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

[eternitygoddess]

^Also, there are quite a number of members in the Hermes family. I don't think keeping ALL of them in line will be that easy.

 

[missbluejean]

French Regulator Exempts Hermès Holding From Tender Offer Rule
By Inti Landauro JANUARY 6, 2011, 7:37 A.M. ET (WSJ.com)

PARIS (Dow Jones)--French market regulator Autorite des Marches Financiers Thursday allowed the Hermes family to create a holding company to house more than 50% of the shares of luxury goods company Hermes International SCA (RMS.FR) without having to launch a public tender offer for the entire company.

The family, which owns 73% of Hermes, created the holding company after rival LVMH Moet Hennessy Louis Vuitton SA (MC.FR) built up a 20% stake in its smaller rival. Hermes has termed LVMH's holding and intention to buy more stock as market opportunities arise as hostile. The move adds to the substantial protection afforded the Hermes family by the company's structure as a limited partnership, which alone makes it impregnable to attack.

According to French law, any shareholder who owns more than 33% in a company must launch a bid for the rest of the group's shares, although exceptions are permitted.

The Hermes family requested the regrouping of shares into a separate holding be exempted from the mandatory takeover law and be instead considered as "reclassification" of companies belonging to the same group.

I don't have access to WWD but here's the link

 

[Dkammern]

how did it take me SO long to find out about this thread?! i'll love to stay updated on new 'movements'... for Pinault and Arnault it's just like kids exchanging baseball cards it seems!

Personally I am also interested in seeing how the current houses in the groups evolve than the new acquisitions.
Taking Loewe as an example, if they really succeed at making it one of the big names in the industry, it could make a nice B-school case! they've hired Stuart, then they put a new manager (coming from Mulberry, like Stuart), they are now trying to reenter the US market, they are already very big in Asia... it's got all the ingredients, but no 'spark' yet. We start to see it featured in big magazines, but there's still work to do until it becomes truly referential (do understand that in Spain, Loewe has the same reputation Hermès has... only no one freaked out when LVMH bought it here)

About Arnault and Hermès, all I can say is the Dumas well deserve what they are getting. Arnault may not be able to control the company, but he can be very tough on deciding who is at the management helm of it, and what the end-of-the-year accounts say. If you don't want to be bought out, and if you don't what people to tell you what to do with your business, then don't go public.

I would extend that if I could, as a suggestion, to Prada and Bertelli. They've considered it various times, but if they are for real this time, they must realize that running the company won't be about their marital disputes anymore. And when you are used to hold 'board meetings' every night over dinner with the kids at home, having exterior people can get all too crowded to the point where the money you made going bigger isn't worth it.

 

[Dkammern]

forgot to mention: if you do twitter and you want an insightful laugh from time to time (both in good and bad ways) do follow @edojao

http://twitter.com/edojao/status/20870357074313216

 

[MissMagAddict]

source | wwd.com

Bernard Arnault on Hermès: Only 'Peaceful' Intentions

PARIS — Could Hermès International one day cooperate with LVMH Moët Hennessy Louis Vuitton, its biggest and most reviled shareholder?

Bernard Arnault extended that olive branch Friday as he disclosed record 2010 results for the world’s largest luxury conglomerate and vowed that it would be a “peaceful but not passive” shareholder in the maker of Birkin bags and silk scarves.

“Don’t count on us to be aggressive,” he told a rapt audience of analysts and journalists hungry for fresh signals about LVMH’s intentions. “We are very pleased to be a shareholder in this very fine company. We want to support the family shareholders, and we want to support the management.”

That said, Arnault held out hope that his company’s prickly relations with Hermès, which views LVMH’s stake-building as hostile, would improve, allowing the two luxury players to collaborate in a way “that is constructive and beneficial to the company.” Analysts have suggested Hermès could benefit from LVMH’s clout in buying advertising space and rental property, for example.

In a veiled riposte to Hermès — which claims its corporate culture and commitment to high craftsmanship is unique — Arnault peppered his talk with repeated references to LVMH’s obsession with quality, its workshops and artisans.

He opened the morning session at LVMH’s in-house auditorium here with a video montage of men and women cutting leather, driving nails into trunks, carving wood and massaging labels onto Champagne bottles. And he trumpeted Louis Vuitton’s unique business model, with no licenses, no discounts and large, impressive stores before which tourists frequently pose for vacation snaps.

“No other luxury company has this elite strategy,” he said. “We never have duty free shops in airports like other brands.”

Hermès operates 46 stores in airport locations, according to a tally of those listed on the firm’s Web site.

Arnault later acknowledged Vuitton products are sold at one airport location, Seoul’s Incheon, yet he characterized it as an anomaly LVMH inherited when it took control of Vuitton.

During the meeting, Arnault deflected repeated queries about the compatibility of LVMH’s corporate culture and that of Hermès. “I find it pointless to compare cultures. It’s like asking, ‘Do you prefer Victor Hugo or Molière?’ They’re different writers, you can’t compare,” he retorted.

What’s more, he touted the decentralized nature of LVMH — “more like a constellation than a federation” of brands — and stressed, “We can guarantee the preservation of [Hermès’] culture in the long term.”

Despite his reputation as one of the business world’s shrewdest financial strategists, Arnault painted himself at the meeting as someone easily befuddled by the complexities of currency gyrations and financial instruments such as the equity swaps that landed him a commanding chunk of Hermès.

“Day in, day out, we focus on high-quality products,” he said. “The financial performance is the logical outcome.”

And to wave off any lingering perceptions that LVMH is a money-hungry marketer, he reminded the audience that when the group bought famed Sauternes vineyard Château d’Yquem in 1999, it reinforced the sweet dessert wine’s upscale reputation and didn’t start producing “T-shirts and other horrendous things.”

Arnault clarified that LVMH has not purchased any more shares in Hermès since the disclosure in December that the company had increased its stake to 20.2 percent. He also stressed that LVMH has no plans to exit from its investment.

Hermès declined to comment on Arnault’s various declarations, but the company has repeatedly characterized LVMH’s investment as unwelcome.

Hermès’ family shareholders plan to group 50.2 percent of its capital into a nonlisted holding company in order to fend off a potential takeover bid. The move has been green-lighted by France’s stock market regulator AMF, but is being appealed by minority shareholders.

Also on Friday, Hermès announced a reorganization of its executive committee, elevating two family members. It said Axel Dumas, currently managing director of the saddle and leather métier, would join the executive committee and become chief operating officer; while Guillaume de Seynes, executive vice president, would head a new production and participations division including all leather and textile manufacturing.

Gains on its investment in Hermès, achieved through cash-settled equity swaps the AMF is also scrutinizing, and a favorable currency environment padded out LVMH’s net profit last year, which rose 72.7 percent to 3.03 billion euros, or $4.03 billion. It would have risen 30 percent without the Hermès transactions.

Profits from recurring operations rose 29 percent to 4.32 billion euros, or $5.74 billion. Dividends are to increase 27 percent.

Dollar figures are converted from euros at average exchange rates for the periods to which they refer.

Revenues for the full year advanced 19.2 percent to 20.32 billion euros, or $26.98 billion, touted as a record level. Sales in the three months ended Dec. 31 jumped 19.6 percent to 6.11 billion euros, or $8.33 billion. Friday’s results were slightly ahead of consensus expectations.

Arnault said January business has accelerated from 2010’s pace, bolstering his optimism for smooth sailing for the luxury business for the next few years.

“We certainly expect 2011 to be as good a year as 2010,” he said. “We have reasons to be optimistic. Ever since 2010, we have entered into a new economic cycle…a resumption of growth.”

Last year, all business groups logged double-digit gains: 12.2 percent for perfumes and cosmetics; 18.6 percent for selective retailing; 19 percent for wines and spirits; 20.3 percent for fashion and leather goods, and 28.9 percent for watches and jewelry, which doubled operating profits.

The pivotal Vuitton brand, which accounts for about half the group’s earnings, posted double-digit gains throughout 2010. Chief executive officer Yves Carcelle said Vuitton would open fewer than 10 new locations this year, and greatly expand the scale of its boutiques in Rome, Cannes and Munich. “We want to offer increasingly luxurious premises for our customers,” he said.

Asia continued to drive luxury sales at LVMH, with sales there advancing 20 percent in local currencies, compared with 14 percent for the U.S., excepting Hawaii, and 12 percent for Europe. Stagnant Japan logged a 5 percent decline in local currencies, with a slight improvement in the fourth quarter.

The French group ended 2010 with a debt-to-equity ratio of 15 percent and a free cash flow of 3.07 billion euros, or $4.22 billion at current exchange. Still, Arnault downplayed the likelihood of acquisitions, reiterating LVMH’s strategy to invest heavily in its high potential brands. Asked about its second-tier fashion brands, the luxury titan highlighted strong results at Celine and Loewe, and said there were no plans for disposals.

LVMH stock closed Friday down 2.4 percent to 114.05 euros, or $154.80 at current exchange.

Separately on Friday, Christian Dior SA, parent of LVMH and Christian Dior Couture, reported results that underscore the strength of luxury’s rebound.

Revenues at the Dior fashion house grew 15 percent in 2010 to 826 million euros, or $1.1 billion, while profits vaulted 169.2 percent to 35 million euros, or $46.5 million.

Sidney Toledano, Dior’s president and ceo, said a stronger full-price business and less reliance on the wholesale channel improved Dior’s gross margins. Sales in Dior’s own boutiques advanced 22 percent last year, or 16 percent at constant exchange.

Toledano cited strength across women’s and men’s ready-to-wear and leather goods, with the brand’s New Look and Granville bags emerging as “new pillars” beside the perennial Lady Dior bag.

 

[mikeijames]

does this mean the family who owns hermes only controls 50.2% of the company?!

 

[thejarc]

does this mean the family who owns hermes only controls 50.2% of the company?!

No. As far as I understood they own 73% of it's stock but only form thisholding to protect 50% of the stock. So maybe the lasting 23% are owned by family members that don't want to participate.

 

[mikeijames]

with lvmh involved in a velvet-gloved hostile takeover of another marquee brand and scooping up little cosmetic companies, it feels like the early aughties again. ppr, it's your move.

February 07, 2011 06:00 AM Eastern Time
LVMH Acquires Renowned Skincare Brand Ole Henriksen

PARIS & LOS ANGELES--(BUSINESS WIRE)--LVMH Moët Hennessy Louis Vuitton, the world’s leading luxury products group, has completed the acquisition of Ole Henriksen, a leading botanical skincare company founded and owned by its namesake. Terms of the transaction were not disclosed.

“I am thrilled to join LVMH. Supported by the global knowledge of the leading luxury products group, I am confident my brand can expand its presence well beyond what we have achieved today to become a world-recognized and most highly desired brand in the skincare market”

The acquisition of Ole Henriksen is aligned with the strategies of LVMH, which include identifying brands with strong, long-term potential and helping them to capitalize on it. In the perfumes and cosmetics sector, specifically, the Group has a strong track record of successfully partnering with innovative brands such as Benefit, Make Up For Ever, and Fresh. These brands have each achieved significant growth as part of LVMH’s portfolio and they are positioned for continued success.

Ole Henriksen, the namesake of the brand, is a world-renowned skincare specialist. In 1985, following studies in cosmetic chemistry, along with his hands-on experience treating Hollywood’s most famous complexions at his Los Angeles spa, he created the ultimate in at-home luxury – botanical-based skincare that treats the face and body while helping to achieve overall health and wellness. The brand is currently sold at Sephora as well as spas in a total of 22 countries. LVMH will focus on future product development breakthroughs as well as expanding its international distribution.

“I am thrilled to join LVMH. Supported by the global knowledge of the leading luxury products group, I am confident my brand can expand its presence well beyond what we have achieved today to become a world-recognized and most highly desired brand in the skincare market,” explained Ole Henriksen, Founder of Ole Henriksen.

“Ole Henriksen has developed a unique skincare brand, with great consumer appeal and clear prospects for continued success. We are proud to welcome Ole Henriksen into the LVMH family and participate in the next phase of its development. In particular, Ole Henriksen will benefit from working closely with Sephora -- our fast-growing, global prestige beauty retailer -- to accelerate the brand’s worldwide expansion,” commented Antonio Belloni, Group Managing Director of LVMH.

Demeter Group, the San Francisco-based investment bank for growth Consumer and Retail companies, acted as exclusive financial advisor to Ole Henriksen. Mr. Henriksen will remain the brand’s Visionary/Creative Director. The Company, which will continue to be based in Los Angeles, expects to appoint a new CEO in early 2011, who will report to David Suliteanu, CEO and President of Sephora Americas.

About Ole Henriksen

Celebrate life, celebrate yourself and you will always look beautiful! 36 years ago, Ole Henriksen opened OLEHENRIKSEN FACE/BODY SPA relaxation and treatment mecca for Hollywood's elite and A-List celebrities. He followed years later with his namesake skin care line all based on the premise that he wanted to help his clients elevate their skin to be the very best it could be. Developing his brand around how he lives his own life, Ole incorporates the best natural ingredients to treat and nourish the body and skin as well as practicing healthy lifestyle habits. Today, Ole's award winning formulations represent the best of nature and science providing highly effective solutions for every skin type and concern. OLEHENRIKSEN Nature - Science - Beauty - Wellness ... Please visit www.olehenriksen.com.

About LVMH

LVMH Moët Hennessy Louis Vuitton is the world's leading luxury goods group. LVMH is present in the Perfumes and Cosmetics sector with Parfums Christian Dior, Guerlain, Parfums Givenchy, Parfums Kenzo, Perfumes Loewe as well as other promising cosmetic companies (BeneFit Cosmetics, Make Up For Ever, Acqua di Parma and Fresh). The Group is represented in Wines and Spirits by a portfolio of brands that includes Moët & Chandon, Dom Pérignon, Veuve Clicquot Ponsardin, Krug, Ruinart, Château d'Yquem, Hennessy, Glenmorangie, Ardbeg, Belvedere Vodka, Chopin, 10 Cane, Chandon, Cloudy Bay, Terrazas de los Andes, Cheval des Andes, Green Point, Cape Mentelle, Newton. Its Fashion and Leather Goods division includes Louis Vuitton, the world's leading luxury brand, as well as Celine, Loewe, Kenzo, Givenchy, Thomas Pink, Fendi, Emilio Pucci, Donna Karan, Marc Jacobs, Berluti and StefanoBi. LVMH is also active in selective retailing through DFS, Sephora in Europe and the United States, Le Bon Marché and la Samaritaine. LVMH's Watches and Jewelry division comprises TAG Heuer, Chaumet, Christian Dior Watches, Zenith, Fred, Hublot and De Beers Diamond Jewellers Limited, a joint venture created with the world’s leading diamond group. Please visit www.lvmh.com.

Contacts

Kekst and Company
Molly Morse / Victoria Weld / Paige Gruman, 212-521-4826 / 4849 / 4876

(source: Permalink: businesswire.com)

 

[mikeijames]

lvmh scoops up a big one....

market pulse

March 7, 2011, 2:12 a.m. EST
LVMH buying Bulgari in all-share deal

By Barbara Kollmeyer

MADRID (MarketWatch) -- LVMH Moet Hennessy Louis Vuitton SA on Monday said it will buy Italian luxury-goods group Bulgari SpA in an all-share deal. The Bulgari family, majority owner of the jewelry and watch maker, said it had "decided to join forces with the LVMH Group in order to reinforce...the long-term development of the Bulgari Group." The deal was made over the weekend, and approved by LVMH's board. Under approval of the Bulgari board, LVMH will issue 16.5 million shares in exchange for the 152.5 million Bulgari shares owned by the family, who will become the second-largest family shareholder of the LVMH Group. LVMH will offer €12.25 per share for shares held by minority stockholders. Paolo and Nicola Bulgari will remain chairman and vice chairman of the Bulgari board, respectively. The Bulgari family will appoint two representatives to the LVMH board and Francesco Trapani, CEO of Bulgari S.p.A., will join the executive committee of LVMH and assume the management of the LVMH enlarged watches and jewelry unit in the second half of 2011.

(source: marketwatch.com)

 

[elle_gb]

LVMH almost owns everything!!!!

 

[thejarc]

LVMH almost owns everything!!!!

It's not even a joke anymore. They really own everything, Fendi, Givenchy, Celine, Louis Vuitton, Donna Karan, Kenzo, Marc Jacobs, John Galliano, Dior, Pucci, Bulgari, Guerlian, EVERYTHING

 

[tatouejeremie]

Off the Catwalk, the Battle for Hermès (part 1)
By LIZ ALDERMAN
Published: March 5, 2011



IN the rarefied realm of Bernard Arnault, the grand master of the world of luxury, the talk is usually of beautiful things.

Of sumptuous things.

Of expensive things.

It is decidedly not of ugly things. But, last Monday, ugliness intruded into this beau monde, in the form of Mr. Arnault’s star designer at Christian Dior, John Galliano. That day, in his Avenue Montaigne offices here, Mr. Arnault sat stunned as he watched the infamous video of Mr. Galliano’s drunken “I love Hitler” tirade.

That video is 42 seconds long. And in 42 seconds, Mr. Arnault and the head of Dior, Sidney Toledano, decided that their star had to go — immediately.

In an interview in his headquarters on Tuesday, only hours after Mr. Galliano’s firing was announced publicly, Mr. Arnault expressed confidence that Dior would shake off its Charlie Sheen moment. He declined to comment on Mr. Galliano, who had helped turn Dior into a multibillion-dollar brand, and with whom he has had a close relationship.

(According to colleagues at Dior, Mr. Galliano had been under increasing strain since the death in 2007 of his chief assistant and confidant of 20 years, Steven Robinson, the suicide that year of the British stylist Isabella Blow, and then the suicide last year of the British designer Alexander McQueen, who had succeeded Mr. Galliano at Givenchy, another haute couture house that Mr. Arnault controls.)

Mr. Arnault, France’s richest man and the force behind the vast LVMH Moët Hennessy Louis Vuitton empire, is eager to put the Galliano affair behind him. For as jarring as this has been for Dior, Mr. Arnault is grasping at another lustrous pearl: Hermès International.

Since October, Mr. Arnault has been — quite publicly — circling Hermès, the 174-year-old family fief whose silk scarves and Kelly and Birkin handbags are coveted near and far.

Mr. Arnault says he will not interfere with Hermès’s management or traditions. “We are a totally peaceful investor,” he said in the interview last week. “But as a leader in the best quality products in the world, we believe we can bring a certain savoir-faire to improve the functioning of their business.”

To people at Hermès, LVMH — indeed, Mr. Arnault himself — represents everything Hermès is not. He has spent the past three decades acquiring one luxury brand after another and then hiring designers like Mr. Galliano, Mr. McQueen and Marc Jacobs (for Louis Vuitton) to invigorate old labels. That Mr. Galliano was given the keys to Dior only to self-destruct with an anti-Semitic rant at a Paris bar seemed to confirm the worst fears of Hermès executives.

“There is a part of our world that is playing on abundance, on glitz and glamour,” Patrick Thomas, the Hermès’s chief executive, said during an interview the week before Mr. Galliano was fired. “And there is another part that is concentrated on refinement, and basically making beautiful objects.”

Hermès counts itself among the latter, and it wants to stay that way. “We don’t want to be a part of this financial world which is ruining companies and dealing with people like they are goods or raw materials,” said Mr. Thomas, the first chief executive at Hermès who is not a member of the family. “It’s not a financial fight, because we would lose that. It’s a cultural fight.”

AT 62, Bernard Arnault is a trim, willowy man with piercing blue eyes and an easy smile. He speaks only when he has something to say, a quality that can come off as cold or supremely self-confident, depending on which side of the table you’re on.

Although Mr. Arnault was born and raised in France, he is, to his detractors here, something of a brassy American in finely tailored Dior. In much of the world, his success in building a wildly profitable, global conglomerate is viewed with envy. But in France, flash, money and wheeling and dealing are still regarded as a bit crass, and Mr. Arnault’s style of business has often ruffled feathers.

Few are as wary of Mr. Arnault right now as the Hermès clan, which includes more than 70 members and now comprises three branches: Dumas, Puech and Guerrand. Mr. Arnault says that he believes the family, now in its sixth and seventh generations, will ultimately bend to market forces. The family says it will not.

Mr. Arnault says Hermès has nothing to fear. LVMH burnishes the brands it buys, he says. It does not compromise luxury through commercialization.

That thinking also applies to Hermès. “I would never diminish the quality of Hermès,” he says. “Hermès can be an even rarer and greater quality business, if they ever wanted to work with us.”

For instance, Mr. Arnault would like to see Hermès leave duty-free stores at airports, eliminate all discounts and bring in younger employees. He did away with discounts at Louis Vuitton in an effort to elevate its monogrammed leather handbags and other accessories. In doing so, he imbued those products with an elitist quality and made them must-have items, especially among the rising ranks of the world’s nouveaux riches.

The accusation that LVMH is interested only in the mass market clearly rankles Mr. Arnault. “Vuitton and Dior have a culture and a history,” he says. “It’s on that basis that I fought to have the LVMH group. It’s not about making brands commercial or trying to make cheaper products. And Hermès has absolutely nothing to fear from me in that regard.”

Those vows have not placated Mr. Thomas: At a press briefing Friday announcing Hermès results, he likened Mr. Arnault's incursion to the r*pe of a beautiful woman, and called on him to reduce his stake to 10 percent to prove he is peaceful. Mr. Arnault said in the interview that he would not reduce his stake.

In the meantime, the Hermès family is rallying to keep its company out of Mr. Arnault’s hands, although the French news media have speculated that some of the younger members might eventually look to sell.

Axel Dumas, 40, is a passionate member of the sixth generation at Hermès. He says that, if anything, Mr. Arnault’s uninvited presence has brought even the youngest generations into solidarity with the old.

“In a way, this brought all of us closer together,” said Mr. Dumas, who will soon take over as chief operating officer. “There’s always arguments within a family, but the fact is that after the announcement, everybody joined ranks without even discussing it. They want to protect Hermès.”

IT was 35 years ago that Bernard Arnault first stormed the French fashion establishment. After a brief stint in the United States, where he tried unsuccessfully to expand his family’s real estate interests, Mr. Arnault returned to France in 1984, at a time when President François Mitterrand was looking to put state companies into private hands.

Mr. Arnault’s eye landed on Boussac, a flailing textile company with a hidden gem inside: Christian Dior.

What happened next set Mr. Arnault on his course toward LVMH: After buying Boussac, he surprised the government by winding down the textile businesses and eliminating thousands of jobs — to focus on Dior.

Not long afterward, Mr. Arnault, still relatively unknown at the time, was invited to buy into LVMH Moët Hennessy Louis Vuitton by its patriarch, Henry Racamier. Mr. Arnault soon outflanked both Mr. Racamier and Alain Chevalier, the chief of Moët Hennessy, to take control of LVMH in 1990.

That bitter battle angered Mr. Racamier and his family and sealed Mr. Arnault’s reputation as a brilliant, American-style corporate raider who ignored the unwritten codes of French business.

Over the years, the first families of European luxury fell to LVMH one by one: Céline, whose Étoile blouse was inspired by the star-shaped roads radiating from the Place de l’Étoile in Paris; Guerlain, the maker of Shalimar perfume; Fendi, the Rome fashion house where Karl Lagerfeld is creative director; Château d’Yquem, which produces premier Sauternes wine — the list goes on. Today LVMH has more than 60 brands under its control.

Critics say that Mr. Arnault did not just buy out families — but that he broke them, and compromised the artisanal essence of their companies. He has tended to swoop in when a family business is most vulnerable, when it is changing shareholders or when a younger generation is taking over.

“It is this capitalistic moment that permits LVMH to take participation,” Mr. Arnault said. “But that has nothing to do with the way afterward that we manage the brand.” He says he has revitalized the souls of tired brands, even if he swept out managers who refused to change with the times.

The financial results speak for themselves: Sales at LVMH rose 19 percent last year and, for the first time, exceeded 20 billion euros. Profits soared 73 percent, to 3 billion euros. Revenue from fashion and leather goods, like Louis Vuitton purses, was up 20 percent.

“Mr. Arnault is an absolutely wonderful performer when the game is tough,” said Armando Branchini, whose consulting firm, InterCorporate of Milan, advises luxury companies on strategy. “On top of that, he has got this special psychological ability to detect where the vulnerabilities lie, particularly among families and shareholders.”

http://www.nytimes.com/2011/03/06/business/06luxury.html?pagewanted=1&sudsredirect=true

 

[tatouejeremie]

Off the Catwalk, the Battle for Hermès (part 2)



INSIDE Hermès’s soaring, light-filled atelier in the Pantin suburb of Paris, workers take fine cuts of leather, alligator and python skins and transform them with meticulous detail, waxing threads and buffing hides with an agate stone into subtle matte finishes or high, lustrous shines. Many of the employees have worked here for decades.

A single Birkin bag, named after the actress Jane Birkin, can take 15 to 23 hours to make, and cost 3,500 to more than 40,000 euros.

These traditions stretch back to 1837, when Thierry Hermès began making leather harnesses in his workshop near Le Madeleine in Paris. A century later, Hermès was making high-end leather products for car travel. The first Hermès scarf appeared in 1937. In the 1950s, Hermès christened its Kelly bag, after Grace Kelly, who was photographed carrying one everywhere. Last year, Hermès turned a profit of 421.7 million euros on sales of 2.4 billion euros.

One February morning in Pantin, Mr. Dumas pointed to a large Birkin bag that required four Australian marine crocodile skins, instead of the usual three, to obtain a perfectly symmetrical pattern. Such extravagances cost money, but no matter: Hermès artisans never skimp to achieve a lower price point, something they fear that LVMH would press them to do.

“We never discuss price,” Mr. Dumas says. “We are never thinking that we can sell X number of bags if we lowered the cost. We don’t need to create a halo effect to sell a purse.”

Indeed, one of the family’s biggest worries is that Mr. Arnault seems so comfortable discussing money, a subject that is almost taboo at Hermès. Family members recoil as they recall an LVMH official’s suggestion that Hermès bolster sales by creating a line of lower-priced bags.

“It’s exactly what you shouldn’t do,” Mr. Dumas says. “Because you will make a cheap Hermès bag which will sell like hotcakes for three years, and after three years people will say, ‘Hermès is not what it used to be.’ ”

Mr. Thomas says: “If you tell me I have to double the profit of Hermès, I will do it tomorrow. But then you’d have no Hermès left in five years.”

ONE Saturday last October, Mr. Thomas was riding his bicycle in rural Auvergne, in south-central France, whose rocky peaks form the backbone of the Massif Central.

His cellphone buzzed. It was Mr. Arnault, and he had unsettling news: In two hours, LVMH would announce to the world that it had acquired 17 percent of Hermès. And, Mr. Arnault added, LVMH would probably buy more.

Mr. Thomas was taken aback by the size of Mr. Arnault’s stake, which has since risen to 20 percent. This was not the way business was done, he thought — not in France, and certainly not among gentlemen. Mr. Arnault had not even had the courtesy to seek an audience with Hermès first.

But Mr. Arnault was not asking. He was telling. “We immediately understood that it was a hostile move,” Mr. Thomas said. “We got a stab in the back.”

Mr. Arnault had quietly amassed his stake in Hermès not by buying its stock in the open market but by wielding one of the most potent weapons in finance: derivatives. He used instruments called equity swaps that essentially gave him the option to buy a big chunk of Hermès over a certain time.

LVMH executives say they had been concerned that another player — perhaps from China, or a private-equity firm, or maybe even Richemont, another French luxury conglomerate — was moving in on Hermès. So, last October, LVMH exercised its option.

Mr. Arnault later said he was “surprised” to find himself a large shareholder in Hermès.

The Hermès family promptly united against Mr. Arnault. Already protected by a limited partnership, the family, which currently holds 72 percent of Hermès, is now seeking to create a special company to hold more than 50 percent of its shares in the business, in an effort to prevent another incursion. Mr. Arnault has said he will not try to buy more. But his stake is now so large that Hermès is at risk of being delisted from the Paris stock exchange, Mr. Thomas says.

Industry insiders say the family was naïve to think that Hermès could remain independent as a publicly traded company, or that anyone would play by the old rules. Hermès sold stock on the Paris bourse in 1993, a move that greatly enriched family members.

“If you don’t want to be taken over, don’t put your business in the public market,” Karl Lagerfeld said of Hermès soon after Mr. Arnault announced his investment.

That point is not lost on Mr. Thomas. “Yes, we are naïve, but between utopia and naïveté there is a very thin margin,” he said. “I don’t think that the fate of this world is to choose between eating and being eaten.”

Both LVMH and Hermès are now hunkering down for a cold war.

CROWDS gathered on Friday at the Rodin Museum on the Left Bank for a showing of Dior’s spring ready-to-wear collection. Paris Fashion Week for ready-to-wear runs through Wednesday, but whatever buzz that Dior’s line generates is bound to be drowned out by the fashion world’s collective gasp over John Galliano.

Mr. Galliano was supposed to attend Friday’s show for another triumphant trip down the catwalk. He didn’t. After issuing an apology on Wednesday for his anti-Semitic remarks, he reportedly left France and entered a rehab center, at the urging of colleagues and friends like Naomi Campbell and Kate Moss. Last week, the Paris prosecutor announced that Mr. Galliano would stand trial for racial insults. Instead of Mr. Galliano at fashion week, there was Mr. Toledano of Dior, surrounded by paparazzi and taking center stage because Mr. Arnault did not attend. Mr. Toledano read the following statement:

“What has happened over the last week has been a terrible and wrenching ordeal for all of us. It has been deeply painful to see the Dior name associated with the disgraceful statements attributed to its designer, however brilliant he may be.”

He continued: “So now, more than ever, we must publicly recommit ourselves to the values of the House of Dior.”

Coco Chanel once said, “Fashion fades; only style remains the same.” That is a sentiment the Hermès family seems to share. Whatever the trend, whatever the market, Hermès remains Hermès. But in the 21st-century business of luxury, time and money are on Mr. Arnault’s side.

Even as it works through its problems with Dior, LVMH will wait for Hermès — “one century, or even two centuries,” says Pierre Gode, who has been Mr. Arnault’s right-hand man for 30 years. “If the family ever wants to leave, we believe we’re capable of soothing away all these fears that we’re mass market.”

Mr. Dumas at Hermès says his family will never sell. But neither does he expect Mr. Arnault to go away quietly. All the family can do, Mr. Dumas says, is stand firm in what its members see as a battle for the very soul of Hermès.

“If it doesn’t destroy us,” Mr. Dumas says, “it will make us stronger.”

http://www.nytimes.com/2011/03/06/business/06luxury.html?pagewanted=1&sudsredirect=true

 

[chloehandbags]

...For instance, Mr. Arnault would like to see Hermès leave duty-free stores at airports, eliminate all discounts and bring in younger employees. He did away with discounts at Louis Vuitton in an effort to elevate its monogrammed leather handbags and other accessories. In doing so, he imbued those products with an elitist quality and made them must-have items, especially among the rising ranks of the world’s nouveaux riches...

...Those vows have not placated Mr. Thomas: At a press briefing Friday announcing Hermès results, he likened Mr. Arnault's incursion to the r*pe of a beautiful woman, and called on him to reduce his stake to 10 percent to prove he is peaceful. Mr. Arnault said in the interview that he would not reduce his stake...

...Mr. Arnault’s eye landed on Boussac, a flailing textile company with a hidden gem inside: Christian Dior.

What happened next set Mr. Arnault on his course toward LVMH: After buying Boussac, he surprised the government by winding down the textile businesses and eliminating thousands of jobs — to focus on Dior...

That bitter battle angered Mr. Racamier and his family and sealed Mr. Arnault’s reputation as a brilliant, American-style corporate raider who ignored the unwritten codes of French business...

...Critics say that Mr. Arnault did not just buy out families — but that he broke them, and compromised the artisanal essence of their companies. He has tended to swoop in when a family business is most vulnerable, when it is changing shareholders or when a younger generation is taking over...

...ONE Saturday last October, Mr. Thomas was riding his bicycle in rural Auvergne, in south-central France, whose rocky peaks form the backbone of the Massif Central.

His cellphone buzzed. It was Mr. Arnault, and he had unsettling news: In two hours, LVMH would announce to the world that it had acquired 17 percent of Hermès. And, Mr. Arnault added, LVMH would probably buy more.

Mr. Thomas was taken aback by the size of Mr. Arnault’s stake, which has since risen to 20 percent. This was not the way business was done, he thought — not in France, and certainly not among gentlemen. Mr. Arnault had not even had the courtesy to seek an audience with Hermès first.

But Mr. Arnault was not asking. He was telling. “We immediately understood that it was a hostile move,” Mr. Thomas said. “We got a stab in the back.”​

​

...and these are just some of the reasons (and there are more) why I really don't like what I've heard about LVMH's business practices; or Bernard Arnault.

​

 

[liketheboys]

Those vows have not placated Mr. Thomas: At a press briefing Friday announcing Hermès results, he likened Mr. Arnault's incursion to the r*pe of a beautiful woman

​

Uhhh.. What.
How on earth did he word that one at a press briefing?!

 

[TianSoFine]

So Arnault pretends not to get the point.


During the meeting, Arnault deflected repeated queries about the compatibility of LVMH’s corporate culture and that of Hermès. “I find it pointless to compare cultures. It’s like asking, ‘Do you prefer Victor Hugo or Molière?’ They’re different writers, you can’t compare,” he retorted.
What’s more, he touted the decentralized nature of LVMH — “more like a constellation than a federation” of brands — and stressed, “We can guarantee the preservation of [Hermès’] culture in the long term.”
Er...slightly contradictory.

And he raises Dior and LV as examples of elite brands that Hermes could become more like if they were bought by LVMH. Yet, Hermes is seen as more exclusive than Dior and LV, although that's what Arnault's denying.

 

[chloehandbags]

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.

That's an excellent analogy.

I wholeheartedly disaprove.

 

[mikeijames]

^in that analogy, the woman who claims no interest allows herself to get plied by many, many cocktails, and accepts some very expensive gifts.

 

[mikeijames]

well, PPR has made their move acquiring surf-brand, volcom.

May 2, 2011, 9:42 a.m. EDT
Volcom shares surge after PPR’s $607.5 million bid

By Andria Cheng, MarketWatch

NEW YORK (MarketWatch) — Shares of Volcom Inc. surged 24% in the opening minutes of trading Monday after French luxury group PPR offered to buy the action-sports brand for $607.5 million.

PPR already owns sports brand Puma.

Volcom shares quickly more than reclaimed the 17% by which they’ve fallen in the past year.

Rival Quiksilver Inc. shares were unchanged, while Volcom retail customer Zumiez Inc. traded unchanged at $28.11. Pacific Sunwear of California Inc. was also unchanged at $3.19.

PPR’s shares moved slightly higher in Paris trading.

The offer for Volcom, of $24.50 a share, represents a 24% premium over the shares’ April 29 closing price.

It would put Costa Mesa, Calif.-based Volcom, with sales of about $323 million through its line of snow, skate and surf gear, as part of the PPR family that also includes Gucci, Bottega Veneta, Yves Saint Laurent, Balenciaga and Alexander McQueen. See related industry story on how luxury retailer Saks plans to sustain its momentum.

PPR has sales of 14.6 billion euros, or $21.7 billion.

PPR said on a conference call it expects the purchase to add to profit in 2012. Executives said PPR enjoys “significant growth opportunity” in the U.S., Europe and Australia. It also plans to take the brand into new markets. It said PPR also will be “complementary to Puma” and help to “enhance (Puma’s) access to the youth market.”

PPR executives said it plans to keep Volcom’s positioning as is, priced in the “mass” level with a loyal customer group.

“The deal makes a lot of strategic sense for Volcom, which can leverage PPR’s international sourcing, marketing, and distribution infrastructure,” said FBR Capital Markets analyst Eric Tracy.

Andria Cheng is a MarketWatch reporter based in New York.

(source: marketwatch.com)

 

[Street_a_Licious]

^in that analogy, the woman who claims no interest allows herself to get plied by many, many cocktails, and accepts some very expensive gifts.

lol

whenever i see such women, all i can think of is 'more power to you gurrl!'

and damn. i love Volcom (well, basically all skate and surf brands). i hope the prices will stay the same.