The Wall Street Journal describes today how luxury groups are considering moving from being ‘pot pouris of fashion, cosmetic and liquor brands’ to a position where they concentrate on a few key – and profitable – brands. Colossal luxury groups were created with the hope that benefits derived from economies of scale in areas such as supply and marketing would greatly benefit the three main groups (LVMH, Richemont, Gucci). However all the groups have seen a three year slump in sales and there is an alarming fact that each groups’ top brand (Gucci for Gucci, Cartier for Richemont, Louis Vitton for LVMH) earns more than twice the operating margins than their parent companies. Furthermore, Louis Vitton contributes half of LVMH’s $3.7b annual revenues!
It is likely that we’ll see the casting off of the smaller less profitable business concerns. Wall Street Journal hints at brands like Thomas Pink, Givenchy and Donna Karen will be the first to leave the LVMH stable and Boucheron for Gucci. Looks like the sales are going to be even better this year!
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Gucci fires CEO: http://www.forbes.com/business/feeds/ap/2004/10/20/ap1599925.html
October 20th, 2004 at 1:04 pm
WHICH tipple will the directors of Moët-Hennessy, part of the luxury-goods group LVMH, choose to toast their acquisition this week of Glenmorangie, distiller of some of Scotland’s best-known whisky? As well as Glenmorangie, Glen Moray and Ardbeg, single malts that account for about 90% of the target company’s sales, the French buyer could, of course, choose its own Moët et Chandon or other upmarket champagnes, such as Dom Perignon and Krug, which it also happens to own.
In future, Glenmorangie, which dates back to 1843, will sit alongside Moët-Hennessy’s other expensive brands, such as Hennessy cognac, the world’s fourth-biggest selling spirit, and Belvedere vodka, as well as a range of other luxury brands owned by LVMH. These include Louis Vuitton handbags and luggage, and Dior fragrances. Since Glenmorangie sells around 2m cases (each containing 12 bottles) of single-malt whisky a year, the deal should also contribute to Moët-Hennessy’s bottom line. Last year, Glenmorangie reported profits before tax of £9.57m ($15.64m), up 10% on the previous year. Moët-Hennessy is already talking about doubling Glenmorangie’s sales within a few years.
http://economist.com/agenda/displayStory.cfm?story_id=3325096
October 25th, 2004 at 1:25 pm
LVMH to sell Christian Lacroix :
http://news.agendainc.com/mt-agenda/content/archives/2005/01/lvmh_to_sell_ch.html
January 7th, 2005 at 3:39 pm