Definition of Buying a House in Relation to the Apparel Industry

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Marc Jacobs founded his design house in 1986. The Marc Jacobs brand was later bought by LVMH.
Marc Jacobs founded his design house in 1986. The Marc Jacobs brand was later bought by LVMH. (Image: Image by Flickr.com, courtesy of darwin Bell)

A fashion house is a company that produces fashionable apparel. When young fashion designers start a fashion company, they often have to fund their own apparel lines. If the designer's company succeeds, a larger holding company may try to purchase the design house. When a large holding company buys a designer's fashion house, it can use its vast resources to help expand and define a brand while minimizing the risk for the designer.

Definition of Fashion House

The term “fashion house” refers to a fashionable clothing company. Fashion houses design, make and sell high-fashion clothing. The clothing that a fashion house produces has a distinct look and reflects the design aesthetic of the founding designer.

History

Before the development of fashion houses, seamstresses designed and created most apparel. Charles Frederick, who designed in the 1800s, redefined fashion by attaching a name and face to his designs. He set up a fashion business in Paris and named it the House of Worth. Other designers followed suit, and fashion businesses began to be known as “fashion houses,” where the designer served as an important symbol for the stylistic values of the brand.

Modern Fashion Houses

When the head designer at a successful fashion house retires, she often passes her fashion house onto a younger designer. For example, Coco Chanel originally founded the Chanel brand, but Karl Lagerfeld began designing for the brand soon after Coco Chanel's death. Karl Lagerfeld continues to expand the brand while maintaining the original Chanel look. Karl Lagerfeld also designs his own Karl Lagerfeld line.

Holding Company

Many fashion houses today are owned by holding companies. A holding company owns stock in several smaller companies and influences the operations of the smaller companies. For example, Moët Hennessy • Louis Vuitton or LVMH, owns numerous fashion houses and luxury brands. The company manages prestigious houses like Louis Vuiton, Givenchy, March Jacobs, Fendi, Emilio Pucci and Donna Karan.

Buying a Fashion House

When a designer's brand succeeds, he sometimes choose to sell his fashion house to a holding company. This allows the designer to take advantage of the larger company's resources while minimizing his personal risk. For example, in 1984 Donna Karan founded her own design business. In 2001, after achieving considerable success, she sold her company to LVMH. She still designs for the Donna Karan clothing line; the the holding company manages the Donna Karan company.

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