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Luxury concentration race accelerates with LVMH investments in Off-White and Etro

By Angela Gonzalez-Rodriguez

Jul. 27, 2021

Business |ANALYSIS

Image: Etro, official web

Amongst latest efforts conducted by LVMH to solidify their dominance in the luxury space, Bernard Arnault’s emporium has just announced the acquisition of a majority stake (60 percent) in Etro through their investment company L Catterton. The acquisition is expected to be completed by the end of this year.

Just days apart, LVMH was making it again to the news, this time due to their agreement with Virgil Abloh to buy a 60 percent stake in Off-White LLC, the company behind the eponymous fashion brand. Once the transaction received the green light from the regulator, the brand’s founder would retain a 40 percent interest and continue to be the creative director.

Change of strategy?

In April, as speculation around luxury M&A intensified, LVMH said it wanted to focus on Tiffany & Co’s acquisition. However, and despite LVMH’s chief financial officer Jean-Jacques Guiony’s saying that LVMH does not intend to make any further acquisitions until Tiffany became fully integrated, the largest luxury group in the world has nothing but intensified its shopping spree.

That same month, LVMH bought Tod’s shares from the group’s chairman and CEO Diego Della Valle for a total of 74.5 million euros, taking its stake up to 10 percent.

In June, LVMH became the full owner of Italian luxury brand Emilio Pucci after buying the 33 percent stake that was still in the hands of the eponymous designer’s family.

LVMH readies up for luxury buyer’s return

Back in April, LVMH surpassed expectations by recording revenue of 14 billion euro in the first quarter, up 32 percent from the comparable period in 2020. Notably, revenue was 8 percent higher than in the first quarter of 2019, suggesting that consumers are seeking out luxury buys despite uncertain times. Furthermore, earlier this week, sales at world’s biggest luxury goods group rose by 84 percent year on year, driven by global travel rebound and early pandemic lockdowns easing.

Indeed, the luxury group’s fashion and leather goods business stood up results-wise, due to “strong creativity” across its brands. High contributors to LVMH strong sales were Louis Vuitton and Christian Dior flagship handbags. Other brands in LVMH’s portfolio of high-end brands including Fendi, Loro Piana, Celine, Loewe, and Marc Jacobs also delivered strong results.

During the company’s first-half results presentation in July, CFO Jean Jacques Guiony told reporters the group had “room for manoeuvre” on margins to be able to invest more in the second half of the year without impacting profitability.

Image: Etro, official web