LVMH, Kai Yun And Hermes Data Analysis In The First Half Of The Year

The "28 phenomenon" in luxury goods industry has never been so obvious. Both investors and consumers focus on 20% of the top brands.

The "28 phenomenon" means that 20% of the strong brands occupy 80% of the market share. Through a few head brands, we can get a glimpse of the trend and future trend of the whole luxury industry. Louis Vuitton, Chanel, Hermes and Gucci are the four most valuable brands in the luxury goods industry, according to the 2018 global best brand list released by Interband, a consultancy. Louis Vuitton is still the overlord.

According to the fashion business express, apart from the Chanel which has not been listed, in the past one week, the luxury group of LVMH and Gucci's parent company opened the cloud and Hermes three market capitalization of nearly 300 billion euros, and released the first half of the year's financial results. Even though the results were mixed, the starting line of the new round of earnings season of the industry has been upgraded to a new height.

In terms of revenue growth, the LVMH fashion leather industry is catching up with Gucci and Hermes, becoming the fastest head brand. The sector benefited from the performance of Louis Vuitton and Dior. Sales rose 21% to 10 billion 425 million euros in the first half of the year, and double-digit growth has been recorded for 11 consecutive quarters. The first half of this year's revenue reached 10 billion euros, a record high.

Gucci began to go downhill, which is different from the full speed running in 2017 and 2018. The sales growth in the first half of this year continued to slow down, with a mere increase of 19.8% to 4 billion 617 million euros, an increase of 44% over the same period last year, and a second slowdown in sales in the second quarter, down from 35% in the same period last year, the lowest growth rate in three years.

Despite the early forecast of Kai Yun group, in October last year, it indicated that the slowdown of the brand after the explosive growth of revenue was a normal phenomenon, but analysts in Reuters and Bloomberg both pointed out that Gucci's growth slowed down faster than expected. In the past six months, Gucci's hot search index on Baidu has dropped 30%, while the search index for LV has risen 13%, according to fashion business express.

In addition, since the second quarter of last year, the number of its workshops has been increasing to meet the market demand. The sales growth of Hermes has also returned to double digits. In the second quarter ended June 30th, sales rose 14.7% to 1 billion 674 million euros, a 3% improvement over the same period last year. Sales in the first half of the year rose 15.1% to 3 billion 284 million euros, exceeding analysts' expectations.

In terms of profitability, LVMH fashion department's operating profit rose 17% to 3 billion 248 million euros in the first half of the year, operating profit margin was 31%, Gucci operating profit rose 26.7% to 1 billion 876 million euros, and operating profit rate was 40.6%, a record high. Although Hermes did not disclose its operating profit in the first half of its earnings report, its operating profit increased by 6.4% to 2 billion 45 million euros in 2018 and its operating profit margin was 34%.

The fashion business Express has found three main trends in the global luxury fashion industry after summarizing the earnings report of the three giants. One is the rise of China's luxury consumption power. Asia has become the largest luxury market in Europe, and the second is to seek growth through business expansion. Even though the direction is different, third is the emphasis and devotion to sustainable fashion.

According to the report on consumer digital behavior of China's luxury goods market released by Tencent advertising and Boston consulting company, China's luxury goods market broke through 110 billion euros in 2018, and its growth rate remained 6%, accounting for 33% of the global luxury goods market. Boston consulting company expects that the market will grow at an average annual compound growth rate of 5%-6%, and will contribute more than 40% retail sales to the global luxury market by 2025.

With China's adjustment of tariff and VAT policy on some imports, China's luxury goods consumption has accelerated back. Louis Vuitton and Gucci have lowered the price of products in mainland China this year, ranging from 3% to 5%. LVMH communications director Antoine Arnault has also reached an agreement with Sun Chenghai, director general of China International Import Fair (CIIE). The group will formally participate in the from November 5th to 10th China International Import fair.

By contrast, Gucci's action in China is rather dull. From last year's creative director Alessandro Michele and artist Mauricio Cattelan co curator "artists here", consumers' weakness for Gucci aesthetics gradually revealed, almost the same time Louis Vuitton's "flight, navigation, travel" (VOLEZ, VOGUEZ, VOYAGEZ) limited time exhibition triggered young people to queue up spontaneously.

The expansion strategy of Hermes in China still chose to open shop as the cutting point. Following the first store in Changsha, it opened twenty-sixth brand stores in China recently in Xiamen. It is reported that the shop is located on the first floor of Huarun the Mixc in Xiamen, covering an area of 253 square meters. It is designed by RDAI, a Paris architectural firm responsible for brand global stores. It not only continues the simple style of Hermes, but also combines the architectural inspiration of "Fujian earth building" into the design.

In addition, the Chinese official website of Hermes has launched the electricity supplier service in October last year. Although Chinese consumers are still unable to purchase Birkin or Kelly handbags online, other brands with other stocks will be sold online. Axel Dumas, chief executive, said the brand was also interested in collaborating with China's e-commerce giant Jingdong or entering the flagship store.

In the favorable environment, Hermes sales in mainland China recorded double-digit growth in the first half of this year, stimulating sales of brands in Asia, excluding Japan, rose 21.1% to 1 billion 299 million euros, accounting for 77.5% of total revenue. LVMH sales in Asia accounted for 33%, which exceeded 26% in Europe. Gucci accounted for 40% in China's Asia Pacific market, and also surpassed the European market.

In terms of business development, the most diversified category is the LVMH fashion leather Department. Since LVMH was promoted to Dior's original CEO Sidney Toledano as the head of fashion leather Department in 2017, its brand innovation has become more daring and its focus has been gradually placed on men's clothing category with more potential. However, under the repeated provocations of Gucci and Kai Yun group, LVMH's step cutting is becoming more decisive.

At the beginning of last year, Louis Vuitton introduced Virgil Abloh, who was good at street style. He was appointed creative director of men's wear. The former Kim Jones was transferred to Dior responsible for the reform of men's clothing business. Although LVMH has never announced the detailed performance of its brand, but in the latest earnings report, Louis Vuitton and Dior men's wear new products continue to be popular among young consumers.

RBC Capital Markets analyst Rogerio Fujimori said earlier that although men's clothing is only a small part of the performance of Louis Vuitton, it can not be underestimated. It has great stimulation to the sales of brand accessories and the high profit core accessories products such as handbags and shoes.

To better approach the millennial generation, Louis Vuitton will open about 100 flash stores around the world this year, 20 more than last year's 80. Virgil Abloh recently launched a webpage called "Endless Runner" on the Louis Vuitton official website, echoing the inspiration of the urban street scene full of retro feeling from the Louis Vuitton 2019 autumn and winter series of culture in 80s. Users can collect Louis Vuitton coins in addition to hurting all kinds of obstacles on the endless runway.

Dior Menswear, under the guidance of Kim Jones, constantly subverts itself, presenting different series from the trend artists KAWS, Japanese sculptor artists, and the American cross border artist Daniel Arsham, inviting Korean designer Yoon Ahn to design jewelry, and then designing costumes for Korean fashion group BTS, Kim Jones completely refreshed the image of the men's wear in just 1 years, from inside to outside branded a distinct personal style, which constantly touched young consumers.

Apart from the head brand, Fendi, Celine and Loewe under the LVMH fashion leather Department also encircle Gucci and Kai Yun group in many ways.

Among them, Italy luxury brand Fendi after the death of the original creative director Karl Lagerfeld, the creative power of the brand was taken over by the founder's granddaughter Silvia Venturini Fendi. To speed up the process of youth, Fendi collaborated with stars such as Xu Weizhou and Wang Jiaer. In May, the first fashion show for men and women was held in Shanghai. It was opened by actor and singer Xu Weizhou, who had 11 million 360 thousand fans in micro-blog, for two consecutive days.

Fendi then joined Tencent to launch the first WeChat game in the fashion industry. With Xu Weizhou as the protagonist, the brand's historical culture and WeChat's understanding of scientific and technological knowledge are integrated. Through the game, the core concept of "Fun fun" brand FENDI FF logo is transmitted to users, and the spirit and value of the brand are understood in the game interaction.

At the same time, the performance of Loro Piana, which is famous for cashmere, continues to rise steadily. The personalized customization service of brand shoes and the boutique flash shop opened in New York have received positive response from consumers. Hedi Slimane's Celine has now officially entered the field of men's wear, and has opened independent stores in major cities such as Paris and Tokyo since the beginning of this year.

The new luxury brand Loewe new product from Celine's original handbag team has been selling well, and RIMOWA has welcomed a good start. Last month, we appointed nearly 75 million Chinese fans from micro-blog to be the spokesperson of China. To the surprise of the industry, LVMH decided to launch a new luxury brand Fenty with Rihanna, which has nearly 80 million fans in social media such as Instagram.

It is reported that Fenty will be the second luxury brand launched by LVMH since its establishment of Christian Lacroix in 1987. It is also the first luxury brand to be launched with female stars. It will be the chief executive and creative director of Rihanna. Jean-Jacques Guiony, chief financial officer, said that the significance of launching Fenty brand to LVMH is more exploration in the new field. Now it is too early to talk about the performance of the brand.

The new modern luxury brand is a collective effort. Bloomberg analysts believe that the performance of the LVMH fashion leather sector is actually a microcosm of the luxury industry, which means that the traditional luxury brands are moving closer to the young people through the introduction of street wave elements and star effect, and gaining new growth momentum.

Maybe it felt the oppression of LVMH fashion leather Department. Gucci continued to add this year. First, it accelerated the layout of home furnishing in April, and opened a series of D home cor Collection flash store in Milan. After 1 months, it announced that it would enter the beauty market in an all-round way and sell the first lipstick product series by Alessandro Michele on official website.

At the beginning of this month, the site of Gucci was officially opened at the high-end jewelry store in 26, Wanda Square, Paris. The first series was named Hortus Deliciarum, which was designed by Alessandro Michele and had more than 200 products, mainly made of colored gemstones, all made in Italy. Fran ois-Henri Pinault, chief executive of Kai Yun group, emphasized earlier that the launch of high-end jewelry series will further enhance the high-end positioning of Gucci. However, from the latest performance data, Gucci's "addition" has not stopped the decline in revenue.

Hermes has also cast its eyes on the beauty cake, and plans to launch its beauty products next year. Axel Dumas said that in order to ensure the quality of products, Hermes's beauty products will be produced in Italy and France, and will extend to the skin care field in the future. In order to avoid conflicts of interest, Axel Dumas retired from the board of L'OREAL group in April.

However, Estee Lauder group, L'OREAL group, LVMH beauty department and Chanel beauty makeup have been regarded as the four largest high-end beauty retailing giants in the world. The high-end cosmetics sold each year account for about 70% of global sales. Hermes will face tough challenges when it enters the office. At the beginning of this month, Chanel's most profitable beauty and perfume business has officially landed on Tmall.

LADYMAX pointed out that the current luxury industry competition is not only a contest of fashion authority, but also the contention of social discourse right. "Sustainable fashion" has become an important barrier that can not be made on the road of luxury brands.

According to fashion business news, LVMH recently acquired some of the equity interest of Stella McCartney, a fashionable environmental protection brand stripped by Kai Yun group. Stella McCartney will continue to be the creative director of the brand, and will also serve as a special adviser to Bernard Arnualt and executive committee to help LVMH achieve better sustainable development.

In the statement, Stella McCartney believes that no investor can compare with LVMH. With the help of LVMH, the brand is expected to stimulate more market potential. The industry is very surprised about the decision of Stella McCartney, and some analysts believe that this means that Stella McCartney has already "turned a blind eye" to its former partner.

LVMH and Kai Yun group are also on the road of "sustainable fashion". In May this year, two important events were held in Europe. They were Copenhagen fashion summit Copenhagen Fashion Summit and Viva Technology summit in Paris, France. The two attracted the attention of the fashion industry.

To be precise, the luxury industry has played a crucial role in the two exhibitions. The silent smoke has been pervasive, and at the same time, Kai Yun group grabbed the right to speak in Copenhagen fashion summit with excellent sustainable development results, and its strong rival LVMH has become the absolute leading role of Viva Technology.

LVMH conveyed a clear signal on the Viva Technology, that is, by paying close attention to AI, AR and block chain, the group's ambition is to become a technology leader in the future luxury industry. The intention behind this is that LVMH also needs a clear public image while the open cloud group is developing sustainable development. Technology is becoming a key card for LVMH to suppress the cloud group.

Kai Yun group issued a statement in the same period, pledged that its brands only recruited models over 18 years of age to participate in its fashion show or fashion blockbuster shooting from 2020. The group is responsible for shaping the best practice model of the luxury industry and launching a whole industry campaign.

After the summit, Kai Yun group issued new animal welfare guidelines. The guidelines were developed by Kai Yun group and animal welfare experts, farmers, herdsmen, scientists and non-governmental organizations for more than three years, covering all aspects of the entire supply chain of the group. The guidelines will be applied to 82 farms in more than 60 countries in the world.

According to analysis, the "sustainable fashion" that LVMH understands is different from Kai Yun group. Its focus is more on the exploration of new and high technology and talents. It aims to better help its brands to achieve sustainable development through new technologies. This coincides with the strategy adopted by Stella McCartney in recent years, and is regarded as the key to promote cooperation between the two sides.

However, the sustainable fashion war will become more and more complex in the future. As LVMH and Kai Yun group continue to invest more in environmental protection and public welfare business, luxury brand Chanel has also announced the acquisition of a minority stake in Evolved by Nature of Boston green chemical company, but the details of the transaction have not yet been disclosed.

Hermes held the first positive response to competitors such as Gucci, Versace and Prada at the shareholders' meeting held in June. He declared that he no longer used animal fur. He said that the guidelines for brand suppliers and farms were more stringent than local regulations, so every farm could respect the health of animals. The brand would also supervise the suppliers and farms in person every month. "This is part of the Hermes culture." He does not think that the use of animal fur is a brand of Hermes, but a public health problem.

On the whole, although the smoke of luxury tycoons in the first half of 2019 is not as strong as that of the same period last year, neither side has relaxed its vigilance.

For the second half of the year, LVMH chairman and chief executive officer Bernard Arnault said that a good start has proved the effectiveness of the group's current strategy. The group's high demand for product quality and continuous creativity are the key to success. In the future, it will continue to invest in its brand and aim at long-term development so as to achieve stable and sustainable growth. Jean-Jacques Guiony emphasized that the more intense the market competition, the greater the group's investment in its brand, so as to be more flexible in the cruel global environment.

Kai Yun group may be aware of the power of brand matrix coordination. While consolidating the status of three brands of Gucci, Yves Saint Laurent and Bottega Veneta in the luxury market, we should explore more potential brands, and expand targeted stores, as well as increase investment in electricity providers, innovation and technology. Hermes estimates that annual revenue will continue to grow at a fixed exchange rate, but no specific data are given.

Under the guidance of the three giants, luxury brands such as Burberry, Mulberry, Tod's group and Salvatore Ferragamo group, the two tier, have begun to explore their new breakthrough.

To be sure, luxury brands have realized that with the change of the meaning of luxury, technology, fabric and design are no longer considered necessary for luxury goods. Expensive and rare materials are not necessarily luxury goods recognized by young consumers, but emotional value and moral value are the only ones. It is possible to achieve new growth if we push the border and do things that are not easy to do and break the traditional thinking of the industry.

Since the beginning of this year, LVMH's stock price has risen by nearly 53%, and its market value is close to 200 billion euros for 191 billion euros, followed by Hermes, with a market capitalization of 66 billion 500 million euros, and Kai Yun group's market value is 58 billion 400 million euros.