LVMH Lipstick Growing Bigger Than Bags as Vuitton Slows: Retail
Luster is everything in the allure of the luxury world, so LVMH Moet Hennessy Louis Vuitton (the full name-dropping moniker of the company) is doing what it can to polish up. Its latest move: Its spending $2.56 billion to acquire 80 percent of Loro Piana, an exclusive Italian textile firm and clothier that hails from near Lake Como, a place where George Clooney hangs out. Loro Piana represents the opposite of the fast fashion trend epitomized by the likes of Zara and H&M. As BloombergBusinessweek noted , you could call it slow fashion. It deals in materials like vicuna wool, which comes from a South American llama cousin that yields the fine fibers only every two or three years – hardly the in-today out-tomorrow vision of a Zara shop. Likewise, Loro sells a $6,000 sports coat made from Myanmars lotus flowers.
Financiere Richemont SA. (CFR) Expanding Middle LVMHs Selective Retailing division, which includes Paris department store Le Bon Marche and duty-free shop operators DFS and Miami Cruiseline Services, accounted for 28 percent of 2012 sales. Ortelli recommends buying LVMH shares and holding PPR. LVMH revenue is set to advance 7.5 percent this year, according to estimates compiled by Bloomberg. Thats faster than the 5.2 percent growth analysts predict for PPR. Sephora is introducing services such as mobile payments and enlarging its own-label assortment to keep shoppers spending. Its also expanding in Latin America and Asia, aiming to attract middle class consumers driving growth in emerging markets. PPR, by contrast, is getting out of mass retail. The company aims to spin off its Fnac media and electronics chain and dispose of online fashion seller La Redoute this year. Its also closing stores at sporting-goods maker Puma SE (PUM) as it combats declining non-luxury sales.