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Louis Vuitton’s desirability matters more than size, parent group says

Luxury industry analysts have told the Financial Times that they expect the industry’s biggest brands to keep growing but that a substantial gap between the two that are, arguably, the biggest, Louis Vuitton and Gucci, is likely to remain.

In its analysis, the FT said that while parent group, LVMH, does not break out figures for its flagship leathergoods brand, estimates are that Louis Vuitton revenues account for two-thirds of the combined results it publishes for its fashion and leathergoods division. This would give Louis Vuitton 2017 sales figures of around €10.3 billion.

In comparison, rival group Kering reported 2017 revenues of €6.2 billion for its flagship label, Gucci, confirming a strong turnaround at Gucci since Marco Bizzarri moved from Bottega Veneta to become its chief executive in 2015. This, in turn, has led to speculation about Gucci’s chances of taking over from Louis Vuitton as the biggest luxury brand in the world.

At the start of May, the FT quoted Thomas Chauvet, an analyst at Citigroup, as predicting 11% growth for Louis Vuitton in 2018 and a rate of 26%  for Gucci. If these estimates prove correct, it would take Louis Vuitton’s revenues to around €11.4 billion, and Gucci’s to €7.8 billion. Mr Chauvet has predicted growth of 7% for Louis Vuitton in 2019, compared to 9% for Gucci, and a rate of 7% for both brands in 2020.

Again, if these speculations prove accurate, Louis Vuitton would have revenues of just over €13 billion by the end of 2020, while the corresponding figure for Gucci would be €8.8 billion.

The gap between the two, therefore, appears to be closing but seems likely to remain reasonably wide at the start of the next decade.

According to the Financial Times, comments on this subject from LVMH chief executive, François-Henri Pinault, suggest he cares more about maintaining the desirability of Louis Vuitton products than about sustaining high rates of growth. “All we would need to do is produce more to double our revenues,” the newspaper quoted him as having said at the group’s annual meeting in April, “but that would be to the detriment of quality, which in the long term would have serious consequences for the perception of the brand, its status, its image and its desirability.”

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