Gucci'S Growth Is Too Fast. What Is LVMH'S Blocking Plan?

New world department store LVMH boss Bernard Arnault made a mistake 20 years ago, or led to a crisis today.

The tripartite capital era dates back to 1988.

This year, the French Bernard Arnault finally became the largest shareholder of the company after it was merged into the LVMH group by the luxury brand Louis Vuitton and MOET & CHANDON Hennessy group.

Under a series of crazy acquisitions led by him, LVMH has become the world's largest luxury group.

The Johann Rupert of South Africa founded the second largest luxury group, Swiss peak group, through asset consolidation. It was also in 1988.

In the same year, the French Fran? Ois-Henri Pinault joined the PPR group, a timber company founded by her father in 1962.

He saw the expansion potential of the luxury goods industry in the global market. Although it began to invest heavily in luxury brands including Gucci in 1999, it soon changed the PPR group from the retail companies to the third largest luxury group in the world, and officially changed its name to Kering Kai Yun group in 2013.

There are thirty proverbs in the past thirty years.

In modern times, William Gann proposed the theory of cycle of thirty years.

In the past thirty years, it seems to be an important week for every industry to rise and fall, and of course, it also includes a highly competitive luxury industry.

Since 1988, it has been exactly thirty years.

During the period, the luxury goods magnate was occupied by the takeover, annexation and hatching, from the European center to the global market, so that the world layout of the luxury goods was gradually clear.

However, with the arrival of periodic nodes, the relatively stable luxury market has been stirred again, and the luxury oligarchy is on the spot.

This time, Gucci is the fuse.

In 2011, because Robert Polet was unable to save Gucci's decline, Kai Yun group CEO Fran ois-Henri Pinault took over the brand personally and made a major reorganization.

In 2014, Gucci arrived at the most dangerous moment. The next year, Bottega Veneta's performance hero Marco Bizzarri was in danger, served as CEO of Gucci, and promoted the designer Alessandro Michele as the brand creative director.

What happened later is well known.

Under the leadership of Alessandro Michele, Gucci's aesthetic system has been pformed into the most popular luxury brand of the millennials, and has constantly rewritten the history of the luxury industry with its commercial success.

According to the latest report released by yesterday's cloud group, the cash cow Gucci broke the spell of "fire for three years". After last year's surpassing Hermes, it pushed the group's third quarter sales up 27.6% to 3 billion 400 million euros over the market expectation, and sales increased 31.5% to 9 billion 526 million euro in the first 9 months of this year.

Gucci organic sales rose 35.1% to 2 billion 100 million euros in the third quarter. On the basis of last year's high base, it has been leading the luxury industry for 11 consecutive quarters. The seventh quarter has recorded an increase of more than 35%, compared with a 50% increase in Gucci in the same period last year.

According to the third quarter results released by LVMH, the group's revenue continued to grow at double-digit rates, rising 10% to 11 billion 380 million euros compared with the same period last year, with an organic growth rate of 10% and a total revenue of 33 billion 100 million euros in the first three quarters.

The fashion leather Department continued to increase its growth rate by 14% under the impetus of the core brand Louis Vuitton, contributing 4 billion 458 million euros to the group. It has been double-digit growth for 8 consecutive quarters.

In the first half of the year, the sector recorded a 25% increase to 8 billion 594 million euros.

Competition is getting more and more sticky.

If Gucci's rapid turnover has aroused the vigilance of rival LVMH, then a series of provocative actions initiated by Kai Yun group from the beginning of this year has completely stimulated LVMH's fighting spirit.

First, Fran? Ois-Henri Pinault released that it would "destroy" Louis Vuitton to make Gucci the world's largest luxury brand. Then Gucci held the early spring show and the 2019 spring and summer fashion show in France, officially landing on the official schedule of Paris fashion week, and the war was burned to the base of LVMH.

According to the analysis, if LVMH can not effectively block the pace of Gucci, the number one luxury brand will give way to Gucci in five years, according to the current Gucci quarter average growth rate of 20% over the LVMH fashion leather sector.

In fact, this "troublesome" Gucci has always been the heart knot of LVMH boss Bernard Arnault.

In 1999, LVMH and Kai Yun group's predecessor PPR carried out a protracted war for Gucci.

Earlier, LVMH used regulatory loopholes to spend $1 billion 400 million in a short span of 20 days to acquire Gucci 34.4%'s stake.

In this case, Gucci proposed to buy LVMH completely, but was rejected by the latter because Bernard Arnault wanted to control Gucci at the lowest cost.

At present, LVMH boss Bernard Arnault ranks fourth in Forbes's list of the world's billionaires.

Surprisingly, after being rejected by LVMH, Gucci decided to expand its shares and sell 42% of the total share capital to $3 billion for PPR.

After the expansion, PPR became the largest shareholder of Gucci, while LVMH's share in Gucci was diluted from 34% to 20%.

Moreover, Gucci also reached a strategic agreement with PPR to ensure the independence of Gucci and continue to develop multi brand strategy.

Gucci's move angered LVMH.

Bernard Arnault filed a lawsuit against the Holland court. The court held that Gucci was acting unfairly, but did not decide to cancel the paction between Gucci group and PPR.

LVMH appealed to the Supreme Court of Holland.

After repeated consultations, LVMH group finally agreed to pfer the shares of Gucci group to PPR in 2001.

So PPR finally bought the Gucci group at a price of 8 billion US dollars.

The brand that once abandoned the acquisition is now threatening to replace its core brand, Louis Vuitton, and Bernard Arnault will never agree that LVMH, which has remained strong for decades, will not tolerate any shaken challenges to the foundation of the group's fashion hegemony.

Once determined to defeat the spirit of the cloud group, LVMH's action has also become very rapid since the beginning of the year. The group has been carrying out a creative director's shuffling for 20 years, and has attracted the most controversial Street opinion leader and Off-White founder Virgil Abloh.

Through the Nicolas Ghesquiere, the creative director of women's clothing, to stabilize the Louis Vuitton customer group, the brand will rely on Virgil Abloh, the creative director of men's wear, with a relatively small market share.

As a cut to attract young consumer groups, take a step in the steady change in the combination of chess.

The purpose of this major decision is very clear, which is to further enhance the competitiveness of the core brand Louis Vuitton.

Bernard Arnault warned at an earlier shareholders' meeting that Louis Vuitton was not interested in the size of the brand, but that the brand would remain the world's most popular luxury brand in the next 10 years.

Other personnel changes, including the original Louis Vuitton men's creative director Kim Jones pferred to Dior Men, Kris Van Assche to Berluti, can be regarded as the strategic adjustment of the Louis to do a coordinated action.

LVMH's second ace is from Dior.

Last year, LVMH bought the Dior garment industry for 6 billion 500 million euros.

With the help of Maria Grazia Chiuri, the creative director of women's clothing, Dior has been welcomed by millennial consumers in a younger position compared to Louis Vuitton and has established a new feminist proposition.

In order to snipe the frontal attack of Gucci, Dior announced that the 2019 spring and summer Paris Fashion Week show could be advanced to the same day, and the release time was only 6 hours earlier than Gucci.

However, for Dior and LVMH, the importance of these 6 hours of time difference in strategy cannot be underestimated.

Of course, Kai Yun group is well versed in the importance of the brand matrix. Besides Gucci, the group supports the two quasi Gucci of Saint Laurent and Balenciaga, and has appointed the 33 year old creative director Daniel Lee for the Celine group, the third largest brand Bottega Veneta, to avoid the risk of the disgrace of the second tier brand while contributing more sales to the group.

LVMH is not without countermeasures.

Since last year, the group's attention has been placed on Celine with potential to enter the 1 billion euro club.

After the departure of the original creative director Phoebe Philo, LVMH changed the trend of Celine brand through the new appointment of Hedi Slimane.

If the positive defense of Louis Vuitton and Dior is LVMH's "A plan", then Celine may be the group's "B plan".

The conspiracy theory interpretation of the B plan adds tension to the current luxury market.

In July 1988, Bernard Arnault gradually began to buy Celine shares. Then LVMH bought the brand at about $5 million 600 thousand in 1996, and opened a shop at a high profile at 36 Montaigne Road, Paris.

As one of the brands that were first targeted by Bernard Arnault, Celine is the brand with the longest expansion of LVMH and the most valued brand of LVMH at the moment.

But the commercial world has always been cruel.

With the character of Bernard Arnault, if Phoebe Philo was introduced into Celine in 2008, it opened up a new era for the brand. This long term pouting brand may have been abandoned by LVMH.

Previous creative directors, including Michael Kors, Roberto Menichetti and Ivana Omazic, never let Celine, which lacked historical accumulation, get rid of mediocrity.

Phoebe Philo rewrote fashion history in 10 years, but she could not beat the rules of the market.

After the fashion industry entered the fast track with no control, Phoebe Philo, the leader of the "slow era", and its Celine, began to expose flaws.

The brand style is constantly copied and copied in the fashion world, but people who really want to pay for their feelings are decreasing, though people are always ashamed to admit it.

Bernard Arnault in

The success of the whole process can not be divorced from its thorough understanding of business. Its vision is the whole LVMH rather than a single brand. Besides, he knows the brand's sales situation better than any spectator.

In the current competition for luxury oligarchs, Celine inevitably became the carrier of group ambition.

So when LVMH appointed the Hedi Slimane with the same style of creation as Phoebe Philo, there was a view that it was a plot behind the elaborate layout of LVMH.

The intention of appointing Hedi Slimane and LVMH is obvious, because the enemy of the enemy is a friend.

Two years ago, Hedi Slimane turned against the Kai Yun group while leaving Saint Laurent. However, the latter continued the creative style of Hedi Slimane pformation through creative director Anthony Vaccarello, so that the brand still benefits from the commercial success of Hedi Slimane when it is in office.

This has obviously become the heart of Hedi Slimane.

LVMH has brought Hedi Slimane to its headquarters, probably not considering the brand tonality of Celine at all. It is more like making room for a piece of open space, so that Hedi Slimane will try every means to win back the original belonger from Saint Laurent, thereby hurting the vitality of Kai Yun group. Saint Laurent is currently the second largest group of Open Cloud group.

。

For Hedi Slimane's ambition, LVMH has enough confidence. After all, Hedi Slimane is the pioneer of style, and LVMH once again takes advantage of the profits.

As for Celine's original customers, LVMH is not worried.

Loewe, Loro Piana, the new creative director Clare Waight Keller Givenchy, designer brand J.W. Anderson will be a certain degree of interception of female consumers.

Although this is not without risk, it is clear that LVMH is more willing to bet on the business returns of Hedi Slimane.

Thus, at the expense of consumer dissatisfaction, LVMH still has a reasonable explanation for the support of all Hedi Slimane pformation.

From changing Logo, emptying social media to changing the design style, Hedi Slimane began to erase all marks of Phoebe Philo in Celine at the beginning of the new design career, because the starting point from the top of the group to Hedi Slimane has never been, or is not just

Itself.

It is noteworthy that Celine has recently announced through the internal mail to suspend production of the best selling handbags Clasp and Frame launched by the original creative director Phoebe Philo.

Celine official website also resumed the business of e-commerce this week, and officially launched the new handbag designed by Hedi Slimane.

Bernard Arnault expressed his appreciation of the new series of Celine in the recent interview. He once said frankly that he hoped that the addition of the designer of Hedi Slimane could bring the highest income of Celine to 3 times in five years.

LVMH rents the most expensive store in Paris for new Celine, grabbing "fans" at Saint Laurent.

LVMH's expectations for Celine are obvious.

According to the latest news of fashion business news, LVMH specially selected for the new Celine store in Paris, 53 Montaigne Avenue, the most expensive rentals in Hong Kong, and the store was originally a boutique of Dior Homme.

Celine spokesman said the new store will open next year, and Hedi Slimane will be fully responsible for the design.

This seems to remind us that after the acquisition of LVMH formally in 1996, the group also set up a store for Montaigne on Celine Avenue. It is enough to see that the new Celine has a reopening significance for LVMH.

What is intriguing is that the Saint Laurent on the other side of Kai Yun group has started to slow down.

According to the latest earnings report, Saint Laurent's third quarter sales grew 16.1% to 447 million euros, slower than the second quarter 19.8% and 22.2% growth in the same period last year.

In contrast to the period of Hedi Slimane, the growth rate was almost half.

Some analysts believe that

Now, though it has three outstanding luxury brands, it can enhance the overall competitiveness, but it has the suspicion of being dazzled by performance.

This year, Kai Yun group seems to be on the road to streamlining the group size. It has stripped Stella McCartney, Christopher Kane and Puma for the purpose of focusing on luxury business, but if Gucci, Saint Laurent and Balenciaga are no longer favored by consumers, the weaknesses of Kai Yun group will soon be exposed.

The fashion industry is full of uncertainties. LVMH's second tier brands, including Fendi, Givenchy and Loewe, will be better at scale and risk tolerance.

The competition for luxury goods in the future is no longer a single brand competition, but a dispute over brand matrix.

Tactics are far from enough. Gao Mingcai of strategy is a way to win.

People can not help worrying that once LVMH's "B plan" really works, Saint Laurent will suffer a heavy setback. At present, Bottega Veneta has fallen behind, and sales in the third quarter have dropped by 8%, which means that the backyard of Kai Yun group will also "catch fire" and drag on Gucci.

But the world of luxury goods is always full of uncertainty. After yesterday's earnings announcement, the opening price of Kai Yun group rose by 10%. Undoubtedly, the capital market is still optimistic about Gucci, with the business brain Marco Bizzarri and creative director Alessandro Michele. No one can predict how far Gucci can lead them under the rare gold portfolio.