How Can We Spend Money On The Luxury Goods Industry That Earns About 20000000000 Dollars?

With luxury

The revival of the industry,

Kai Yun group,

And the summit group is facing a new challenge.

According to the world clothing and shoe net, as of the end of 2017, the total profit and cash assets of LVMH, Kai Yun group, Hermes and historic group reached 17 billion 400 million euros, or about US $21 billion 500 million, mainly due to the strong recovery of Chinese consumers' luxury purchasing power.

In this regard, Ashok Som, who is responsible for luxury management projects at Essec School of business in France and SDA Bocconi School of management in Italy, says it is impossible for them to keep so much cash in hand, but the question is how to spend it.

How should we spend money on the luxury goods industry that earns about 20000000000 dollars last year?

The picture shows the cash assets of the four luxury goods giants last year.

Among them, the French luxury brand Hermes chose to distribute a special dividend of about 528 million euros to shareholders, while the peak group chose to buy the remaining shares of its luxury fashion business group Yoox Net-A-Porter with 2 billion 700 million euros, but this is still a small amount for the cash industry with a total amount of more than 20 billion dollars.

According to another statement, LVMH will invest in Stadium Goods, a sports shoe retailer in the US, which will be dominated by the group's venture capital LVMH Luxury Ventures. Its purpose is to acquire part of the equity interest in the emerging brands of fashion industry, but the details of specific pactions have not yet been revealed.

There are people in the industry who believe that the four giants will be most likely to use their cash assets for brand acquisitions in the future, thus consolidating their market share in the luxury goods industry, but at present there are not many attractive targets to choose from.

In the past year, LVMH, Kai Yun, Hermes and the peak group have missed hot topics such as Jimmy Choo, Kate Spade, Breitling, Bally and France's oldest luxury brand Lanvin, among which Bally and Lanvin have been acquired by two Chinese buyers, Ruyi holdings and Fosun international, Shandong.

It is reported that the luxury brands that are still looking for buyers are only left by Lancel of the group.

LVMH, which had secretly bought Hermes shares through a variety of channels 8 years ago, has finally been passed out or intends to acquire French luxury brand Chanel.

Subsequently, the Chanel holder Wertheimer family immediately made clear that there was no intention to sell, and LVMH chairman and chief executive Bernard Arnault also formally responded to the shareholders' meeting at a recent meeting that it had no plans to acquire Chanel.

In view of the fact that LVMH has spent 6 billion 500 million euros to acquire Dior fashion department last year, the group said in its latest quarterly report that it will focus on the development of its existing brands this year and will not consider buying new brands.

Bloomberg analysts also believe that half of LVMH's profits now come from the core brand LV, and the acquisition of a new brand will not have too much impact on the overall business of the group.

According to the fashion headline data, thanks to the sales revenue contributed by the Dior fashion department, sales rose by 10% to 10 billion 850 million euros in the first quarter of March 31st, and organic growth reached 13%. The sales of the core leather goods sector increased by 25% to 4 billion 270 million euros, and the revenue of machine generated revenue increased by 16%. LVMH

According to Exane BNP Paribas, global luxury director Luca Solca, LV's revenue last year was 930 thousand euros, while RBC Capital Markets analyst Rogerio Fujimori predicted that its sales volume was 9 billion 100 million euros.

In this regard, Bernard Arnault said that LV is not interested in the size of the brand, but the brand will remain the world's most popular luxury brand in the next 10 years.

He also warned at the shareholders' meeting that low interest rates and high share prices would lead to new market bubbles and economic crises in the next 5 years, so LVMH will continue to be cautious about the future.

By contrast, Kai Wan Group, which has just stripped Puma, Volcom and Stella McCartney three non luxury businesses, seems more likely to make acquisitions this year. As its Gucci, Saint Laurent, Balenciaga and other luxury brands continue to grow, the group announced early this year that it will not focus on luxury goods.

EQuita Group, a global business consultancy, has previously boldly predicted that the next goal of Kai Yun group or Italy luxury brand Salvatore Ferragamo is in a report.

Giuseppe Marsella and Luca Solca, a bank analyst in Paris, France, also believe that the gradual pformation strategy of the brand is too slow. If the new management fails to make effective decisions, it will be forced to sell.

However, members of the Ferragamo family have made it clear that they will not consider seeking sale and maintain confidence in the future development of the brand.

In addition, the British luxury brand Burberry group, which has a market value of about 7 billion 100 million, is also regarded as a potential takeover target of Kai Yun group.

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With the addition of new CEO Marco Gobbetti and new creative director Riccardo Tisci, Burberry is currently in turmoil. Last year, LVMH independent director and Belgium billionaire Albert Frere continuously increased two Burberry shares, making the rumors of the brand being sold again.

With the gradual development of the new phase of Burberry, Rogerio Fujimori of Royal Bank of Canada believes that, like Gucci, the successful case of luxury brands often requires a strong creative director and chief executive's close cooperation.

Another analyst stressed that Burberry is a few luxury brands that do not involve family interests, so it is easier to acquire than Salvatore Ferragamo.

In addition, Citibank analysts predicted in December last year that the US luxury jewellery brand Tiffany&Co., which has a market value of up to 12 billion US dollars, will become a popular acquisition target for major luxury groups.

Because of the slow progress of Tiffany in recent years, the chairman and CEO were all replaced last year with the radical investor Jana Partners and former Bvlgari CEO Francesco Trapani. The current chairman is Roger Farah.

Alessandro Bogliolo had worked in Bvlgari for 16 years, and had close working relationship with Francesco Trapani.

According to fashion headline data, Tiffany sales increased by 4% to US $4 billion 200 million over the year ending January 17, 2018, compared with the same period last year.

Under the new tax law, the net profit dropped by 17% to 370 million US dollars and the gross profit margin was 62.5%.

In addition to the above brands, the brands that LVMH and Kai Yun group have seen include two year old French luxury leather brand Goyard, Italy luxury brand Prada and French luxury fashion brand Courr ges ges.

Courr Ge, founded in 1961, is not listed, but according to industry estimates, the brand's annual sales are less than 20 million euros, or at a loss.

In June last year, Kai Yun Group acquired a minority stake in the brand by acquiring Art MIS MIS group's main shareholder of Courr ges. Neither side has responded to the news.

However, Fran C ois-Henri Pinault, chairman and chief executive of Kai Yun group, has said after the financial report that the geopolitical economy and politics in the world remain unstable, especially the frequent terrorist attacks in Europe or the European tourist industry will once again cool down, so it will maintain a cautious attitude.

When it comes to whether plans to take acquisitions to further stimulate the growth of group performance, Fran C ois-Henri Pinault believes that the group's brand portfolio is just right now, and sales are steadily rising, and there is no acquisition plan for the time being.

Thanks to the strong rise of Gucci, Kai Yun group is ushering in the peak of its performance. Last year, Gucci revenue was recorded at 6 billion 200 million euros, with a total revenue of 700 million euros.

In 2016, the income of Hermes was 5 billion euros, and Gucci's income was only 4 billion 378 million euros.

Over the past year, Kai Yun group's share price has increased by more than 75%, and its market value has exceeded 55 billion euros to a record high.

So, in the rapidly changing fashion industry, will Fran ois-Henri Pinault, who holds lots of cash in her hands, change her mind?

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