LVMH fashion and leather division reports disappointing first quarter results

LVMH, the world’s largest luxury group reported the lowest quarterly sales growth since 2009 on Monday at its fashion and leather division dominated by Louis Vuitton, the world’s biggest luxury brand by sales. LVMH achieved a revenue rise of 3 percent at its fashion and leather unit in the first quarter, below the 5 percent expected on average by analysts.

Although LVMH confirmed in February that it planned to slow down Louis Vuitton’s global expansion to preserve the brand’s exclusive image and move its products more upmarket, there are more than 10 Louis Vuitton stores opening around the world (including two Maison flagships) in the next 6 months.

Overall, LVMH’s first-quarter sales rose 7 percent on a like-for-like basis to 6.947 billion euros. The group said it had strong growth in Asia and the United States but noted the economic environment remained challenging and uncertain in Europe. The quarterly performance was in line with previous trends seen in the second half of 2012, it added.

adapted from Reuters

Louis Vuitton, Spring Summer 2013 windows

Missed opportunities and mistakes at Louis Vuitton in the past 3 years

- over-expansion of retail

- the gradual loss of its ultra-luxury positioning – with predictable designs and moderately priced items

- lack of interaction with any luxury lifestyle components (art, sports, cinema etc)

- over-exposure online through e-commerce

- gradual loss of its French identity (shoes are made in Italy and parts of leather goods in countries such as Romania and Spain)

- a creative director who has become lacklustre

- three CEOs in 2 years and Bernard Arnaud dictatorial involvement in every day operations

- questionable diversification into stationery, writing instruments and furniture

- marketing through controversy, many accusing the company of promoting prostitution (video produced with the direct involvement of Marc Jacobs)

- LVMH’s pursuit of Hermes (many perceive it as Vuitton / Hermes battle)

Oliver Petcu