Has the buying spree started again with LVMH, PPR, and Richemont?

[mikeijames]

WOW! and while lvmh maneuvers to try to get ahold of hermes, it looks like PPR might get its tentacles around burberry. this would make PPR quite the force among these conglomerates....

Buy British? | Lauren Milligan | 10 December 2010
http://www.vogue.co.uk/news/daily/101210-is-pinaults-ppr-set-to-buy-burberr.aspx

THE market is awash with rumours this morning that PPR - the French luxury conglomerate which owns fashion labels including Gucci, Yves Saint Laurent, Bottega Veneta, Alexander McQueen, Stella McCartney and Balenciaga - may be set to buy Burberry.

PPR, headed by businessman François-Henri Pinault, is in the process of selling its furniture company Conforma, thereby freeing up some funds. But PPR played down the rumours yesterday.

A PPR spokesperson told the International Herald Tribune that Pinault believes that a complementary luxury brand that helped to fill out his portfolio, such as an upscale watchmaker, would make better strategic sense and would be less likely to "canabalise" sales of PPR's existing labels.

"Burberry would be a little too much for them," Virginie Blin, a luxury and retail sector analyst told the IHT. "Luxury sector acquisitions are going to be very costly in this market."

(source: nymag.com)

 

[Street_a_Licious]

canabalise? really? canabalise?

Burberry seems to be doing better and better each year, on their own too, especially after they streamlined everything. in times like these, it'd be foolish to sell NOW, since i would expect Burberry's price to rise more, what with the current crisis.

 

[mikeijames]

^or have they just been positioning themselves to fetch a winning sale price? a conglomerate could streamline that company even more.

 

[snowinmoscow]

This thread is really interesting since I've just finished reading "The Jimmy Choo" story and it delves quite deeply into fashion houses acquisitions and the financial side of it all! Its amazing how integrated they all area... the politics behind the boards of these groups must be amazing..

 

[Street_a_Licious]

^or have they just been positioning themselves to fetch a winning sale price? a conglomerate could streamline that company even more.

well, yes. but what i think Burberry did themselves was just 'trimming the fat', while a conglomerate would cut into the substance, all for a wider profit margin. i mean, you KNOW it'd happen.

there's a limit to streamlining...

 

[mikeijames]

well, yes. but what i think Burberry did themselves was just 'trimming the fat', while a conglomerate would cut into the substance, all for a wider profit margin. i mean, you KNOW it'd happen.

there's a limit to streamlining...

the balenciagas and bottegas seem to fair quite well....

 

[Street_a_Licious]

not if you buy Balenciaga bags. they switched from goatskin to lambskin (cheaper and easier to source), changed various aspects about the bags (hardware changes, interior changes, switching silver plates for steel ones), it's only the question WHEN they'll start cutting deep.

Bottega being PPR's label for understated luxury, they're still doing good, i agree, but i am dreading the day when they'll start lowering the quality and raising the price simultaneously.

 

[mikeijames]

not if you buy Balenciaga bags. they switched from goatskin to lambskin (cheaper and easier to source), changed various aspects about the bags (hardware changes, interior changes, switching silver plates for steel ones), it's only the question WHEN they'll start cutting deep.

Bottega being PPR's label for understated luxury, they're still doing good, i agree, but i am dreading the day when they'll start lowering the quality and raising the price simultaneously.

while i can concede the point on the bags, whatever money they saved with the handbags, they spent on some of ghesquiere's creative flourishes in other departments like ready-to-wear. further, many houses -- under any number of different corporate umbrellas -- use lambskin for their bags from dior to lanvin to chloe. in the end, balenciaga isn't a "leather house" as we think of it, it's a design house. houses like bottega and hermes and loewe and others bank on the quality of their leather not necessarily the innovativeness of their design.

and, let's face it, most people do not flock to burberry for the quality of the leathers so much as they do for the visibility of the plaid or the recognizability of the cut. it'd fit well in the ppr fold because of that.

 

[Street_a_Licious]

well, it's also true that it's the bags which make the money for Ghesquiere's creations, which are mighty costly and i don't think sell out. at all.

and while a lot of people on here perceive Balenciaga as a design house, creating looks, silhouettes and also fabrics, the majority of people who buy designer goods, think of the bags first, before they start on the clothes. as such, i believe that the bags play an important part in their current brand identity (but seriously, this is going off topic lol)

either way

i believe Burberry might not be ready yet for becoming part of PPR. it hasn't been that long since it was less of a luxury house and more a licensing monster, which was mighty popular with chavs. they just got done buying their licenses back (i think the only ones still running are Blue and Black Label in Japan), so i'd like to think that they should enjoy the fruits of their own labor first before selling out to PPR.

 

[mikeijames]

well, it's also true that it's the bags which make the money for Ghesquiere's creations, which are mighty costly and i don't think sell out. at all.

and while a lot of people on here perceive Balenciaga as a design house, creating looks, silhouettes and also fabrics, the majority of people who buy designer goods, think of the bags first, before they start on the clothes. as such, i believe that the bags play an important part in their current brand identity (but seriously, this is going off topic lol)

either way

i believe Burberry might not be ready yet for becoming part of PPR. it hasn't been that long since it was less of a luxury house and more a licensing monster, which was mighty popular with chavs. they just got done buying their licenses back (i think the only ones still running are Blue and Black Label in Japan), so i'd like to think that they should enjoy the fruits of their own labor first before selling out to PPR.

maybe so, but that's not really the way wall street works in the end. gucci went through a similar transition -- buying back all of is licenses -- back in the tom ford days before it formed the gucci group powered by ppr money.

 

[Street_a_Licious]

well, but Burberry ain't becoming no 'Burberry Group', owning several other fashion houses themselves. Gucci was still at a power position, while Burberry would most likely become 'one of PPRs brands'.

 

[mikeijames]

and not to be outdone by whispers about PPR nabbing buberry, LVMH increases its stakes in hermes even more. i hope the hermes family is having fun at those christmas parties.

LVMH Now Owns 20 Percent of Hermès

* 12/21/10 at 2:15 PM

Despite all the name-calling, potentially illegal stock maneuvers, and other measures that the Hermès family has taken to prevent LVMH from purchasing more shares of their company, LVMH announced yesterday that they now own 20 percent of Hermès. This is less than a 3 percent increase in their ownership, up from the 17.3 percent they accumulated back in October, but the acquisition flies in the face of all the hoop-jumping the Hermès family has done over the past two months to protect their holdings. While LVMH initially said that they had no interest in a "hostile takeover" within the next six months, they didn't rule out buying more stock, which will probably continue to happen.

LVMH Crosses Threshold of 20 Percent of Hermès Shares [WWD]
Related: Hermès’s CEO Calls It ‘the Pretty Flower’ That LVMH Could ‘Kill’

source: nymag.com

 

[Street_a_Licious]

WAT?????

i mean, the Dumas family is still the majority stockholder, but what LVMH does is just plain indecent...

 

[mikeijames]

^one just has to wonder if any family members have unloaded their stock onto third parties over the years because you know lvmh is on the hunt for those outstanding shares.

 

[Deleted member 7575]

the balenciagas and bottegas seem to fair quite well....

They've laid people off in the recession, too. And of course they cut corners on as many products as they can, all those huge companies do. Is it so that they can allow the designers creative flourishes? Hardly. It's pure greed. That's why I'm so afraid of what LVMH will do to Hermes if they get any more shares. They WILL ruin it. Buy your scarves and Birkins now while you are still getting what you pay for, as soon as LVMH steps in that stuff is going to covertly outsourced to China. SAD.

 

[Thefrenchy]

WAT?????

i mean, the Dumas family is still the majority stockholder, but what LVMH does is just plain indecent...

My thoughts exactly. I know "business is business" but he's seriously pushing it a bit too far. Not that he's known to be particularly nice or anything, but still...

 

[Street_a_Licious]

i know! it's like a woman at a bar, telling a guy that she's simply NOT interested in him and never will be and the guy is STILL hitting on her. ugh.

 

[eternitygoddess]

Well it is the business world; what Arnault/LVMH is doing may be indecent, but unless the French laws cracks down on him, it ain't illegal. Hostile takeovers are never polite.

I wonder what Hermes' strategy will be going forwards.

 

[Street_a_Licious]

that's why they're called hostile takeovers LOL

then again, you need to be a majority shareholder in order to takeover, no? most that LVMH could get would be seat at the board and then they could still be outvoted for every decision.

 

[mikeijames]

^or lvmh could suddenly sell their holdings de-valuing the shares the family has. i mean, lvmh doesn't have to live off their shares like family members do. also, it just takes one skeptical family member or a collection of third party holdings to make this drama interesting.