Lindsay Lohan may have been the straw that broke the fashion house’s bank.
Emanuel Ungaro, which disastrously hired Lohan as an artistic adviser last fall, is looking for a buyer, The Post has learned.
The 45-year-old French label has scrambled this year to slash expenses — including the lease on its massive Madison Avenue boutique — as it searches for an investor willing to take on its debts and tattered image, sources said.
Asim Abdullah, a Silicon Valley venture capitalist who bought the label in 2005 from fashion group Salvatore Ferragamo, was approached by an investment group about a sale, according to one source briefed on the situation.
But the source said “all bets are off” after an October fashion show of Lohan’s designs, which included pasties and microskirts that bared models’ buttocks.
Ungaro — whose namesake designer built his legend with bright floral prints on drapey dresses — is now a company with “no real estate and the brand has been mismanaged for years,” said one industry insider, noting that Ungaro’s licensees “mostly sell cheap stuff in Asia.”
While Ungaro’s finances haven’t been disclosed, in 2004 when the label was under Salvatore Ferragamo, it lost $26.5 million on revenues of about $38 million. Debts totaled about $25 million at the time, and the losses haven’t stopped, sources said.
To stem the bleeding, Ungaro has jettisoned its 8,000-square-foot boutique on Madison Avenue. Ungaro in recent weeks shuttered the shop — which in the 1990s was a mecca for the label’s Upper East Side clientele. It had occupied the space since 1994.
Fashion designer Michael Kors has since swooped in to occupy the space at 792 Madison, according to a source familiar with the transaction. Whirlwind negotiations won Kors a “very favorable deal,” the source said.
Meanwhile, Ungaro has been looking to save money any way it can. While Lohan only confirmed this month she had left the label, sources said Ungaro had nickel-and-dimed her for months, paying her with clothes instead of cash.
Outcry over Lohan’s designs helped trigger the ouster in December of CEO Mounir Moufarrige, who in the 1990s built a reputation as a visionary at Chloe.
Abdullah, a 40-something software designer, “was in a big hurry to court a younger clientele,” according to a person close to the label. “He had no patience for the process that’s required to properly build a brand.” That helped cause last summer’s departure of designer Esteban Cortazar.
Meanwhile, sources said the Plaza Hotel has been trying to lure retail tenants by telling them that Ungaro will open a store in its struggling underground complex.
“If that’s true, the Plaza must be giving them an extremely low rent,” a real estate source said.