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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Jacques-Franck Dossin, luxury analyst at Goldman Sachs in London, said in a research note Thursday that LVMH’s intensifying focus on star brands like Louis Vuitton and Fendi suggest the sale of "small but loss-making brands" might be in the offing.

During the conference call, an LVMH spokesman singled out Marc Jacobs and the men’s shoe firm Berluti as having double-digit sales increases last year. He also noted that Fendi is "making strides," Donna Karan is showing "good resilience," while Céline posted a "good performance," boosted by strong sales of its "Boogie" handbag.

The spokesman also mentioned the standing ovation and rave reviews that greeted Christian Lacroix’s couture show Tuesday, and mentioned Lacroix’s overhaul of the house of Pucci. LVMH fashion and leather goods brands that weren’t mentioned include Loewe, Givenchy and Thomas Pink.

Meanwhile, Patrick Choël, president of the perfumes and cosmetics division at LVMH, described the sale of Hard Candy and Urban Decay as a "small disposal. They were the two smallest businesses in my portfolio," which includes such big hitters as Parfums Christian Dior, Parfums Kenzo and Guerlain, plus numerous small-sized players like Bliss, BeneFit Cosmetics, Fresh and Make Up For Ever.

Wende Zomnir, executive creative director of Urban Decay, seemed upbeat about the new ownership by the Falic Group, composed of Leon, Simon and Jerome Falic. "They love the business," she said. "They want to maintain the prestige positioning the brands have and even take them up a notch. All they have said to me is, ‘We want more creativity from you, more product.’"

Urban Decay and its sister brand, Hard Candy, already have some duty-free distribution. The brands now are also sold in Sephora, Nordstrom and select doors of Bloomingdale’s, Foley’s and Macy’s East.

Industry sources estimate the brands could have been sold in a deal worth less than $10 million. Urban Decay and Hard Candy, sources said, are at best marginally profitable although estimates of their sales vary widely, from $20 million to $40 million at retail.

The two brands were cherry-picked by LVMH within 10 months of each other between 1999 and 2000. It was a time when LVMH was on an acquisition spree, snapping up trendy and wild beauty brands. Urban Decay fit the bill with its defiant attitude and products to match, including nail polishes named Roach, Pigeon and Asphyxia. Hard Candy was equally rebellious, with items like Trailer Trash nail polish. Its founder, Dineh Mohajer, started concocted nail polishes in her bathroom.
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