When Valérie Hermann agreed to become the new chief executive of the Yves Saint Laurent brand back in January 2005, the petite, energetic 44-year-old knew she had her work cut out for her.

Her task – turning the iconic but loss-making YSL brand into a profitable company – was arguably one of the toughest briefs in the modern fashion industry. The business was already a mess when Gucci Group, the luxury goods arm of French conglomerate PPR, bought it for what many analysts thought was an over-the-top $1bn in 1999.

Flushed with cash from PPR, Gucci’s former top managers, Tom Ford and Domenico De Sole, undertook a vast campaign to reposition YSL at the high end of luxury, drastically reducing its licensing agreements and expanding its network of stores. But the problem was that these investments all came before a recovery in revenues.

Compounding the situation was Mr Ford, who tried to apply Gucci’s aesthetics to YSL. In an industry where brand individuality is paramount, Ford’s singular vision failed to work its magic at YSL.

The result was that the company fell deeper into the red. An initial target to break even by the end of 2003 came and went. In the first six months of 2005, the group racked up €40m in losses on €72m in sales.

A graduate of the French business school HEC Paris in 1985, Ms Hermann concedes that turning YSL around is no easy feat.

“But I love challenges and YSL was as big of a challenge as they come,” she says, explaining her reason for taking on the job.

Ms Hermann is no stranger to suffering brands. As director of Christian Dior’s women’s ready-to-wear brand between 1999-2004, Ms Hermann helped engineer one of luxury good’s most admired turnaround stories. She also acted as the business brain and brand manager for John Galliano, reining in and ultimately commercialising with great success the creative talents of fashion’s wild child.

In today’s crowded luxury business, the consensus among industry insiders is that a talented designer is no longer enough to guarantee a brand’s success. Instead, you also need someone who knows how to manage the talent. It is an intangible skill that is in short supply.

Little wonder then that Ms Hermann ended up being poached by François-Henri Pinault, PPR’s chief executive and fellow HEC classmate, from arch-rival LVMH.

“I could never develop a business without a good designer, but inversely I think designers need a good manager by their side,” says Ms Hermann. “Success comes from matching the right creative talent with the right business talent. It’s like a marriage, really.”

“The original success of YSL was developed from the close personal and professional relationship between Yves Saint Laurent himself and Pierre Berge,” she adds. “Likewise, Prada is the work of Miuccia Prada and her husband and business partner Patrizio Bertelli.”

Born in Concarneau, a small resort town on the coast of Brittany, to a family of doctors, Ms Hermann, despite her small-town background, has always harboured big ambitions. Having obtained her baccalaureate at the age of 17, she left Brittany for Paris in order to attend preparatory classes for HEC.

“I was determined to go there because I knew it would open up many possibilities,” she says. “And I was right.”

Ms Hermann says she would not be where she is today had she not attended HEC. “HEC opened up my horizon, socially and academically,” she says. “Academically, because my studies there were very multidisciplinary and international. I studied everything from communications, marketing to finance, and was encouraged to do internships abroad.”

“Socially, because living on campus taught me how to work and live with very different people and see things differently.”

The latter she says was particularly important when it was time for her to work with Galliano in 1996.

The two of them, she says, were as different as day and night.

“Here I was, a rather bourgeois girl from the provinces with a business school degree, while John is this wildly creative Brit who studied at Saint Martin’s,” she says with a laugh. “The only thing we had in common was our work ethnic and our interest in others.”

But the partnership worked, with Ms Hermann’s rationality helping to ground Mr Galliano’s wildly imaginative ideas.

“Managing creative talents is a very delicate affair,” she says. “You have to know how to listen in order to figure out what your designer needs. Yet you also have to be able to criticise and disagree, without being disagreeable. You have be passionate about human relations to do this.”

At YSL, Ms Hermann is equally as determined to translate the essence of the YSL brand – which she describes as a lighthearted Rive Gauche spirit that went amiss during the Tom Ford era of sexual dominants – into fashionable must-haves.

To this end, Ms Hermann, along with designer Stefano Pilati, a 41-year-old Italian who worked under Ford, have pushed to diversify the YSL collection away from cocktail dresses and evening wears and into versatile, everyday clothes for women.

There are signs that Ms Hermann’s strategy is working. The refocusing of the brand, coupled with some cost saving measures have helped YSL cut 2006 losses from €66m to €49m while boosting sales 20 per cent to €194m.

The recovery looks set to continue apace this year following encouraging first half results. For the first six months of this year, YSL’s sales were up nearly 20 per cent to €101m during the first six month of this year, while operating losses narrowed from €35m to €25.8m. Still, the brand has a long way to go before it hits its objective of doubling sales to about $400m, which is the breakeven point set out by Robert Polet, Gucci Group’s chief executive and Ms Hermann’s boss. But given Ms Hermann’s record, it will only be a matter of time.