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INTERVIEW-Lacoste aims to shift upmarket - CEO

Astrid Wendlandt
Friday, 17 Jan 2014 | 11:59 AM ET

PARIS, Jan 17 (Reuters) - French sportswear maker Lacoste is sacrificing short-term growth to reposition itself at the higher end of the market by cutting shop space and focusing on more expensive items, Chief Executive Jose Louis Duran said on Friday.

Lacoste has reduced its product range by 14 percent in the past year, and Duran told Reuters he expected average prices to rise by a few percentage points annually after remaining broadly flat for three years.

"Lacoste should not be in constant search of volume," Duran said in an interview at the brand's new Paris headquarters. "I will be happy with zero organic growth again this year if we have completed the brand's premium repositioning."

The brand had flat same-store sales at constant exchange rates in 2013 after posting modest growth in previous years.

The strategy shift echoes that of luxury brands such as LVMH's Louis Vuitton and Kering's Gucci, which are narrowing their distribution, culling entry-level products and moving their collections more upmarket after a decade of rapid global expansion.

"We are not going to raise prices per se but strengthen our collection with more value-added products," Duran said, adding that the brand would reduce the number of less expensive items such as T-shirts.

Lacoste was founded in 1933 by French tennis player Jean Rene Lacoste, nicknamed "the crocodile" because of his tenacity on the courts. The reptile later became the brand's emblem and one of the most forged logos in ready-to-wear history.

After bitter infighting, the family behind Lacoste sold their combined majority stake in 2012 to Swiss group Maus Freres, which ran Lacoste's licensee, Devanlay, and already owned 30 percent of the company.

Since 2010, Lacoste has been under the creative leadership of designer Felipe Oliveira Baptista, who also works for his eponymous brand. Baptista's new head of merchandising hired in April came from Ralph Lauren, while his predecessor Christophe Lemaire now works for Hermes.

LEATHER EXPANSION

Duran, who led French retailer Carrefour from 2005 to 2008, became CEO of Lacoste a year ago, having first taken the helm of Devanlay in 2009.

He said revenue at the Lacoste brand, which includes perfume made for it by Procter & Gamble, grew slightly more than 5 percent in 2013, after rising 14 percent in 2012 to 1.8 billion euros ($2.5 billion) and 12 percent in 2011.

Duran said Lacoste was closing 20-30 of its 300 shop spaces at U.S. department store Macy's, its No.1 wholesaler, and several underperforming boutiques, as well as revamping existing ones.

He said the brand had also ended promotions in countries including the United States, its biggest market with about 20 percent of revenue. France represents 13 percent.

Lacoste plans to expand its leather goods offering, doubling its contribution to sales to 6 percent in three years.

Lacoste got back its leather goods licence in 2011. It had been used by suitcase maker Samsonite for more than a decade. ($1 = 0.7352 euros)

(Editing by James Regan)