Kering and LVMH are the two most powerful fashion conglomerates. Together they best represent the French myth of elegance, luxury, and sophistication.
Let’s look how they compete with each other and what makes them interesting?
| Kerring | LVMH | |
| Head office | Paris | Paris |
| # of Brands owned | 18 | > 60 |
| Key portfolio assets | Gucci Y. Saint-Laurent Balenciaga A. McQueen Sergio Rossi Stella McCartney Puma Volcom |
Louis Vuitton Givenchy M.Jacobs Fendi Kenzo Donna Karan Moet & Chandon Hennessy Tag Heuer Sephora DFS |
| Revenues | Total: € 9.7 billion US: 19 % Europe: 31 % Asia, incl. Japan: 37 % Others: 13 % |
Total: € 28.1 billion US: 23 % Europe: 31 % Asia, incl. Japan: 36 % Others: 10 % |
| # of stores | 958 | 3204 |
| # of employees | ~38’300 | ~100’000 |
| CEO | François-Henri Pinault (Chairman und CEO), married to Salma Hayek |
Bernard Arnault, ranks #10 |
| Key brand | Gucci | Louis Vuitton |
| Weak brand | Puma | Edun |
| The designers we’re talking and thinking about! |
Hedi Slimane Cathy Horyn |
Riccardo Tiscie |
| The new born stars | Alexander Wang (29) working at Baleciaga |
Phoebe Philo (36) working at Céline |
| The iconic items | The brand-changing Bottega Veneta Cabat bag for about USD 6,000 The Gucci loafer |
LVMH brown and gold Speedy bag, Marc by Marc Jacobs mouse flats |
| Major market exposure | Asia | Asia |
| Specific effort | Sustainable python sourcing | Lends private collection Stradivarius violins to young musicians |
| Recent additions | Christopher Kane (clothing – Scotland) Pomellato (jewelry – Italy) |
Bulgari |
| Present legal actions | Threatened eBay with a lawsuit to prevent it continuing to sell fake items |
Sued eBay for the sale of fake items > LVMH won USD 63 million, Sued Wal-Mart |
| Major strengths | With its new strategy, Kering will be able to deliver higher efficiencies and better shareholder returns Affluent customers spend on luxury items, whatever the economic conditions, hence the business is highly resilient |
LVMH can mitigate the downside of individual brands Both up and downstream, LVMH has high long-term leverage |
| Major weaknesses | The sports and lifestyle businesses have proven very difficult to integrate into one of the world’s most famous luxury conglomerates |
Growth is driven by Asian consumers, even in Europe The company’s wine and spirit business is capital intensive and hence ROI is below what it could be |
| Operating margins | +/- 20 % | > 20 % |
| EV/EBITA | 13 x | 9 x |
| FCF yield | 5.7 % | 5 % |
| FWD P/E | 20.4 x | 17 x |
| Organic growth rate | 6 % | 20 % |
| Recommendation | For our clients only | For our clients only |