Fashion Insider: LVMH’s Movements

Written By Sandee Wang

LVMH, the largest luxury goods conglomerate, catches eyeballs worldwide in this fashion week season, not only for the wonderful shows and trend-setting products, but also for the recent acquisition of Rimowa, the heatedly debated issue about selling on Amazon and fast organic revenue growth. Now let’s go in depth and look into this fashion giant.

LVMH will Take 80% Stake in Rimowa

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LVMH has agreed to buy a controlling stake in Rimowa, a German luxury luggage brand featuring its high-end aluminum, grooved suitcases. Rimowa is a time-honored brand founded in 1898 with unique heritage and characteristic design structure. And it is the only high-end brand remaining in the market. LVMH aims to achieve revenue growth in the tourism and traveling products with this acquisition.

“No way to do business with Amazon”

LVMH refused to sell their products on Amazon. According to the CFO Guiony, the reason is that it does not fit with LVMH full stop and the brand image. Also, LVMH has been trying to obtain the right from European Commission to reject the partnership with some websites to avoid potential counterfeits and massive discounts. It is no surprise! This action is strategically correct. The market positioning of these two companies and their target customers are disparate. Even though Amazon is currently selling some “accessible luxury” like Kate Spade and Michael Kors, it still does not fit the brand image of LVMH.

Good News: 5% Organic Revenue growth

LVMH witnesses a 5% organic growth and also the third quarterly revenue exceeds the expected performance. The outstanding performance is mostly driven by great sales of perfume and cosmetics especially in the Asian market excluding Japan. However, the sales growth is still slower than the number year-on-year. It is still very likely that the organic growth of LVMH indicate the silver lining for luxury fashion industry since this profit growth has be stagnant for so long.

 

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About Tha L. Spot (826 Articles)
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