In 2020, The Best Buyers Of Luxury Goods Were 13.

Can a brand independent of a large group occupy a place in the luxury market?

At the end of 2019, LVMH bought us jewellery brand Tiffany for us $16 billion 200 million. This not only refreshed the acquisition records of the industry, but also further demonstrated the growing strength of large groups in the market. The greater the number of luxury brands in the portfolio, the greater the group's advantage in manufacturing, distribution, recruitment and retail real estate. This poses a more severe challenge to independent enterprises that try to gain competitive advantage.

However, with the emergence of various mergers and acquisitions in the luxury market, there are few attractive target enterprises. Some brands are hard to adapt to the new rules of luxury goods rewritten by online shopping, e-commerce and digital transmission, and the prospect of future exit will be even more bleak.

Pierre Mallevays, the founder and managing partner of Savigny Partners LLP, a financial consultancy, said: "those brands that use investment to prove growth potential or profitability can not only face the problem of investor reduction, but also make it harder to achieve their valuation expectations."

However, the "champion assets, digital stars or additional acquisitions" that are easy to combine with buyers' business will continue to attract investors' attention and get a high valuation.

Italy, where many luxury brands are headquartered, has many family brands working closely with factories. They still operate independently, or are controlled by the founders and their descendants, such as Prada group (Prada), Brunello Cucinelli and Ferragamo. Mario Orteli, a luxury goods analyst, said: "the popularity of these brands is often far higher than current revenue."

Investors are looking for brands with strong cultural history and inspiring global resonance, hoping to reduce their reliance on the trend and avoid the impending change of intergenerational changes. This may lead to the idea that the original independent operators will gradually start accepting the sale of cards.

However, there are also attractive luxury assets outside Italy. BoF joined hands with experts to make predictions and see which luxury brands are most likely to be bought this year, and which complicated merger may accelerate.

　 Prada

Revenue: according to Reuters, 2019 revenue of 3 billion 200 million euros (about RMB 24 billion 736 million yuan) is higher than that of 3 billion 100 million euros in 2018.

Advantage: just 6 years ago, the top Italy independent luxury group's revenue performance was comparable to that of Gucci. But since then, Gucci's revenue has doubled, and Prada's revenue has shrunk. However, Prada is still one of the most recognized and respected luxury brands in the world. Buyers can boost Prada business by optimizing business and product categories. As designers Raf Simons and Miuccia Prada will be co creative directors, the new design is likely to impress luxury customers if brands can be supported by appropriate distribution, marketing and sales strategies.

Prada also has development opportunities in the field of beauty. In December last year, the brand signed a new licensing agreement with L'OREAL L Or al. The agreement will come into force on January 2021, and Prada will conclude its cooperation with Puig group.

Disadvantages: Miuccia Prada and Patrizio Bertelli couples seem to have little interest in the idea of selling a company in the short term. The company is listed in Hongkong, and two people share 80% of the total. Their son Lorenzo Bertelli joined the company in 2017 as head of marketing and communications. The move shows that the couple still want the family to run the business.

Besides, buyers will have a lot of work to do. Prada's revenue fell from 3 billion 500 million euros in 2016 to 3 billion 200 million euros in 2019, and its share price also suffered from the peak of 2013. "It takes time rather than the pressure of short-term performance improvement," Citibank analyst Thomas Chauvey said about the company.

　 Burberry

Revenue: according to Reuters, in the fiscal year ended March 31st, the company's revenue could reach 2 billion 700 million pounds (about 24 billion 113 million yuan), unchanged from last year.

Advantages: the British traditional brand is the largest independent brand in the market, and is expected to become a profitable investment target for buyers. Although the scale of the brand is quite large, its financial structure helps to simplify the future trading process: stock 100% is a public transaction, so buyers need to provide a transaction price that can persuade most shareholders. After the approval of the board of directors, the acquisition process will be further simplified.

Disadvantages: Burberry is still in transition, so we need to pay more attention to the latest changes. Ortelli pointed out: "this is not a market positioning in the best state," plug and play "assets.

In November 2017, CEO Marco Gobbetti launched a multi-year plan to enter the high-end market. This strategy focuses on leather products that can create high revenue, which currently accounts for only about 40% of Burberry business, far below the Louis Vuitton, Gucci and other industry predators.

The chief creative officer, Riccardo Tisci, joined the brand in 2018. Although his series was popular with celebrities, it did not create sensational effects like Gucci's creative director Alessandro Michele. By the end of this fiscal year, the design of Tisci will account for 80% of the Burberry market series, which can further observe the performance of its works.

　　 Mytheresa

Revenue: in the fiscal year ended June 2019, revenue was 377 million euros (about 2 billion 914 million yuan), up 25% over the same period last year.

Advantage: Mytheresa is the only multi brand retailer on the list. It has achieved profitability and has continued to grow. EBITDA grew by 50% over the same period last year. Compared with some well capitalized competitors, the Neiman Marcus Group company is quite cautious in its growth management. In February 2020, the company launched an initial public offering intention with a website valuation of $500 million, which is expected to help debt troubled parent companies repay part of their debts. Mytheresa is a brand that is stripped from Theresa, a multi brand retailer in Munich, Germany. It may also be a reasonable investment target for large groups such as Kering or LVMH, especially LVMH has been making efforts to build its e-commerce platform 24s, hoping to compete with Net-a-Porter.

Disadvantages: multi brand retailers face many challenges, both online and offline. Competition in the industry is fierce. Dozens of companies with similar products often compete for the same type of customers, or even a "competing phenomenon": retailers start competing in the weeks before the traditional selling season. At the same time, Gucci, Prada and other big brands are investing more resources to the self operated e-commerce providers, which will hinder many brand sellers from gaining hot sources. But the scale of Mytheresa is not large. If acquired, there may be opportunities to try other business models or to turn to franchising.

　 Moncler

Revenue: according to Reuters, revenue in 2020 can reach 1 billion 800 million euros (about 13 billion 913 million yuan), up from 1 billion 600 million euros in 2019.

Advantage: Moncler is growing fast. In 2019, sales increased by 15%, and EBITDA profit margins increased by 35.3%. There is still room for growth in product category.

"The brand has entered the ranks of the leader in the field of clothing, and has the opportunity to enter the new product market, set up stores and build an internal e-commerce platform," Ortelli said.

Moncler launched the "Genius" strategy in 2018, and joined hands with a series of popular designers and brands to launch limited joint series, attracting more new customers, especially the Z generation and the millennial generation. These groups account for 40% of the total number of brand customers. Rumor has it that the strategy has also interested some buyers. Moncler was reported to have approached the cloud in December 2019. But brand CEO Remo Ruffini and Kai Yun CEO Fran ois-Henri Pinault later said they had not considered any transaction.

Disadvantage: now is not a good time to initiate acquisitions. Moncler's share price rose more than 30% last year, and its valuation is more than 10 billion euros. Buyers need to pay a high premium for takeover. Just imagine how much value the new buyer should get from the brand so that such an expensive transaction can be worth the money. In addition, Ruffini has become accustomed to independent operation, and he owns more than 22% shares.

　　 Brunello Cucinelli

Revenue: according to preliminary estimates, 2019 of revenue was 607 million 800 thousand euros (about 4 billion 698 million yuan), up from 553 million euros in 2018.

Advantages: the brand's modern leisure cashmere jacket and coat are well received by wealthy customers in Paris and Silicon Valley, and have a group of enthusiastic followers. The company went public in 2012, and its share price rose in 2019, but its share price is basically unchanged from the beginning of the listing.

Disadvantages: the Brunello Cucinelli family owns a large share of the company and seems to have little interest in selling the company. Two years after the public listing, the founder transferred his shares to a trust fund to "benefit his daughter and ensure that he would continue to develop philanthropy in the future".

　　 Salvatore Ferragamo

Revenue: according to Reuters, revenue in 2019 can reach 1 billion 400 million euros (about 10 billion 821 million yuan), up from 1 billion 300 million euros in 2018.

Advantage: the Italy traditional brand has a strong brand DNA, especially in shoes that contribute more than 40% of revenue. At the same time, the brand is also developing continuously, and handbags and leather goods account for 40% of the total revenue.

In recent years, Paul Andrew has been promoted from the head of women's shoes department to the creative director of the whole brand, and has effectively enhanced the brand image.

Disadvantages: Micaela Le Divelec Lemmi has been a chief executive since 2018, and despite its failure to give up efforts to revive its morale, the brand still lacks momentum. The brand showed signs of recovery in the first half of 2019, but at a constant exchange rate, the third quarter revenue fell by 3.6%.

In October 2018, Salvatore Ferragmo widow Wanda Ferragamo died (after her husband died in 1960, she led the company to expand). The outside world has speculated that the founding family may be more open to the sale company, but its son, chairman of the company, Ferruccio Ferragamo, denied any sale intention in February 2019.

　　 Ermenegildo Zegna

Revenue: revenue in 2018 was 1 billion 200 million euros (about 9 billion 275 million yuan).

Advantage: this family run Italy men's wear brand was founded in 1910. It started with fabric factory and has strong manufacturing capability. At the same time, it is also a fabric supplier for other men's clothing brands. In recent years, the company has strengthened the supply chain construction and invested in the development of innovative fabrics. As more and more luxury brands are striving to advance to the upstream of the production line, this has become an important advantage of the brand. Ermenegildo Zegna is currently in charge of the third generation of family members Gildo Zegna and art director Alessandro Sartori. It has strong brand awareness and has the opportunity to realize diversified development outside men's wear.

Disadvantages: with the new generation of customers losing interest in formal clothes and turning to a more casual form, Zegna suits manufacturers are facing great challenges. The family has not expressed its intention to sell, but in fact it has long been engaged in mergers and Acquisitions: in 2018, the US fashion brand Thom Browne earned its income.

　　 Missoni

Revenue: 2018 revenue of about 150 million euros (about RMB 1 billion 159 million yuan).

Advantage: thanks to the joint brand plan with the mass market brand, the brand knitwear and its "shape" printing have established a strong brand awareness. When launching a joint series with Taghit department store (Target) in 2011, Taghit's website collapsed due to excessive traffic.

Disadvantages: the Missoni family continues to hold most of the shares, but private equity FSI Mid-Market Growth Equity Fund also acquired 41.2% of the company's shares in 2019 and intends to expand its size, so the company may not be open for sale in a few years.

　 The Row

Revenue: according to market sources, the brand's annual sales volume is between 1 and 200 million dollars (Private Companies rarely interviewed by the media and did not disclose revenue data).

Advantage: the core business of the brand is clothing, and has accumulated a large number of fans. Since Celine no longer runs the low-key, advanced and simple aesthetics of designer Phoebe Philo in the brand age, The Row is expected to become the leading brand in this market and compete with Bottega Veneta of Kai Yun. Although The Row's footwear and leather goods business has considerable revenue, there is still much room for growth, especially outside the United States.

Disadvantages: the co founders Ashley Olsen and Mary-Kate Olsen sisters have earned a lot of money from the entertainment industry, so they began to raise funds at the beginning of their brand creation. At the same time, they do not seem to need the approval and support of large groups. Therefore, a major obstacle to the acquisition process is persuading them to sell their brands.

The following are some of the industry mergers and acquisitions that have not yet been known, but will be speeded up.

　　 Merger of Kai Feng and Kai Yun group

Revenue: according to Reuters estimates, revenues in the 2020 fiscal year will reach 14 billion 800 million euros, up from 14 billion euros in the previous fiscal year, while Kai Yun Group expects to achieve 17 billion euros in 2020, up from 15 billion 900 million euros in 2018.

Advantages: analysts have been speculating that the opening of cloud and peak will merge and redefine the whole industry. This may be the only way for the two big groups to compete with the world's largest luxury group LVMH, especially after the acquisition of Tiffany & Co. by LVMH to further establish its industry dominance.

The two big groups can form complementary effects: the peak is a leader in the hard luxury sector, but there are mixed feelings in the soft luxury market, and the advantage of opening the cloud lies in fashion and leather goods. Mallevays believes that the marriage between the two will become a "game changer".

Disadvantages: the two major families of the Rupert and Pinault families belong to the family and the Pinault family. If a strategic alliance is formed, the power struggle is inevitable; if the two are combined, the Pinault family will probably take the lead because the market value of the open market is as high as 64 billion euros, while the market value of the peak is about 36 billion euros (as of December 31st). Another big problem is that the structure of shareholders inside the company is complex. The shares of Johann Rupert, the founder of the group, are much lower than that of the Pinault family.

　　 Chanel

Revenue: $11 billion in 2018 (about 76 billion 328 million yuan), up from $9 billion 600 million in 2017.

Advantage: Chanel is one of the most valuable brands in the world.

In 2018, the company released its first financial report in history. Its huge scale was surprising, and many people speculated that it was releasing signals to find buyers. A year later, the death of designer Karl Lagerfeld, who signed a lifelong contract with Chanel, marks the end of an important fashion era, and another era of potential challenges has just begun.

Chanel brand holder Alain Wertheimer, G e rard Wertheimer brothers, or would like to retain the assets for the fourth generation successors of the family (Chanel's former chief executive Maureen Chiquet left in 2016 and Alain Wertheimer served as interim CEO).

Disadvantages: Chanel chief financial officer Philippe Blondiaux told BoF last year that Chanel executives insisted they would not look for buyers or prepare IPO.

The new generation of Wertheimer family successors is ready to take over, including Alain's son Nathaniel Wertheimer and Arthur Heilbronn (he is Alain and G rard rard's half brother, Charles Heilbronn's son).

If the brand is sold, buyers will pay a lot of cost. Insiders estimate that the brand will be as high as 700 to 100 billion dollars. Even LVMH will be awed unless the Wertheimer family becomes an important shareholder of LVMH group.

　　 Ralph Lauren

Revenue: according to Reuters, revenue in fiscal year 2020 can reach US $6 billion 300 million (about 43 billion 715 million yuan), unchanged from 2019.

Advantage: the American fashion giant is also one of the most famous brands in the world. It is a real lifestyle brand. Its products range from Linen Tablecloth to evening dress. But the company has potential for further growth, especially in women's clothing and international markets.

PVH group, parent company of Calvin Klein and Tommy Hilfiger, may be a suitable buyer. "We are looking for another acquisition target," Emanuel Chirico, chief executive of PVH group, told Bloomberg in 2019. We are looking for a strong brand or brand portfolio to stack up to the existing operation platform.

Disadvantage: Ralph Lauren is also struggling to adapt to changing consumer preferences and communication strategies as the US wholesale market shrinks. Ralph Lauren, the chief creative officer and founder, is still deeply involved in business operations.

　　 Armani group (Armani Group)

Revenue: 2 billion 100 million euros (about 16 billion 227 million yuan) in 2018, less than 2 billion 300 million euros in 2017.

Advantage: Armani is very similar to Ralph Lauren and is one of the most famous brands in the world. From red carpet gowns to candy shops, restaurants and hotels, group business is almost everything.

Disadvantage: founder Giorgio Armani is the sole shareholder of the group, and expressed firm determination to defend the independence of the company. Because he will be 86 this year, the problem of planning successors is imminent. The designer announced the establishment of a foundation in 2016 to protect the company's future, but it also increased the challenge of acquisitions. He has said he intends to run the company until he dies.