A creation for Yves Saint Laurent autumn/winter 2009 ready-to-wear collection Photo : Pierre Verdy/AFP

By Astrid Wendlandt

PARIS, March 10 (Reuters) - Fashion house Yves Saint Laurent will not be cutting prices or corners in the face the economic crisis, its head said after unveiling a conservative collection of black leather dresses and high-waistline flannel grey skirts.

Hands-on fashion veteran Valerie Hermann, who brought back YSL to profitability in 2008 after running it for just over three years, said she did not plan to sacrifice margins even if buyers were adopting a more cautious attitude.

"Lowering prices and quality, never!" Hermann told Reuters backstage of the autumn/winter 2009-2010 collection presented late on Monday at the Palais de Tokyo modern art exhibition centre in Paris.

"If we lowered prices by 30 percent, we would disappear."

She said the company's strategy was to make "wearable clothes," both in terms of price and quality.

Hermann added YSL would try to design less complex and costly clothes than in some previous seasons.

Last year, YSL made an operating profit of 300,000 euros ($380,600) on revenues of 263 million euros after decades of losses. By the end of 2008, it ran a worldwide network of 64 shops and employed 1,046 staff.

YSL, which prides itself on making women's ready-to-wear clothes in France, generates nearly 58 percent of its sales in Europe, 22 percent in North America and 7.5 percent in Japan.

Created in 1961, YSL is one of several French iconic houses such as Dior and Chanel that try to strike a balance between preserving their heritage and producing innovative clothes to compete against young, trendy and fast-growing brands.

YSL was acquired in 1999 by Gucci Group, which is part of the French group retail and luxury group PPR (PRTP.PA), for $1 billion. Last year, PPR sold its YSL perfume and cosmetics line to beauty products giant L'Oreal (OREP.PA) for an enterprise value of 1.15 billion euros.

Front row guests at the YSL show included actress and model Milla Jovovich. "That show was amazing, very wearable pieces, there are at least 10 things I would like to buy," Jovovich told Reuters.

Last year, Jovovich stopped her fashion line co-founded with Carmen Hawk in 2003 called Jovovich-Hawk. She said there were no plans to resurrect it for the moment.

POLARISED MARKET

Hermann said buyers had become more polarised. Either they wanted top-of-the-line clothes or mass-market, cheaply priced items. There was little room for the middle ground.

She said YSL was faring well in the downturn partly thanks to its 24 hours edition launched in recent years which was priced more accessibly than the catwalk collection.

"People who come into our shops now think twice and even three times before buying something and they ask themselves whether their investment will last," Hermann said.

The YSL ready-to-wear collection designed by Milanese designer Stefano Pilati, featured classic grey and black utilitarian suits, jackets and coats.

It included puffed out white blouses on pin-striped skirts, leather overalls on bare skin and pencil-thin stilettos on platform soles.

As a tribute to its founder Yves Saint Laurent, credited with having revolutionised French fashion and introducing tuxedo jackets and pants for women, the new collection included a tuxedo-themed black dress with a floating hemline. (Editing by Matthew Jones)