LVMH - The Luxury Goods Conglomerate

[Nimsay]

@Lola701 Why do you think Bernard is so interested in disinvesting Marc?

Based on:

…When you think that LVMH still owns Kenzo perfumes, Loewe perfumes or even Givenchy perfumes, you understand that selling YSL beauty was a dumb move. Btw I suspect that Arnault might get rid of Marc Jacobs one day even more considering that Coty handles the beauty now…

 

[Lola701]

@Lola701 Why do you think Bernard is so interested in disinvesting Marc?

Based on:

I think Bernard loves and respect Marc the person but unfortunately, all the attempts he mad to elevate the house never worked (I remember in one AG, he mocked the kind of mass market business of MK and the irony is that MJ is in reality similar).
The brand clearly doesn’t make sense in their current portfolio and the perspective of growth there will probably mean « going mass ».
One could argue that they have Kenzo and Patou. But LVMH still has Kenzo parfums and the only thing they need is a strong creative director to push the cachet of the brand. I’ve heard that Kenzo by Nigo is not a success. In a way it’s not bad. I think they should give the brand to one of the LVMH Prize contestant tbh.

And regarding Patou, it’s a very small operation and they can still have control over it.
I think that when Fendi will surpass the 3B and Givenchy reach 1.5/2b, a brand like MJ wouldn’t necessarily be a particular asset in the portfolio.

And you can sense that there’s not real sense of pride from the people at LVMH to have MJ as brand despite it being a financial success overall.

 

[Nimsay]

I think that American culture. Specifically NYC culture - where all the money is - so its defacto American culture. Is all about being an appearing as European as possible. It started with the Astors and whatnot trying to buy into royal titles…

Its a very NYC to try to become and be as European as possible. The idea of a Grand Tour still exists in NY. In NYC being credentialed as Cosmopolitan is the highest highest status. NYers want Euro labels because that is NY heritage that European status symbols are the highest.

Even Tom Ford struggles with his American heritage hamstringing his luxury aspirations. I think the only reason TF is viewed above other American labels is simply because he is based in Milan - upholding this idea that Americans dont have a upper-tier fashion world. MJs best bet is a Polo RL competitor. I really think Arnault understands his limits… that to meet the needs of that market he will need a whole new teams and a new skillset for himself to measure success. However MK was able to build his own conglomerate off $300 Dior dupes so there is money to be had.

 

[PDFSD]

NEWS

Could Hermès overtake Louis Vuitton in terms of revenue?​

Posted On April 15, 2024 CPP-LUXURY

Does Hermès have the potential to overtake rival Louis Vuitton in terms of revenue? According to Citigroup analysts, overtaking is possible: the Faubourg-Saint-Honoré maison would in fact have all it takes to become the largest brand in the luxury sector within three years.

The US banking giant predicts that the house that produces the Birkin and Kelly bags is destined to reach 20 billion euros in revenues (21.3 billion dollars) by 2027 or earlier. A milestone that LVMH’s flagship brand achieved in 2022, while Hermès generated a turnover of 13.4 billion euros in 2023.

According to Thomas Chauvet of Citi, the gap is destined to close as soon as possible, also because Hermès would be better structured to gain new market shares compared to its competitors. “Hermès enjoys one of the most predictable growth, margin and cash flow profiles in the luxury sector,” Chauvet said.

The analyst highlighted how control over distribution and growth opportunities in categories beyond leather, such as ready-to-wear, watches, jewelry and tableware are the aces up the sleeve of the fashion house born as a saddlery in 1837.

Despite current fears of a slowdown in demand, Hermès shares have outperformed other luxury stocks with a 20% gain in the first few months of this year. A figure significantly higher than that recorded by the sector in the same period (+6.8%), while LVMH increased by 8.2%.

 

[Olaffo]

Im keeping my fingers crossed for Hermes because they deserve it: top quality products, breathtaking campaigns, consistent visuals from ages, no drama associated with the brand, also have not fall into cheapness hole like LV etc. There are plenty reasons to celebrate that, LVMH contributes enough to cheapening of luxury market that Hermes being one of the handful of truely luxurious houses should lead the way.

 

[PDFSD]

LVMH revenues in Q1 decline 2 percent​

Posted On April 16, 2024 CPP-LUXURY

LVMH said revenue took a hit in the first quarter as the normalization of the luxury industry’s growth rates impacted its sales of high-end goods, including Champagne and jewelry. Overall group sales were down 2 percent at actual exchange rates to 20.69 billion euros in the three months ended March 31, following a 5.5 percent increase in the previous three months.
This represented a rise of 3 percent on a like-for-like basis, down from the 10 percent recorded in the fourth quarter, but in line with market expectations. Organic sales at LVMH’s key fashion and leather goods division were up 2 percent, following a 9 percent increase in the fourth quarter, also matching the consensus forecast from analysts.

The watches and jewelry segment reported a 2 percent decline in like-for-like sales, while the wines and spirits division saw a 12 percent drop. Bucking the overall trend were perfumes and cosmetics, up 7 percent, and selective retailing, with a sales rise of 11 percent.

Earlier this year, LVMH chairman and chief executive officer Bernard Arnault sought to put a positive spin on the sector slowdown after three years of post-pandemic euphoria, but he was clearly banking on less anemic growth rates than the latest figures suggest.
“We have reached a stage where we no longer need such strong growth and for me, between 8 and 10 percent is ideal,” he said at the time, noting that he prefers to focus on the desirability of his brands with exclusive products, rather than chasing higher sales.
LVMH shares have risen by more than 8 percent since the start of the year, but some analysts have downgraded the stock, noting that sluggish Chinese demand is likely to continue weighing on the industry for the foreseeable future.

“For shares to go higher still, we think upgrades are needed and that these are unlikely to materialize soon, especially knowing that the basis of comparison is even tougher in [the second quarter] for fashion and leather,” HSBC said in a recent report.
In a mixed bag of economic indicators, China reported on Tuesday that its economy grew 5.3 percent in the first quarter, faster than expected, but March retail sales came in below expectations, suggesting the outlook for consumer spending remains cloudy.

French luxury group Kering sent shudders through the market last month when it warned that it expects first-quarter revenues to fall 10 percent in like-for-like terms, with its star brand Gucci set to record a decline of nearly 20 percent year-on-year.
While Kering is clearly underperforming its industry peers, the rare profit warning underscored the challenges facing high-end brands as China struggles to bounce back after three years of restrictions designed to limit the spread of COVID-19.

Shareholders are also expected to approve the appointments of Arnault’s sons Alexandre and Frédéric to the board. Alexandre Arnault, EVP of product and communications at Tiffany & Co., and Frédéric Arnault, CEO of LVMH Watches, will join their siblings Antoine Arnault, head of communication, image and environment at LVMH, and Delphine Arnault, chairman and CEO of Christian Dior Couture, on the board.
That leaves the youngest sibling, Jean Arnault, who is in his mid-20s and is marketing and product development director for watches at Louis Vuitton. “He’s got time, he’s young,” his father commented at a press conference in January where he announced the nominations.

 

[Nimsay]

ok so arnault is going to run lvmh into the ground with his kids. Its very hard to transfer that desire for money when you grew up fantastically rich.

None of his kids have displayed a scintilla of skill. They spent a fortune on tiffany and where is it now ? Those stupid collabs moved no needles. Tiffany is still nowhere … tiffany needs a top to bottom redesign and several lines be phased out and replaced. Remember the dumb beyonce and basquiat nonsense… The LVMH Scions formula of collabs doesnt work anymore. They shouldve expected it and planned for that. They didnt which shows hubris and is shocking. Like this is serious business darling. What do you mean you didnt have another strategy for your billion dillar company. They will get eaten alive by the billionaire hedgefund managers who see LVMH as a golden calf to dismember and sell off to the highest bidder.

Not to mention Delphine at Dior. Dior literally seems to have no strategy whatsoever. Besides collabs and limited editions.

Also as someone who was at watches and wonders … Jean looks ridiculous sitting next to rolex chopard iwc glashutte longines management. Like a little checkers child next to chess masters.

No none of the kids impress me besides maybe Frederic?

 

[GRCF]

ok so arnault is going to run lvmh into the ground with his kids. Its very hard to transfer that desire for money when you grew up fantastically rich.

None of his kids have displayed a scintilla of skill. They spent a fortune on tiffany and where is it now ? Those stupid collabs moved no needles. Tiffany is still nowhere … tiffany needs a top to bottom redesign and several lines be phased out and replaced. Remember the dumb beyonce and basquiat nonsense… The LVMH Scions formula of collabs doesnt work anymore. They shouldve expected it and planned for that. They didnt which shows hubris and is shocking. Like this is serious business darling. What do you mean you didnt have another strategy for your billion dillar company. They will get eaten alive by the billionaire hedgefund managers who see LVMH as a golden calf to dismember and sell off to the highest bidder.

Not to mention Delphine at Dior. Dior literally seems to have no strategy whatsoever. Besides collabs and limited editions.

Also as someone who was at watches and wonders … Jean looks ridiculous sitting next to rolex chopard iwc glashutte longines management. Like a little checkers child next to chess masters.

No none of the kids impress me besides maybe Frederic?

I have to ask: What exactly about Frederic is so impressive? He and Jean look out of place, out of their depth, and give off zero confidence.

I can’t speak for merit, intelligence or any serious skill because I don’t know them, but just by appearances alone, if I were an LVMH stakeholder boy I am sure glad Delphine and Antoine are there. Frederic and Jean look like Trump in this:


Actually, Jean inspires a bit more confidence than Frederic does. He may have gone to Polytechnic but he looks no more apt to run anything than Trump does the US. It takes a lot more than being book smart to be as successful as his father and his sister.

 

[Lola701]

I watched the Assemblee Générale….
Is it me or Arnault was throwing subliminals at Kering.
He mentioned many times the longevity of the designers and also of the executives. He thanked his team in lengthy speeches…Some jabs to what is happening at Kering lol.

Hmmm…
I don’t agree with your comment @Nimsay because the kids actually contributed a lot to the group.
Delphine is the first one to have a full official executive position as a CEO and clearly now, in the economic context, she is playing safe and focusing on expansion but saying that none of the kids displayed skills is a stretch.

I think nowadays, and for the past decade maybe, they have found ways to be integrated in the group while making it feels relevant to their personal interest.

We all know that Delphine was involved in the choice of designers for the brands of the group. She is great with talents, her strategy for Vuitton paid and Burke was a great mentor.

Alexandre had to idea to buy Rimowa and completely revamped the brand as a status symbol for travel. He has ideas.
Tiffany was a gamble and no matter how controversial his decisions were in terms of Marketing (he is not the CEO), they worked.

Antoine I think is more at ease in communications and corporate stuff. We saw that he doesn’t have the drive to carry a whole brand. Berluti could have been better than what it is.

The two brothers are interested in watches and technology. I think ideally they would have loved to work for a tech company but Tag Heuer is doing good and for Vuitton watches, it’s a tremplin.

I think LVMH is more strongly armed to face the challenges of the industry than some of their competitors because they are touching in so many parts of the industry at the same time, with different brands having like different pin points in the industry.

You are focusing on the short term strategy. Collabs is short term, much like capsules and little events thrown to boost the activity but you should look at the long term. Now there’s a war on real estate, a lot of brands are transforming into lifestyle operations. The lifestyle aspect is motivated by the aspirational customer. Fragrances have now became again aspirational entry priced luxury products.

Tiffany cannot be completely redesigned because it’s still a very lifestyle oriented company…Contrary to Bulgari which is the real competitor to Cartier.

Every question or concern cannot be simply solved by a creative solution or « redesign », even more when you compare the historic markets and the growing markets. Things takes time, even more in that world.

 

[PDFSD]

LVMH could sell Marc Jacobs​

Posted On April 30, 2024 CPP-LUXURY

LVMH Moet Hennessy Louis Vuitton SE is exploring options for its Marc Jacobs fashion brand amid interest from potential buyers, people with knowledge of the matter said. The fashion giant has been working with advisers to study possibilities for Marc Jacobs after getting approaches from suitors, the people said. The brand could attract bids from other consumer companies as well as private equity firms, the people said, asking not to be identified because the information was private.
The review is in the early stages and LVMH hasn’t made a final decision on how to respond to the interest. The luxury conglomerate could continue growing the business itself, according to the people. A representative for LVMH said the company strongly denies it’s considering a sale of Marc Jacobs, declining to comment further.
It’s relatively rare for LVMH to divest any of the brands in its portfolio. One of the last major disposals was in 2016, when it agreed to sell Donna Karan and DKNY for an enterprise value of $650 million. Any deal would help LVMH to capitalise on a years-long turnaround of Marc Jacobs and allow it to offload a brand in the affordable luxury category in order to focus on higher-end offerings.
Fashion designer Marc Jacobs, 61, was an artistic director for more than a decade at the Louis Vuitton brand, which is LVMH’s biggest profit contributor. The New York native’s namesake brand was founded in 1984 alongside business partner Robert Duffy. LVMH owns about 80 percent of the brand, while Jacobs and Duffy own the remainder.
Marc Jacobs sells products like The Tote Bag that retail for €550 ($588) in France, much lower than the €1,500 ($1,603) price tag for a Louis Vuitton Neverfull bag. It ventured into personal care in 2007, debuting the Marc Jacobs Daisy perfume with the famed floral cap and subsequently launched a beauty collection in 2014, according to its website.
LVMH has restructured Marc Jacobs in recent years, which led to a simplification of its product offering. The profitable brand recorded about €600 million ($642 million) of sales in 2023, one of the people said. LVMH doesn’t break down financial performance by label.
Paris-based LVMH is the world’s biggest luxury conglomerate, having amassed 75 labels ranging from Tiffany & Co. to Christian Dior and champagne maker Dom Perignon.

 

[Lola701]

Thanks for posting the news @PDFSD !

See, @Nimsay what we talked about earlier in this thread. I could even quote myself on this one…
Now, the news is in the table. It might not happen tomorrow but Marc Jacobs could be a fabulous asset to Tapestry (as it makes sense in their portfolio). Marc Jacobs has the potential to be as big as Michael Kors while remaining cooler.

Now, if the Qataris wants to play the HF game, they can acquire Versace, which could make up for the loss of Valentino.

I wonder if Marc would still like to be part of the fashion game if/when the brand is sold. I don’t think Marc is one of those designer who is invested in the strategy. So, he could remain creative director of his own brand, do his annual show and put out a team to handle his brand. However the good relationship he has with Arnault could open some doors for him, if he is interested…Like Dior!

He can potentially be a great talent for Dior! The brand is more global, the entities are separated and he can be focused on fashion and campaigns. Delphine, who is really products-oriented could help as an asset. Plus, there’s a mutual respect there.