LVMH strikes the catwalks of Paris, London, Milan and New York but this year it is facing an unanticipated rival
LVMH – the most valuable luxury group in the world has been very successful at acquiring ownership of a range of renowned fashion Maisons in the last decades.
It might be mind-boggling to some to discover that seemingly competitive high-end brands are in fact all under the same conglomerate umbrella. Under this umbrella nest Louis Vuitton, Prada, DKNY, Loro Piana, Christian Dior, Givenchy, Marc Jacobs, Fendi, a quarter of Hérmes and many other brands.
The majority of these fashion houses run autonomously meaning LVMH has little to no influence on the creative output of its fashion subsidiaries. Yet what it does have an impact on is the talent pool employed by the brands. Talented people often leave good companies because they want fresh experiences elsewhere. But at LVMH, an ambitious designer looking to diversify her résumé need never depart the group, because many of the companies that she would want to move to are in fact within it. For instance, Raf Simons – a designer that jumped ship a few times in his career – from Jil Sander to Christian Dior and now to Prada. All these brands are part of the LVMH business group; in a way, he never really left the company simply redirected his creative flows.
It comes as no surprise that the LVMH owned fashion houses get the most coverage and recognition during Fashion week events. After all, they do have the budgeting to rent the most extravagant venues and hire the most sought-after models. Louis Vuitton Paris show took place inside of the Louvre museum, Dior custom-built a show space in the Tuileries gardens.
Almost all of the fashion brands owned by this group saw notable growth in revenue in the last year. Usually, this is a clear indicator that the creative director and the design team are doing a good job.
As ‘fashion month’ comes to an end, the ready-to-wear collections are commencing their way to boutiques and department stores all around the world.
But beautiful clothes aren’t the only thing this season that are making their way across the globe. ‘COVID-19’ aka Coronavirus is also making its way throughout the land. To limit the spread of the virus across China, the Chinese government has imposed a strict quarantine in most provinces. The lack of Chinese influencers and couture lovers did not end in empty seats, but it most likely will end in emptier stores and hence weaker sales in 2020.
LVMH’s executive team kept a cool exterior when probed about the threat of the coronavirus outbreak in a recent interview with analysts.
Nonetheless, it is no secret that China’s appetite for luxury bags, Louis Vuitton in particular, hence the spectacular revenue rise of 15% in 2019. Affluent Chinese shoppers buy their fashion and leather goods both at home and abroad, so the real contribution to their growth is even higher. In a call to discuss 2019 earnings results, LVMH chief executive (who’s also the CEO of Dior) Bernard Arnault said it was too early to conclude the effects of the Coronavirus on business operations.
Whether the effects of the Coronavirus on the economic activity will leave a serious mark on the consumption trends in China remains unclear. In the meantime, the moguls of the fashion industry are keeping their fingers crossed that this season’s fashion collections will see the light of day and parade the streets around the world – even if paired with a face mask.