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Fashion’s Latest Diet: LVMH Sheds 2 Brands, Other Sales in Pipeline

PARIS — It looks like thin is in for 2003 at LVMH Moët Hennessy Louis Vuitton.WWD has learned that the luxury giant sold the upstart...

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PARIS — It looks like thin is in for 2003 at LVMH Moët Hennessy Louis Vuitton.

WWD has learned that the luxury giant sold the upstart beauty companies Hard Candy and Urban Decay last month to the U.S.-based Falic family for an undisclosed sum. And those might not be the last of LVMH’s 50 brands to go. Chief financial officer Patrick Houel said on a conference call Thursday, during which the group discussed its 2002 sales results, that more transactions are on the way.

LVMH upped its operating profit growth targets to at least 25 percent for 2002 while reporting a sales increase last year of 3.8 percent to $13.58 billion.

"I think we will continue selling some businesses, small companies, real estate and shares in companies," Houel said, responding to questions from analysts. "We will concentrate on our core businesses."

Pressed for further precision, Houel said, "I will not give you the names of companies we are going to sell."

However, sources suggest possibilities range from Thomas Pink and Loewe to Sephora, Guerlain or even Givenchy. Potential buyers for fashion and leather goods businesses are said to include the upstart luxury conglomerates Equinox and France Luxury Group, Texas Pacific Group, the investment fund Opera or other venture capital funds. As for potential beauty brand buyers, possibilities range from L’Oréal to Wella, while for Sephora, suitors could range from the German group Douglas to French department store chain Galeries Lafayette.

Sources suggested all options are being considered, and it’s possible some brands could be bundled and sold as a package deal. LVMH sold its Pommery champagne brand and money-losing auction business Phillips last year, and had been under pressure to sell its money-losing selective distribution division, which last year saw sales dip five percent to $3.57 billion. Dollar figures are converted from the euro at current exchange rates.

LVMH chief Bernard Arnault has described selective retail as "noncore" and analysts believe that may still be the case. "I think Sephora could be sold this year," said Antoine Colonna, luxury analyst at Merrill Lynch in Paris. "I would expect the company will clarify in March at its shareholders’ meeting what it sees as core and noncore."
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