Luxury Goods

Burberry buyer would need steel-plated trench coat

6 Nov 2024

Shares in the $4 bln UK luxury group rose after a website reported that Moncler was eyeing a bid. But the returns on offer look low, while boosting the brand will be costly. Possible suitors require deep pockets, and the patience to wait a long time for any kind of payback.

Luxury’s China wobble will accelerate M&A

16 Oct 2024

LVMH lost 7% of its market value after revealing bleak consumer spending in the world’s second-largest economy. The broader sell-off will make small players more vulnerable. But this will create a big opening for cash-rich giants to pounce on already battered stocks like Kering.

Richemont exits online hell, but heaven is way off

9 Oct 2024

The $70 bln luxury group is offloading its ailing platform YNAP in exchange for a stake in US-listed buyer Mytheresa. Chair Johann Rupert gets rid of a loss-making arm. But the sector’s dubious economics make it hard to see how he winds up with a holding that offsets his blushes.

China-EU trade spat’s next swipe may hit LVMH

23 Sep 2024

Beijing is weighing up retaliating against EU tariffs on electric cars. Targeting the French luxury giant and its rivals would cause minimal strategic pain and hit Paris rather than Berlin. Higher consumption taxes, rather than import duties, could also fit with domestic reforms.

Luxury’s legal pain is new threat to valuations

20 Aug 2024

Italian prosecutors allege sweatshop-like worker conditions at subcontractors of houses like LVMH’s Dior. That’s a bad look after recent luxury price rises. But if the sector has to hike costs to improve its supply chains, investors may find a new reason to mark valuations down.

Rose-colored Ray-Bans shade brand rehab realities

26 Jul 2024

EssilorLuxottica is paying $1.5 bln for Supreme, whose cachet suffered under Vans owner VF. Streetwear strays from the buyer’s eyewear expertise and the imputed return on capital looks modest. American Apparel also serves as one of many cautionary tales on fashion after it frays.

Porsche looks stuck in rival Ferrari’s slipstream

24 Jul 2024

The 64 bln euro group’s shares have stalled since a 2022 float, and its valuation trails the Italian group by miles. Competition in China and production snafus may hold it back. The risk is that investors value the 911 maker like a normal carmaker, rather than a luxury group.

French luxury’s China pain may be more evenly felt

24 Jul 2024

Headwinds from Beijing are affecting the performance of Hermès, LVMH and Kering. The three groups continue to operate in different leagues, but they share a common dependence on the People’s Republic. China’s shaming of luxury implies Hermès may be less insulated than before.

Mattel buyout would be fun but dangerous plaything

23 Jul 2024

Despite Barbie’s star power, the $7 bln toymaker’s sinking valuation has attracted suitor L Catterton. A deal can work but looks big enough to be a choking hazard for the LVMH-backed investment firm. Higher tariffs on Chinese suppliers also would make the financial game riskier.

Meta stake may blur vision for Ray-Ban maker

18 Jul 2024

The $1.2 trln tech giant may buy 5% of eyewear group EssilorLuxottica. It’s a show of confidence in the companies’ smart glasses partnership. But the investment could complicate the Paris-listed firm’s governance and limit its options for working with rivals like Apple.

Burberry faces a lengthy stay in the bargain bin

15 Jul 2024

Shares in the $3.4 bln UK fashion group fell 17% after it replaced its CEO and suspended its dividend. New boss Joshua Schulman’s plan to refocus on trench coats isn’t certain to work. But Burberry fare’s waning appeal also limits the scope for a deep-pocketed acquirer like LVMH.

China has an incentive to keep road to Europe open

26 Jun 2024

Beijing agreed to start talks with the EU on the bloc's planned tariffs on China-made EVs. Carmakers can survive but the issue represents a larger threat. It would hurt the $18 trln economy to add a full blown trade war with the EU to its escalating one with the United States.

Permira has many motives to kill its Golden Goose

19 Jun 2024

The sneaker brand blamed Europe’s political uncertainty for pausing its $1.9 bln listing. Yet a sluggish luxury market and slower growth had already forced it to scale back its price ambitions. For the private equity shop, avoiding a repeat of Dr. Martens’ IPO flop is paramount.

Japan’s luxury boom sparks wishful China thinking

30 May 2024

LVMH and Prada have reported stellar sales in the country, while Richemont’s CEO hailed China’s resurgent overseas shopping as one reason for a 20% annual revenue bump there. But those big spenders have yet to return to pre-pandemic habits. A weak yen deserves more credit.

Gulf buyer is best hope to revive De Beers sparkle

16 May 2024

Anglo American wants to offload its diamonds group. Hit by cheaper lab-grown gems and falling demand, De Beers will struggle to attract a luxury buyer. A rich Middle East suitor looks the most plausible way to avoid a sale at well below its $7.6 bln book value, or a mere spinoff.

Global retailers are headed for Shein reckoning

30 Apr 2024

Zara owner Inditex, H&M and other apparel giants are holding ground against the Asian fast-fashion upstart. However, AlixPartners’ retail expert Matt Clark argues in this Exchange podcast that Shein’s focus on garment quality could threaten the dominance of pricier rivals.

L’Occitane sets a high bar for Hong Kong exits

30 Apr 2024

Chairman Reinold Geiger’s offer to take his skincare group private values it at 6 bln euros, a decent 30% premium. Funding led by Blackstone might help keep a lid on interest expenses while the company restructures and seeks a listing in Europe. Other buyouts will be trickier.

Time for Kering’s king to consider a step back

24 Apr 2024

François-Henri Pinault, heir to the family fortune, has been at the helm of the 40 bln euro French luxury conglomerate for nearly 20 years. With returns shrinking and as flagship brand Gucci struggles, Kering may benefit from fresh blood – and possibly a new CEO.

ESG is ghost at global retailers’ annual feast

19 Apr 2024

LVMH, Amazon and peers gathered in Paris for the industry’s yearly shindig. The growth areas in the $30 trln sector are Shein-style cheap garments and the Middle East. Both jar with retailers’ previous focus on environmental, social and governance factors.

Luxury’s great divide will get more striking

17 Apr 2024

Sales at $420 bln LVMH rose a dull 3% in the first quarter. The Tiffany-to-Dior behemoth’s insipid performance points to a broader fragility within the sector. With revenue in the luxury industry flattening, the gap between winners and losers is set to grow wider.