LVMH (France)

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LVMH's brand portfolio is a catalogue of the finest things money can buy. It is the world's premier luxury goods company, controlling more than 70 exclusive brand names including Louis Vuitton, Christian Dior, Hennessy, Givenchy, Moet & Chandon, TAG Heuer and Guerlain. These have been accumulated over the years by LVMH's chairman, Bernard Arnault, earning him the title of France's richest man, as well as arguably the world's most influential arbiter of good taste. One of Arnault's few failures was the two-year battle to add ultra-chic Gucci to his collection. LVMH eventually admitted defeat in 2000, but instead negotiated a handsome payout for its interest. In 2010, Arnault began a similar assault on domestic rival Hermes, accumulating a 22% stake in the smaller company through the financial markets. Hermes' owners were implacable in their opposition to Arnault's investment in their company, but even after a court case have been unable to displace him entirely as a shareholder. In 2011, Arnault added Bulgari to the LVMH portfolio, followed by Loro Piana luxury cashmere in 2013. 

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Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 2nd Feb 2017: Luxury group LVMH enjoyed a banner year in 2016, with revenues and profits both reaching new highs. Combined sales were up 5% (or 6% on an organic basis) to E37.6bn, while net profit rose 11% to just under E4.0bn. All divisions reported solid growth of between 7% (for selective retailing) and 3% (the core fashion & leather goods business), while fashion and wines & spirits both enjoyed profits rises of 10%. However CEO Bernard Arnault, in his address to investors, warned of potential clouds on the horizon. "Despite the fact that the signals have been fairly positive since the start of the year, I am extremely cautious for 2017. In my opinion, it’s always when things are going well that something unexpected happens." He reminded the audience that the global economy has not suffered a major shock since 2008. "In a 10-year period, there are usually eight good years and two not-so-good years, maybe even one very bad year. We are reaching the end of a 10-year cycle." As a result, he said, "We should expect much more difficult conditions in the second half of the year." 

Adbrands Weekly Update 6th Oct 2016: LVMH returned to the acquisition trail with a deal for German luxury luggage company Rimowa, founded at the end of the 19th century. Surprisingly, perhaps, it is the group's first acquisition in Germany. LVMH acquired an 80% stake for E640m. Rimowa's sales this year are expected to top E400m. The deal has been championed by LVMH chairman Bernard Arnault's 24-year-old son Alexandre, who will become co-CEO of Rimowa alongside Dieter Morszeck, grandson of its founder.

Adbrands Weekly Update 1st Sep 2016: Ads of the Week "Mutant Brain". You probably won't see a more startling ad than this any time soon. We often give fragrance ads a hard time for being brainless, but this film for LVMH's Kenzo World scent by maverick director Spike Jonze couldn't be more different. Not that it has any deep underlying message, but it breaks all the usual rules. Watch and you'll see what we mean. A special mention is required for the truly spectacular performance by star Margaret Qualley (Andie Macdowell's daughter). Physical, funny and wholly unexpected; she's in a class of her own.

Adbrands Weekly Update 28th Jul 2016: After multiple attempts to revive the fading Donna Karan fashion label, LVMH called it quits and has agreed to sell the business, now mainly consisting of the DKNY leisure brand, to US apparel group G-III in a deal valuing the business at $650m. Exact terms were not disclosed, but LVMH will receive a small shareholding in G-III in addition to a large cash sum. It is the first time since 2005, when it sold Christian Lacroix, that LVMH has dropped one of its major brands. It acquired the Donna Karan business in 2002 for around $243m. Karan herself left the business last year. G-III is best-known as a manufacturer of licensed apparel for other, mainly American, designer labels, including Calvin Klein, Kenneth Cole and Tommy Hilfiger. It has also accumulated a small portfolio of wholly owned brands including GH Bass, Vilebrequin and Andrew Marc. Donna Karan/DKNY becomes the new jewel in that collection. G-III CEO Morris Goldfarb believes he can triple DKNY's sales to $1bn by 2020. Separately, LVMH reported better than expected performance for the latest quarter. Despite the string of recent terrorist attacks in France, which had depressed the general retail market, Louis Vuitton turned in a strong performance, though other fashion brands were flat. Sharp growth in sales of champagne and cognac, and fragrances resulted in a 4% lift in group revenues for the quarter, significantly above the most recent forecasts.

Adbrands Weekly Update 30th Jun 2016: Ads of the Week "Define Your Luck". Here's a gorgeous spot from French agency Marcel - a unit of Publicis - for LVMH's Fred jewellery brand. The film is the work of noted performance artist Liu Bolin, the so-called "invisible man" for his photographs where he blends into the background of his surroundings with bodypaint. We don't think he's hiding in plain sight here, but the results are stunning, riffing on the concept of luck when it is applied to jewellery.

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Free for all users | see full profile for current activities: Louis Vuitton learned his trade in the first half of the 19th century as an apprentice to Monsieur Marechal, who offered a service designing and packing trunks and luggage for the belle monde of Paris. Having built up a following of his own among Marechal's wealthier customers, in particular with the young Empress Eugenie, wife of Napoleon III, Vuitton established his own premises in 1854 to make personalised luggage. He was most celebrated for his popularisation of flat-sided trunks, which could be easily stacked when travelling. With Empress Eugenie's endorsement, the business quickly gained a substantial international following, and Vuitton opened its first branch in London in 1885. The designs were widely copied by other companies, so Vuitton introduced its first trademarked design pattern in 1889, followed a few years later by the LV monogram still used today. Under the control of his son Georges, Vuitton established branches in America around the turn of the century and also moved into other travel goods as well as handbags. 

The family-owned business continued to be successful throughout the 20th century, but took a huge leap forward in the late 1970s after it came under the control of Henri Racamier, a successful industrialist who had married into the Vuitton family. He oversaw a rapid international expansion of the company's retail network, as well as the purchase of like-minded businesses such as Givenchy and Veuve Clicquot. Sales rose to almost $2.5bn by 1987. In that year, Racamier engineered a merger of the company with the equally upmarket drinks business Moet Hennessy, which had a similar portfolio of luxury brands. 

The Moet et Cie champagne house had been founded in around 1745, and became celebrated in French court circles after it was favoured by Madame de Pompadour, the mistress of Louis XV. The house maintained its status over the turbulent years of the French Revolution, and was later a supplier to Emperor Napoleon. In 1832, management passed to Pierre-Gabriel Chandon de Briailles, who had married into the Moet family, and it was renamed Moet et Chandon. Its fame spread throughout Europe during the course of the 19th century. Later, during the 1920s, Moet et Chandon introduced what it promised would be the world's finest champagne, priced well above its existing wines, and which it named Dom Perignon after the the Benedictine monk who had first perfected the technique for double-fermenting wine to create champagne. 

In the 1960s the house expanded further, acquiring rival champagnes Ruinart and Mercier. This was followed by diversification into fragrances, with the purchase of Parfums Christian Dior in 1970, and of Hennessy cognac in 1971. In 1973 the company established a winery in Napa Valley, California, under the name Domaine Chandon. Later under CEO Alain Chevalier the group also diversified into skincare with the purchase of RoC (now owned by Johnson & Johnson) and even cultivation of fine roses. However these latter businesses generated losses, and to avoid the possibility of a hostile takeover by another company, Moet Hennessy agreed to a merger of equals with fast-expanding but much smaller Louis Vuitton. However the disparity in size between the two businesses - Moet was almost two-thirds bigger than Vuitton - quickly created tensions between Moet Hennessy's Chevalier, appointed as executive chairman of the enlarged group, and Vuitton's Henri Racamier. The latter sought to bolster his position by calling upon the support of Bernard Arnault, a rising figure in the French business world, who had developed a reputation as a shrewd businessman and a tough adversary. This was to prove an unfortunate error on Racamier's part, and a stroke of immense good fortune for Arnault.

Bernard Arnault's business career had begun in the 1970s as an engineer for Ferret-Savinel, a large construction company controlled by his father. Later, he dabbled in the property development market first in France and then the US. In 1984, Arnault took control of holding company Financiere Agache, previously part-owned by his family, and used this as the platform for a series of acquisitions of weak French businesses. One of the first was Boussac, a near-bankrupt textiles group which owned various businesses including the legendary but ailing Christian Dior couture label and retail group Le Bon Marché. Arnault acquired the group and sold off everything but Dior and Bon Marché, but was frustrated to find that he could not reclaim the Parfums Dior license, which had been sold to Moet Hennessy several years earlier. In 1987, at Henri Racamier's prompting, Arnault purchased a stake in LVMH and lent his support to a campaign to oust Alain Chevalier as chairman. Almost immediately afterwards, he turned against Racamier, enlisting other shareholders to support his own campaign to force out his former partner. After an 18-month legal battle, he was successful and appointed himself as chief executive, while also transferring several of his own existing businesses into LVMH in return for a substantial shareholding. This effectively gave him complete control of the group. 

During the late 1980s and early 1990s, Arnault made a series of additional significant purchases. The Givenchy fashion house joined the group in 1988, and Arnault shocked the fashion world by unceremoniously sacking elderly founder Hubert de Givenchy, replacing him with British enfant terrible John Galliano, who quickly set about reinventing the famed label. To build its haute couture profile, Arnault transferred his Christian Lacroix and Kenzo fashion labels into LVMH in 1993. Further acquisitions included jewellers Fred in 1995, designer Celine and Loewe leather goods in 1996. Having worked his magic at Givenchy, John Galliano was moved across into Dior, and replaced at Givenchy by another iconoclastic British star, Alexander McQueen. Having established a thriving portfolio of fashion brands, Arnault moved on to enhance his retail and distribution interests, acquiring Asian-Pacific DFS duty-free shops in 1996 and Sephora perfumeries a year later.

That year, however, the group's drinks business was threatened when UK giants Guinness and Grand Metropolitan announced they were merging to form Diageo. Moet Hennessy and Guinness already owned significant stakes in each other, and the French company was also involved in a series of joint venture distribution deals with Grand Met. Arnault was not only insulted that he had not been consulted over that the merger, but also nervous that he might be shut out of his distribution partnerships and unhappy about being associated with Grand Met's Burger King chain. Initially he threatened to block the merger altogether, proposing instead that the Guinness and Grand Met drinks businesses should be spun off and merged with his own Moet Hennessy division. Diageo refused, but was eventually persuaded to pay off Arnault with around £270m in compensation, as well as a seat on the Diageo board and rights to distribute the full portfolio of Diageo drinks through a new distribution joint venture. LVMH also kept its shareholding in the enlarged drinks giant, worth just under £3bn, and Diageo inherited Guinness's 34% stake in Moet Hennessy.

With this triumph under his belt, Arnault began looking for other targets. At the tail end of 1998, he resigned his directorship of Diageo, and gradually began disposing of his shares to build up an acquisition war chest. His target was revealed at the end of the year, when the company announced it had secretly bought a 5% holding in famed fashion brand Gucci. Shortly afterwards, LVMH acquired further shares from fashion house Prada as well as through the markets to build up a 34% holding in Gucci by early 1999. But what began as a seemingly friendly alliance between the two companies quickly turned sour, leading to a bitter takeover battle. Uncharacteristically, this was a battle which Arnault eventually lost. [See Gucci profile for details of the subsequent battle for control]. LVMH finally sold its shares in Gucci at the end of 2001, consoling itself with a profit of E860m. 

Never a man to do just one deal when he could be doing ten, Arnault took some time out during the Gucci battle to ink a number of other mostly internet-related deals, later consolidated into private incubator fund Europ@web. By 2000, Europ@web had built up stakes in more than 50 leading online businesses. Plans to launch an IPO of the group were later cancelled, but instead Arnault successfully sold a big shareholding in Europ@web to media and utility giant Suez Lyonnaise des Eaux for around $255m in 2000, shortly before the internet bubble burst. Most of Europ@web's investments did not survive the downturn, with fashion e-tailer its most notorious failure. One notable success was the French ISP LibertySurf, later sold to Tiscali for a huge profit. Another unsuccessful diversion was an attempt to break the stranglehold of Sothebys and Christies on the international auction market. LVMH acquired the leading British auctioneers Phillips and Bonhams & Brooks, as well as Etude Tajan of France and famed Geneva art dealership De Pury & Luxembourg, merging them to create a new international auction house, Phillips de Pury & Luxembourg. However the economic downturn of 2001 hampered the company's development, and LVMH sold its majority stake to management in 2002. 

Meanwhile, LVMH continued to add a string of prestigious fashion labels to its portfolio, including UK shirtmaker Thomas Pink and Italian fashion house Fendi. The purchase of Swiss sports watchmaker TAG Heuer ( for $751m) was the first of a series of acquisitions of luxury watch and jewellery makers. Other brands bought in late 1999 and early 2000 included Ebel, Chaument and Zenith. High profile US designer Donna Karan joined the portfolio in 2001. Also that year the group announced a joint venture with De Beers to market jewellery and other luxury products under the De Beers brands, and bought out Prada's stake in Fendi, to gain majority control of the Italian design house. Although economic slowdown, exacerbated by the shockwaves from the 9/11 New York terrorist attacks, hit all of LVMH's operations later in the year, performance steadily improved in 2002 and 2003. The group streamlined its portfolio during the period, selling off several under-performing businesses. Arnault has also kept much tighter control on acquisitions, adding only a few key businesses, compared to the numerous purchases of previous years. 

In 2006, LVMH issued a lawsuit against the French subsidiary of auction giant eBay for acting as an intermediary in the sale of counterfeit Christian Dior and Louis Vuitton products. In 2008, a judge found in favour of the luxury group, and ordered eBay to pay a fine of almost E40m in compensation. It also instructed eBay to block sales of certain genuine products, because their sale via the auction site breached selective distribution agreements made by LVMH. A further E1.7m fine was made against eBay in November 2009, for failing to comply with the previous ruling. See full profile for current activities

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