LVMH Sees Big Profits, Dior Gains Despite Galliano’s Demise

LVMH Moët Hennessy Louis Vuitton has recorded significant revenue gains for the first half of 2011.

The world’s largest luxury conglomerate saw revenue of €10.3 billion ($14.9 billion) in the first half of 2011, up 13% from last year. Profits were €2.2 billion, up 22% from 2010.
Bernard Arnault, chairman and CEO of LVMH, credited strong brand appeal, consumer attraction to artisanal products and simple business strategy with prompting the growth.

“The first half was marked by the agreement with the Bulgari family to strengthen the long-term growth of the famous Italian Maison,” Arnault said in a press statement. “We approach the second half of the year … relying upon the creativity and quality of our products as well as the effectiveness of our teams to pursue further market share gains” in both historical and emerging markets.

It has been a busy six months for LVMH, which recently acquired a majority stake in Bulgari, faced opposition in buying part of Hermès, opened dozens of stores worldwide, acquired 70% of Ali Hewson’s Nude Skincare, and fought critics of its planned Frank Gehry art museum in Paris, among other projects.

Perhaps the most notable part of the company’s half-year report was the redoubled strength of Dior despite the scandal surrounding John Galliano’s exit and the poor reviews its fall-winter 2011-2012 haute couture collection received. LVMH reported “robust growth” and a gain in market share for the 65-year-old brand.

Luca Solca, a retail analyst at Sanford C. Bernstein in Zurich, had predicted that Galliano’s departure wouldn’t greatly affect its financial stability.

“Galliano designs the Dior catwalk collection, but the commercial relevance of that collection is very low,” Solca said.

In all, fashion and leather goods registered a 14% jump in organic revenue in the first half of 2011, with Céline in particular generating extraordinary demand.

Performance-wise, though, the shining star in Arnault’s crown is Louis Vuitton. It has seen double-digit organic revenue growth and a high level of profitability so far this year.

Vuitton’s first-ever participation in the Basel watch fair and the opening of a new leather goods workshop in Marsaz, France, likely aided its growth; Arnault has also said Vuitton is aided by the fact that it is the only luxury brand to sell exclusively within its own store network.

All told, the biggest gains for LVMH came in the watches and jewelry group, which saw a 27% jump in revenue over last year. TAG Heuer (with a new automatic chronograph made with the 1887 Calibre movement and the opening of TAG Heuer stores), Hublot (the King Power line with new Unico movements) and Dior (launch of the Dior VIII watch) saw large jumps in sales.

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Roberto Cavalli to open 85 stores in China

Roberto Cavalli said it will open 85 new stores in China within the next five years under a deal signed on Tuesday with Shanghai-based retail giant UCCAL Group.
The company will open its first stores under the new deal in Beijing and Shanghai between late 2011 and early 2012, it said in a statement.
The venture will be called Roberto Cavalli China and will be owned 75 percent by the Roberto Cavalli Group and 25 percent by UCCAL.


“The collaboration with UCCAL… will surely be a success in a market that is so prominent, fascinating and in which every day I want to dive more into in order to understand its secrets and culture,” Roberto Cavalli said.
The stores will include five high-end “Roberto Cavalli” stores to be managed by the joint venture and 80 outlets for the more popular brands “Just Cavalli” and “Class Roberto Cavalli” which UCCAL will handle directly.
The last two brands already have 20 outlets in China.
Cavalli, 70, started out in Florence in the early 1960s and hit financial trouble during the global economic crisis but has bounced back.
His clothes are available in more than 50 countries.
Cavalli joins a long list of European luxury and fashion names who have piled into the high-growth Chinese market in recent years.

source:Luxuo

Pierre Cardin wants to sell business for 1 bln euros

French fashion legend Pierre Cardin is ready to sell his group and will seek one billion euros (1.46 billion U.S. dollars).
“I want to sell it now,” Cardin, 88, told the Wall Street Journal. “I know I won’t be here in a few years and the business needs to continue.”
Cardin, who has no heirs, said he wants to stay on as creative director, explaining that it would be in the buyer’s interest “for the brand’s image.”


But Cardin is asking too much for the brand and his talent, judged hard-nosed bankers who value the business at closer to 200 million euros.
Financial data for calculating valuations is thin because the Cardin empire is not quoted on any stock exchange and so is not obliged by listing rules to provide detailed figures such as sales volumes.
At business consultancy Savigny Partners, senior manager Pierre Mallevays said: “A brand like Cardin does not increase (in value) like a normal brand because it is entirely based on licence revenues.”
Valuations are reached by applying a multiplying ratio to licence income streams, he told AFP.
“Financially, Pierre Cardin is a very big deal because all these licences generate a lot of royalties,” he said.
Cardin explained his pricing logic, on the basis of 10 million euros per product per country, “which is nothing at all”, he said. “One thousand products, 100 countries, that’s how it calculates. It’s nothing.”
The group employs 450 workers but owns only one Cardin shop in France. However, it manages some 900 licences throughout the world and indirectly employs some 200,000 people.
Cardin was also one of the pioneers of licensing, a capital-efficient method of developing a business by selling the right to sell branded products.
Cardin has since built up an eclectic range of businesses and brands, including the exclusive Maxim’s restaurants, and also high-end furniture, and perfume.
“I own 100 percent of everything that I need. I can drink my own wine, go to my own theatre, eat in my own restaurants, sleep in my hotels on my own sheets, dress in my own clothes and use my own perfume,” Cardin once said.
In 2009, Cardin sold 32 textile and accessory licences in China — but not its brand — to companies Jiangsheng Trading Company and Cardanro for 200 million euros.
Although there are no publicised buyers for the Cardin business, US group Iconix Brand may be a bidder, a source familiar with the deal said.
But top names such as LVMH and PPR are less interested because they “want to control the brands they own.
Cardin, on the other hand, gave a multitude of licences,” the source added.
“Pierre Cardin is a brand that was at times a little too exposed, too used, too franchised and in a way intangible assets were greatly squandered,” said Laurent Habib, who heads the Paris-based Observatory on Intangibles.

source:Luxuo