Billionaire Bernard Arnault has announced a post-pandemic growth spurt at his fashion-luxury empire LVMH—which owns brands like Louis Vuitton, Givenchy and Christian Dior—as plans for to grab even more of the market gather momentum.
On Monday LVMH announced revenues of $33.9 billion for the first half of 2021, up 56% compared to the same period in 2020, with much of the growth driven by fashion and leather goods, for which revenue rose from $9.4 billion in the first half of 2020, to $16.3 billion in the first half of 2021. Sales in the U.S. and Asia were “up sharply since the start of the year,” the company said, with Europe’s recovery from the pandemic more “gradual.”
Arnault, chairman and CEO of LVMH, celebrated an “excellent half-year,” claiming in a company statement that LVMH was “reaping the benefits of having continued to innovate and invest in its businesses throughout the pandemic despite being in the midst of a global crisis.” Arnault trumpeted the “integration” of U.S. jeweler Tiffany & Co, which it acquired in November 2020 for $15.8 billion.
During the pandemic Bernard Arnault briefly became the world’s richest person when his estimated net worth hit $186.3 billion in late May this year. Arnault’s fortune rose from $76 billion in March 2020, and today sits at $191 billion, behind Amazon’s Jeff Bezos on $211 billion.
Off-White, On Brand
Last week LVMH announced it grabbed a 60% stake in the youth culture fashion brand Off-White, founded by designer Virgil Abloh, for an undisclosed amount. LVMH analysts identified the move as a sign of Arnault’s business plan for the next decade.
Flavio Cereda, who runs luxury brand equity research for Jefferies in London, tells Forbes that LVMH’s post-pandemic strategy is to grow and gain as much of the “wallet” of luxury and fashion consumers as possible. “I think their global market share has gone from 11%-12% pre-pandemic to probably 15%-16% today.” He adds, “The strategy here is land grab. It’s a very aggressive land grab in many categories across the divisions.”
Abloh, a designer, architect and onetime creative consultant for Kanye West, has worked at LVMH as artistic director of menswear at Louis Vuitton since 2018. The arrival of his Off-White label under Arnault’s roof will give Abloh “a seat at the table,”he told the New York Times last week. Arnault himself gave a clear hint of the battle-plan for the years to come, celebrating Abloh’s “exceptional creativity and vision” and how that can roll out across LVMH’s “broader range of luxury categories.”
Jefferies analyst Cereda tells Forbes that the deal is more about knitting together the disparate parts of LVMH through one of the most exciting and influential new names in fashion. “Off-White with LVMH money behind it could [soon have] 300 stores–it’s not difficult if you have LVMH behind you, [but] the brand in itself is tiny in the context of LVMH,” he says.“What I think is much more relevant is … the locking in of Virgil [Abloh], his services, his name, his brand–they can do lots with that.” Abloh, in an LVMH statement, said “This is an incredible new platform to take the disruption we’ve achieved together to a whole new level.”
Abloh’s resume is a huge part of his appeal to LVMH, according to analyst Cereda, “They wouldn’t do this deal if they didn’t have plans for him to grow inside of LVMH,” he says. Cereda noted that Abloh’s famous “three-per-cent approach,” where “you can tweak anything by 3% and it becomes something new,” gives a fair idea of what we can expect from Off-White at LVMH, especially in bridging the gap between fashion, luxury and LVMH’s drinks brands and 50-plus global hotels. Collaboration is key, “Virgil’s ‘little black book’,” Cereda says, “is something nobody else has. That’s a part of the package.”