Creative directors in luxury fashion have a five-year expiration date

On June 16, Matthew Williams, whose fashion line, 1017 ALYX 9SM, has made him a rising star in the industry, officially became the new creative director of Givenchy, the French label owned by luxury giant LVMH. If history is any indication, profits should grow under his tenure until peaking about four to five years in, at which point their growth will start to fall.

At least that’s the pattern investment firm Bernstein found when looking at the past performance of big luxury companies under more than a dozen different creative directors. In addition to profitability, it analyzed company share prices and their enterprise value—a measure of a company’s total value that includes its debts and cash on hand—in relation to sales. “Five years seems the ‘expiry date’ of successful creative directors,” the company said in a research note yesterday. After that point, the financial measures it analyzed declined.

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