases the Dior staff, which has seen the firm’s profits sink year after year into the bottomless Boussac pit. Partly as a result, Dior has not had resources to invest in new products and outlets needed to keep from falling behind such dynamic competitors as Yves Saint Laurent and Pierre Cardin.

The Dior firm has plenty of suitors. Last week Robert Hocq, president of Jeweller Cartier, offered to pay $65 million for it. Among other potential buyers are French cosmetics manufacturer L’Oreal and champagne producer Moët-Hennessy, which bought Christian Dior Perfumes when Boussac needed cash in the early 1970s. The main concern of Dior’s management and the French government is that the prestigious label remain in French hands. “You can’t separate the Christian Dior image from France’s,” says Rouet. “When an American woman pays for the Dior label, she wants to know that there is French know-how and style behind it.”