In the past year, what kind of brand adjustment and reorganization have the three luxury giants carried out? Behind the brilliant financial performance of the three groups is the admission and exit of a number of brands.

After getting rid of the short downturn in 2020, the luxury industry has ushered in the best market in recent years.

Recently, the latest financial reports of LVMH, Kaiyun and Lifeng have been released one after another. LVMH’s annual sales last year were 64.2 billion euros, and Kaiyun group’s sales reached 17.645 billion euros, all of which were record highs. Although Richemont group did not disclose the financial report of 2021, from the key financial data of the third quarter released by Richemont group, the performance can be described as rapid progress. The total sales in the third quarter increased by 32% year-on-year to € 5.658 billion, an increase of 38% compared with the same period in fiscal 2020.

At present, Kaiyun group, which holds 3.948 billion euros of free cash flow, is actively looking for opportunities to improve its brand portfolio in order to reduce its dependence on Gucci. Acquisition or not? Who else to buy? Kaiyun group is willing to wait and see. Instead, LVMH group, which has a cash flow of 27 billion euros, released a signal to bring another brand under its command.

Recently, it is reported that LVMH is considering acquiring an American luxury brand worth nearly 10 billion US dollars in a city. If the news comes true, it will be another big deal between LVMH and major American luxury brands after its acquisition of Tiffany. Why does LVMH group have such a hand? In the past year, what kind of brand adjustment and reorganization have the three luxury giants carried out? Behind the brilliant financial performance of the three groups is the admission and exit of a number of brands.

Tiffany is getting better

In October 2020, LVMH group completed the largest M & a transaction in the history of the global luxury industry - buying Tiffany, an American jewelry brand, for us $15.8 billion.

After joining LVMH group, Tiffany’s performance has lived up to expectations. After numerous and complex team changes and brand transformation, Tiffany achieved “excellent performance” in the third quarter of 2021. Christopher Hollis, head of financial communications at LVMH group, said the growth of the Tiffany brand in the United States was “particularly strong”.

In order to maintain “a little mystery” in the early stage of the acquisition, LVMH group did not give specific performance data of Tiffany. However, it is not difficult to know from the annual financial report that Tiffany plays a positive role in the group’s watch and jewelry department. Over the past year, sales in the watch and jewelry sector increased by 40% to € 8.964 billion, an increase of 7% compared with 2019.

With Tiffany’s endorsement, LVMH set the next $10 billion target, which may not be difficult to understand.

The rumoured takeover target, in addition to the original men’s and women’s clothing business, expanded to business in the fields of cowboy, sports, golf, perfume and so on. Now it has become a comprehensive luxury group. After three years of downturn, the brand achieved significant growth in all regions of the world in the fourth quarter of 2021. Sales in North America increased by 30%, Europe by 47% and Asia by 20% year-on-year, which has returned to the pre epidemic level.

For the reasons for the rapid growth of performance, insiders believe that its efforts in repositioning business, improving brand and turning to attack have achieved initial results.

It is worth mentioning that the brand’s digital channel has a strong momentum, and the total revenue of digital ecosystem increased by more than 40% year-on-year in this quarter. Although the operating profit margin of digital business shrank slightly compared with the same period last year, it increased by 700 basis points compared with the same period in fiscal 2020. Therefore, the company estimates that revenue will increase by 39% to 41% in fy2022, compared with the previous forecast of 34% to 36%.

With this performance, it is not surprising to gain LVMH’s attention.

Admission and exit: brand matrix adjustment of the three luxury giants

It is undoubtedly the main strategy for large luxury groups to optimize their product portfolio and stabilize their performance by bringing strong brands under their command and eliminating those with poor performance.

A series of actions of LVMH group focus on fashion and leather goods, wine and spirits. Last April, LVMH increased its stake in TOD’s, an Italian luxury goods group, to 10%; In July, it acquired 60% of off white, a New York designer brand. In addition to increasing the shares of some brands, individual marginalized brands are also rejected. Its British high-end men’s clothing retailer pink shirtmaker and the fashion brand Fenty launched in cooperation with American female singer Rihanna are examples. Pink shirtmaker was once the favorite shirt of British financial men. However, home office tended to be normal during the epidemic, the market demand for office clothing plummeted, and the significant loss of key customers of the brand was expected. Fenty had serious supply chain problems in the epidemic, and Rihanna herself in the United States was unable to cooperate with the Paris design team due to travel restrictions. In addition, the high price of the product further reduces Rihanna’s fan effect. Although LVMH group chose to separate from Rihanna’s fashion brand, l catterton, the group’s largest consumer goods private equity fund, immediately completed the investigation of Rihanna’s underwear brand savage x fenty1 $1.5 billion in round B financing. This move is also consistent with LVMH group’s strategy of focusing on color makeup, skin care and underwear business during the epidemic.

According to the financial report, the fashion and leather Department of LVMH group performed well in 2021, with a sales revenue of 30.896 billion euros, a record high, an increase of 47% and 42% respectively compared with 2020 and 2019. UBS estimates that the market share of LVMH group’s fashion and leather products has increased from 16% before the epidemic to about 21%. In addition, sales in the wine and spirits sector increased by 26% year-on-year to € 5.974 billion, reversing the double-digit decline in liquor sales in 2020. Last February, the Group acquired 50% of Armand de brignac, a champagne brand owned by Jay-Z, a well-known American rapper.

In the past year, what kind of brand adjustment and reorganization have the three luxury giants carried out? Behind the brilliant financial performance of the three groups is the admission and exit of a number of brands.

After getting rid of the short downturn in 2020, the luxury industry has ushered in the best market in recent years.

Recently, the latest financial reports of LVMH, Kaiyun and Lifeng have been released one after another. LVMH’s annual sales last year were 64.2 billion euros, and Kaiyun group’s sales reached 17.645 billion euros, all of which were record highs. Although Richemont group did not disclose the financial report of 2021, from the key financial data of the third quarter released by Richemont group, the performance can be described as rapid progress. The total sales in the third quarter increased by 32% year-on-year to € 5.658 billion, an increase of 38% compared with the same period in fiscal 2020.

At present, Kaiyun group, which holds 3.948 billion euros of free cash flow, is actively looking for opportunities to improve its brand portfolio in order to reduce its dependence on Gucci. Acquisition or not? Who else to buy? Kaiyun group is willing to wait and see. Instead, LVMH group, which has a cash flow of 27 billion euros, released a signal to bring another brand under its command.

Recently, it is reported that LVMH is considering acquiring an American luxury brand worth nearly 10 billion US dollars in a city. If the news comes true, it will be another big deal between LVMH and major American luxury brands after its acquisition of Tiffany. Why does LVMH group have such a hand? In the past year, what kind of brand adjustment and reorganization have the three luxury giants carried out? Behind the brilliant financial performance of the three groups is the admission and exit of a number of brands.

Tiffany is getting better

In October 2020, LVMH group completed the largest M & a transaction in the history of the global luxury industry - buying Tiffany, an American jewelry brand, for us $15.8 billion.

After joining LVMH group, Tiffany’s performance has lived up to expectations. After numerous and complex team changes and brand transformation, Tiffany achieved “excellent performance” in the third quarter of 2021. Christopher Hollis, head of financial communications at LVMH group, said the growth of the Tiffany brand in the United States was “particularly strong”.

In order to maintain “a little mystery” in the early stage of the acquisition, LVMH group did not give specific performance data of Tiffany. However, it is not difficult to know from the annual financial report that Tiffany plays a positive role in the group’s watch and jewelry department. Over the past year, sales in the watch and jewelry sector increased by 40% to € 8.964 billion, an increase of 7% compared with 2019.

With Tiffany’s endorsement, LVMH set the next $10 billion target, which may not be difficult to understand.

The rumoured takeover target, in addition to the original men’s and women’s clothing business, expanded to business in the fields of cowboy, sports, golf, perfume and so on. Now it has become a comprehensive luxury group. After three years of downturn, the brand achieved significant growth in all regions of the world in the fourth quarter of 2021. Sales in North America increased by 30%, Europe by 47% and Asia by 20% year-on-year, which has returned to the pre epidemic level.

For the reasons for the rapid growth of performance, insiders believe that its efforts in repositioning business, improving brand and turning to attack have achieved initial results.

It is worth mentioning that the brand’s digital channel has a strong momentum, and the total revenue of digital ecosystem increased by more than 40% year-on-year in this quarter. Although the operating profit margin of digital business shrank slightly compared with the same period last year, it increased by 700 basis points compared with the same period in fiscal 2020. Therefore, the company estimates that revenue will increase by 39% to 41% in fy2022, compared with the previous forecast of 34% to 36%.

With this performance, it is not surprising to gain LVMH’s attention.

Admission and exit: brand matrix adjustment of the three luxury giants

It is undoubtedly the main strategy for large luxury groups to optimize their product portfolio and stabilize their performance by bringing strong brands under their command and eliminating those with poor performance.

A series of actions of LVMH group focus on fashion and leather goods, wine and spirits. Last April, LVMH increased its stake in TOD’s, an Italian luxury goods group, to 10%; In July, it acquired 60% of off white, a New York designer brand. In addition to increasing the shares of some brands, individual marginalized brands are also rejected. Its British high-end men’s clothing retailer pink shirtmaker and the fashion brand Fenty launched in cooperation with American female singer Rihanna are examples. Pink shirtmaker was once the favorite shirt of British financial men. However, home office tended to be normal during the epidemic, the market demand for office clothing plummeted, and the significant loss of key customers of the brand was expected. Fenty had serious supply chain problems in the epidemic, and Rihanna herself in the United States was unable to cooperate with the Paris design team due to travel restrictions. In addition, the high price of the product further reduces Rihanna’s fan effect. Although LVMH group chose to separate from Rihanna’s fashion brand, l catterton, the group’s largest consumer goods private equity fund, immediately completed the investigation of Rihanna’s underwear brand savage x fenty1 $1.5 billion in round B financing. This move is also consistent with LVMH group’s strategy of focusing on color makeup, skin care and underwear business during the epidemic.

According to the financial report, the fashion and leather Department of LVMH group performed well in 2021, with a sales revenue of 30.896 billion euros, a record high, an increase of 47% and 42% respectively compared with 2020 and 2019. UBS estimates that the market share of LVMH group’s fashion and leather products has increased from 16% before the epidemic to about 21%. In addition, sales in the wine and spirits sector increased by 26% year-on-year to € 5.974 billion, reversing the double-digit decline in liquor sales in 2020. Last February, the Group acquired 50% of Armand de brignac, a champagne brand owned by Jay-Z, a well-known American rapper.