LVMH - The Luxury Goods Conglomerate

[Lola701]

This question has been raised several times already, but it's worth asking again:
Is it truly feasible to have multiple luxury brands operating in the €15–20 billion annual revenue range without compromising quality, brand image, or exclusivity?

THIS!
It’s impossible. What save those brands is the distribution strategy.

The reality is that public scrutiny has put extreme standards on luxury brands today: they have to cater to more markets, a more diverse clientele (shops don’t buy the same items from collections for example), be innovative, be sustainable, maintain a high quality, provide top services, be ethical…etc.

At a certain point, it’s impossible to not compromise anywhere.
Back then, the customer only wanted a high quality product that lasted long enough and basta. The promise was that you bought an item and you could pass it to your children.

Nobody was interested in the way leather was tanned, treated. Those « sweatshops » in Italy have existed for at least 10 years. I don’t know if it was Chinese but the reality is that those brands have always use subcontractors who were fast enough to respond to a demand in a limited time.

And even with those brands that supposedly at the top of the chain, where are their zippers and hardware produced?

Sometimes when I talk to people, it can almost feel like I’m defending those brands but I think people have to rational. And I think shopping online has also made people loose the perspective on what they are paying.

Yes, those brands makes insane margins on handbags, leather goods and kind of merch RTW (Tshirts, hoodies, jeans, athleisure) but we are not paying the manufacturing cost.

I think what saves a house like Hermes is the fact that they have 3/4 flagship bags. People go to Hermes for a Birkin, a Kelly, a Constance and at best a Haut à Courroies. In terms of shoes, they have the Oran sandals. In terms of offer, they have a fairly more limited one even if the range of products is huge.
Vuitton with Ghesquiere did that. They scaled back a lot in terms of bags in the catalogue.


And I would say that the problem today is that we place everything at the same level too. In essence, Chanel and Dior are different from Vuitton, Gucci and Hermes. And even between them, Hermes is closer to Fendi than Vuitton.
Artisanat wasn’t even Vuitton’s selling point before Arnault took over.
Now everything is luxury. It has become a « one word fits all » word.

 

[PDFSD]

This question has been raised several times already, but it's worth asking again:
Is it truly feasible to have multiple luxury brands operating in the €15–20 billion annual revenue range without compromising quality, brand image, or exclusivity?

At that scale, brands inevitably have to cater to the broader market. This usually means having a well-oiled beauty/ fragrance business, alongside a wide array of entry-level priced products.
Even Chanel and to a lesser extent Hermès are struggling with this, even though their foundations are more solid compared to Dior or Vuitton.
LVMH has begun a ‘reset’ at Dior, and I expect changes are underway at Vuitton as well — though they’re decidedly late in doing so. Givenchy still seems to be going nowhere; Fendi remains a big question mark; Celine has adopted a renewed but yet unproven strategy; and Loro Piana is now under scrutiny. It’s all very much in flux.
LVMH has not been completely blind to ‘niche’ brands, acquiring minority or majority stakes in companies such as Our Legacy, Kapital, Ganni, A.P.C., and Aimé Leon Dore. However, I don’t think these investments will make a significant difference for the group.

The rise of social media and influencer marketing has massively amplified the visibility (and profitability) of megabrands. But there are growing signs that this exposure can become a liability.
Videos highlighting quality issues with leather goods, for example, can be very damaging to a brand's long-term reputation. Or the trend of people publicly documenting their Hermès spending journeys to obtain a Birkin are so cringe-inducing—and most importantly, completely outside the brand’s control.
Once people are completely put off by a brand’s image, it becomes very difficult to win them back without any radical changes.

lets not forget in 2024 LVMH, through its private equity firm L Catterton, has acquired a minority stake in the French leather goods brand Polène. This move signifies LVMH's interest in the rising brand, known for its minimalist designs and quality craftsmanship. While LVMH now holds a stake, Polène retains its independence and will continue to operate as a separate entity.

so they know a shift is at play

 

[PDFSD]

subcontractors in italy been around for much longer 20-30 years also kenzo and dior suits made in eastern europe you have youtube investigation documentary dating back as late 90´s on LVMH using this practice ..even till today for Louis Vuitton has a factory in Romania focused on leather goods, for part (but they do also fully finished bags and shoes it came out that get made in italy or france stamp at the end )

Prato's long history in textiles and fashion, along with the influx of Chinese businesses in the mid 1990s, has shaped its current role as a manufacturing center.
https://www.newyorker.com/magazine/2018/04/16/the-chinese-workers-who-assemble-designer-bags-in-tuscany

 

[style_expert]

So LVMH is trying to sell Marc Jacobs for a price of $ 1 billion (originally reported by the WSJ)
"Sources said the luxury powerhouse is in talks with licensing specialists Authentic, WHP and Bluestar."

For context: Prada paid $1.375 billion for Versace earlier this year....I wonder who will pay that one billion dollar price for the MJ business...and the future of Marc Jacobs is apparently a complete licensing brand.

 

[PDFSD]

So LVMH is trying to sell Marc Jacobs for a price of $ 1 billion (originally reported by the WSJ)
"Sources said the luxury powerhouse is in talks with licensing specialists Authentic, WHP and Bluestar."

For context: Prada paid $1.375 billion for Versace earlier this year....I wonder who will pay that one billion dollar price for the MJ business...and the future of Marc Jacobs is apparently a complete licensing brand.

its crazy i feel versace should be worth more

 

[yslforever]

subcontractors in italy been around for much longer 20-30 years also kenzo and dior suits made in eastern europe you have youtube investigation documentary dating back as late 90´s on LVMH using this practice ..even till today for Louis Vuitton has a factory in Romania focused on leather goods, for part (but they do also fully finished bags and shoes it came out that get made in italy or france stamp at the end )

Prato's long history in textiles and fashion, along with the influx of Chinese businesses in the mid 1990s, has shaped its current role as a manufacturing center.
https://www.newyorker.com/magazine/2018/04/16/the-chinese-workers-who-assemble-designer-bags-in-tuscany

So there was this June 2025 Le Monde article about organised crimes, rackets, counterfeit, intimidation, arson, death threats, actual murders in Prato, because Chinese and Italian mobs obviously followed (or preceded ?) this influx of Chinese businesses. No brands are named in the article and LVMH is not mentionned. The Loro Piana case happened near Milan.

It is to the point that some current town councillors have been arrested for corruption (duh) and the town in under administrative and judicial administration.

En Toscane, la « guerre des cintres » de la mafia chinoise dans le plus grand pôle textile d’Europe

Incendies criminels, attaques au couteau et intimidations dignes de films noirs ont transformé en une scène de crime, surtout depuis juillet 2024, la petite ville de Prato, dans le nord de l’Italie.

www.lemonde.fr

I can't find the English version by Le Monde but let me know if your browser doesn't translate.
A little bit more information about the sweatshops and modern slavery there:

En Toscane, la « guerre des cintres » de la mafia chinoise dans le plus grand pôle textile d’Europe

FR : « A Prato, la réalité du travail pour les ouvriers migrants, c’est douze ou treize heures par jour, sept jours sur sept, trois cent soixante-cinq jours par an, soit un système moyenâgeux, digne de l’esclavage », constate Riccardo Tamborrino, responsable du syndicat SUDD Cobas, engagé dans la défense des ouvriers du textile. « Le système ressemble aujourd’hui à celui d’un point de deal, mais avec des vêtements au lieu de la drogue », poursuit-il, concédant qu’il peine à mobiliser les ouvriers chinois, dont beaucoup sont à la merci de leurs employeurs, qui détiennent leurs papiers d’identité et les contraignent à dormir dans les ateliers. Une enquête récente témoigne du contrôle total exercé sur eux : des couturiers étaient forcés de travailler avec une minicaméra sur la tête, afin que leur productivité puisse être suivie en direct, à distance"

EN : “In Prato, the reality of work for migrant workers is twelve or thirteen hours a day, seven days a week, three hundred and sixty-five days a year, which is a medieval system, worthy of slavery,” says Riccardo Tamborrino, head of the SUDD Cobas union, which is committed to defending textile workers. “The system today resembles that of a drug dealing spot, but with clothes instead of drugs,” he continues, admitting that he struggles to mobilize Chinese workers, many of whom are at the mercy of their employers, who hold their identity papers and force them to sleep in the workshops. A recent investigation reveals the total control exercised over them: seamstresses were forced to work with a mini camera on their heads so that their productivity could be monitored live, remotely.

The bold is from me, it makes me sick and furious, I just don't know what to do, except boycott, but which ones to boycott ? do I have to visit the factory myself every time ? should I demand to facetime the people who made my shirts ?
Should I boycott all the "made in italy" and switch to made in France/Japan only ? any thing by LVMH, Kering, Prada ? give up on fashion and source all my clothes from the tailors across my street.

But Prato is essentially a manufacturing and leather hub: what about the fabrics manufacturing, the raw materials, how many pesticides and toxic dyes for my cotton ?

 

[LadyJunon]

its crazy i feel versace should be worth more

I thought the same. Valentino us valued at €5.4b, despite only making a few 100m more than Versace. On top of that, Versace has much more cultural capital than Valentino ever had.

 

[oioioi]

The bold is from me, it makes me sick and furious, I just don't know what to do, except boycott, but which ones to boycott ? do I have to visit the factory myself every time ? should I demand to facetime the people who made my shirts ?
Should I boycott all the "made in italy" and switch to made in France/Japan only ? any thing by LVMH, Kering, Prada ? give up on fashion and source all my clothes from the tailors across my street.

But Prato is essentially a manufacturing and leather hub: what about the fabrics manufacturing, the raw materials, how many pesticides and toxic dyes for my cotton ?

I second your thoughts, its the absolute boom and acceleration to meet all the demands of how these labels became mega-brands in the last 10-15 years. Fashion became pop as they say.
I can only imagine the daily prejudice and lower class stereotype of them in Prato (can't even begin with the casual racism in Italy, even in Milan...). I was reading an article in FT 2 weeks ago of uncovering mass corruption of fast-track acceleration of new-builds in Milan's Porta Nuova area through both the building process and corrupt officials. I find it more excessive in Italy than in France.
Alexander Wang was found in 2012 to have been using Chinese sweatshops in NY to produce pieces. Maybe 15 years ago a very high prestige mega-brand 'saved' 2 embroidery companies from closure but the majority of the production is done by Chinese ethnic workers outside of Paris (though no excessive or toxic bullying allegations, more that they have a have a higher turnover - fast, disciplined and precise handwork and don't complain as much).

I am buying mostly second hand designer (other than superior fabrics its also fun to discover and hunt some older iconic collection pieces), though I still like some current fashion.
It's also interesting because an example like Phoebe's DTC model is small scale, very tight production, all pieces are very rigorously developed, the model is based on real consumption data and trying to have as little leftover stock as possible to reflect her ethics but the working conditions for her team are beyond toxic (from design team, interns working round the clock, to wholesale/digital).

 

[rivegaucheface]

I wonder though how much this actually hurts their sales. Maybe I am too cynical but I just don't think people shopping at Dior or LP care at all about humanitarian standards. I only know one person who goes into deep dives on brands and their production processes and that is my cousin lol and even then she still buy what she buys.

i think it will hurt their sales. there is a big subset of pragmatic aspirational consumers that will think they should just buy a cashmere sweater from saks, aritzia or uniqlo (whatever their bracket is) instead of saving up for LP because they're being made the same way.

i also honestly think that a significant number of their clientele will be turned off by the workers being chinese. if it were a sweatshop staffed by italians or other europeans, i don't think it would be as much of an issue but sinophobia is alive and well.

Does someone know how this affects younger audiences?

The fashionable teens and early 20s I know aspire/buy to contemporary brands (more so if niche) when only a few years ago they’d die to shop in Dior/Prada/Celine.

this is exactly what i mean. wearing logos these days is less of an advertisement of wealth and more of an advertisement of being a sucker or uninformed.

 

[Kimihiro]

this is exactly what i mean. wearing logos these days is less of an advertisement of wealth and more of an advertisement of being a sucker or uninformed.

I mean it’s dire when even a friend I know who used to work for an LVMH brand and loves designer brands feels high and mighty after “discovering” underground Vietnamese streetwear.

Performative or not, social consciousness is now a status symbol among kids I know—who should’ve been the LVMH customer few years from now.

When sheer exclusivity (especially in this economic climate) is the raison d’être of these brands, more so that those who peddle supposed quality has been exposed, the market will react.

After all, most of the market that drove these brands to the big leagues weren’t really there for craftsmanship.

 

[rivegaucheface]

When sheer exclusivity (especially in this economic climate) is the raison d’être of these brands, more so that those who peddle supposed quality has been exposed, the market will react.

I think too many brands are trying to be all things to too many audiences.

Visible enough to be aspirational, expensive enough to be exclusive, with merchandised junk to sell, identifiable to telegraph a brand identity (in a cheap way since most brands don't have reliable house codes anymore), with invite-only secret luxury perks for VVIPs that are glamorous enough to show off on social media, made cheaply enough for unsustainable growth, and a veneer of social consciousness that ultimately doesn't mean anything. And I can't think of a single major fashion house with product that's good enough to keep the facades from falling.