donderdag 3 oktober 2013

Marc Jacobs boosting LVMH upon exit; photography Djamila Celina Melcherts. Paris - New York designer Marc Jacobs’s departure from LVMH to focus on an initial public offering of his own Marc Jacobs brand is set to provide a double boost for the top luxury goods company LVMH. The move will enable Jacobs to concentrate solely on the growth of his own label.

Marc Jacobs boosting LVMH upon exit; photography Djamila Celina Melcherts
Louis Vuitton’s catwalk show, staged in Paris this week, was a tribute to Marc Jacobs, who is leaving LVMH after 16 years of service. The designer, who is credited with turning Louis Vuitton into one of the world’s most successful luxury brands, is planning to taking his own Marc Jacobs brand public. LVMH, the luxury group that owns Louis Vuitton and has had a majority stake in the Marc Jacobs label since 1997, said it has come to an agreement with the designer and his business partners. As this point in time it is unclear whether or not LVMH would retain a stake in Marc Jacobs until it floats, or if the designer will secure private equity backing to buy LVMH out. That would come with a considerable price tag, says Bonno van der Putten, retail expert for Private Equity powerhouse Monarch Capital . “When LVMH and Marc Jacobs started together, Marc Jacobs was a relative tiny business of around €15m of revenue/year. Today the total sales of the fashion label accounts for annual sales of nearly € 7 billion for LVMH and and more than its operating profits. This of course has been a tremendous and successful growth path. LVMH and Kering (formerly known as PPR, and before that Gucci Group), the two major luxury conglomerates, have acquired virtually every historic fashion brand in Europe, as well as some in the United States. Both LVMH and Kering and some other luxury sector focused Private Equity players are once again making investments in young designer labels at a rapid pace, with J. W. Anderson and the shoe designer Nicholas Kirkwood joining LVMH, and Joseph Altuzarra and Christopher Kane now linked with Kering Van der Putten says it is believed that LVMH will continue to invest in expanding Marc Jacobs’ network of stores. Of course, as a own brand, Marc Jacobs will also need to demonstrate its value as a standalone business if it wants to win over would-be shareholders, according to van der Putten who is a serial PE investor in retail and luxury fashion brands. Marc Jacobs, the designer, and his management team will be key in developing the business, but the company needs to avoid becoming overly reliant on a single figure, he added. Few of the fashion brands that have gone public are associated with a single, living designer. The most famous, Donna Karan, offers a cautionary approach as investors fell out of love with the brand as it expanded too fast, and a year later the brand was acquired by LVMH, around the same time LVMH bought into Marc Jacobs. LVMH’s strategy has been one of purchasing other blockbuster brands that would allow the company to reduce its reliance on smaller labels such as Fendi and Celine, while buying it time to burnish Louis Vuitton and develop its other fashion lines. Michael Kors has had more success as a public company . Michael Kors has that buzz factor. The company, which went public in December 2011, is likely double its revenue by next spring to reach $2.9 billion. Michael Kors Q1 sales grew 54%. Revenue at stores open at least a year, a key indicator of a retailer’s health, rose 27%. In North America, that sales growth figure was 25%; in Europe, 56%. After its IPO, the stock traded around $25. After its latest earnings call, shares traded at about $70. Private Equity backers (among others John Idol, investors Silas Chou & Lawrence Stroll ( through their Hong Kong-based PE vehicle Sportswear Holdings), Lance LePere, Brightpoint and Monarch Capital) encouraged Kors to start a lower-priced line, the MICHAEL Michael Kors Collection. And while Kors continues to produce runway collections and offer ultra-luxe items, it’s the other line of accessories and clothes—and accessories in particular—that’s really selling. Small leather goods and handbags are most important to Kors. Shares of Michael Kors have tripled since December 2011, making it one of the most successful offerings in recent years. Mr. Kors made hundreds of millions of dollars taking his company public, and his private equity backers have made billions. Van der Putten says that said that the success of Michael Kors’s IPO and other successful PE fashion I.P.O. stories driving much of the interest in high-fashion stock, reason for a flurry of I.P.O activity nowadays in the fashion industry By pursuing an IPO, Marc Jacobs could follow that Michael Kors path Focusing on his own line will give Jacobs an opportunity to make it more exciting, according to van der Putten.

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