Belgian Lingerie Maker Plans to Spread Its Brands

Marie Jo lingerie is modeled at a show in Paris last year. Underwear made by Van deVelde NV sells well in the European luxury market.
Marie Jo lingerie is modeled at a show in Paris last year. Underwear made by Van deVelde NV sells well in the European luxury market. (By Charles Platiau -- Reuters)
By Carolyn Henson
Dow Jones Newswires
Wednesday, January 11, 2006

BRUSSELS -- Belgian chocolate is well known but another luxury item from this country is causing a stock-market stir -- Van de Velde lingerie.

Since Margaretha Van de Velde started stitching corsets at the family home in Flanders after World War I, the company has grown to become one of the top names in Europe's $1.25 billion luxury lingerie market.

On Monday, publicly traded Van de Velde NV reported that sales of its Marie Jo, Marie Jo L'Aventure and Prima Donna brands rose 10 percent in 2005 to $135.2 million. Profit increased 10 consecutive years to $26.6 million at the end of 2004, and the stock price rose 30 percent in 2005 to $186a share, prompting superlatives from financial analysts. In Brussels trading yesterday, it closed at $205.11, up 1.4 percent.

Van de Velde's success shows how high-cost European textile companies can fend off products from less-expensive Asian rivals by carving out niches in the luxury market. It faces retail competition from Italy's La Perla and from France's Chantelle Group, LeJaby SAS and Lise Charmel, but with the exception of the Paris-based Christian Dior, few major French or Italian couturiers or luxury powerhouses find the market attractive.

"Not many manufacturers concentrate on high-end of the lingerie market due to the smaller client base and labor intensity," said Kerstin Herbert, an analyst at Dexia SA. "The basic product is very expensive." A Marie Jo bra-and- briefs retails for about $120.

As Van De Velde attempts to broaden its appeal outside Belgium, France, Germany and Luxembourg -- which account for 75 percent of sales -- the small independent lingerie stores that are its main sales outlets are in decline. It is attempting to compensate by opening its own stores but so far is struggling to make a profit with the outlets, the company says.

Still, analysts generally remain impressed, citing its strong balance sheet, with zero debt, and its earnings track record.

When Van de Velde started cutting corsets in 1919, they were made of tough woven cloth. They were mainly cut and stitched in small workshops behind the stores that sold them.

After World War II, elastic and Lycra propelled sales of elastic girdles and panties. But when the 1970s oil crisis dented sales, grandson Karel Van de Velde said, the family realized it needed to do something.

"Lingerie companies either did fashion or they did fit," he said. "We said, 'Why don't we combine our fit with fashion and create a product no one else has?' "

The Marie Jo brand was born in 1981. In 1997, Van de Velde listed its shares on the Brussels stock exchange.

While product design, quality control and distribution remain based in Schellebelle, assembly is now almost wholly outsourced. Nearly half its production is in China, with 24 percent in Hungary and 22 percent in Tunisia and only 5 percent still in Belgium.

Its Belgian operations focus on design, testing and exacting final touches. In what was once the back garden of the Van de Velde home, stretching machines test the materials' endurance and washers repeatedly wash, spin and dry the fabric to check for shrinkage and weathering.

The firm last year named Ignace Van Doorselaere chief executive, the first from outside the family. His assignment is expand the brand into southern Europe and the United States, which accounts for just 2.6 percent of sales.

One of his first challenges, Doorselaere said, is to help modernize independent lingerie stores or replacing those that have closed when the retiring owners failed to find a successor. Van De Velde has also opened eight branded shops in Germany and France, targeting cities where there are too few independent stores to maintain a company presence.

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