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PARIS — Recalling luxury’s glory days of acquisition mania, Bernard Arnault used the occasion of LVMH Moët Hennessy Louis Vuitton’s annual shareholders’ meeting Thursday to reveal a deal.
This story first appeared in the May 15, 2009 issue of WWD. Subscribe Today.
The French luxury giant said it took a minority stake in Edun, the eco-luxury label founded in 2005 by U2 rocker Bono and his wife Ali Hewson.
Financial details were not disclosed, but sources pegged the stake at 45 percent and Edun’s revenues at less than $10 million.
At the meeting, Arnault said LVMH would play a “very active role” in the development of the brand.
Edun represents a small, but high-profile company for LVMH at a time when luxury players are keen to promote their sensitivity to social and environmental issues. Next month, rival PPR will unveil its eco film “Home” by Yann Arthus-Bertrand.
Edun, designed by Hewson and Sharon Blankson, U2’s longtime stylist and new creative director at the contemporary firm, uses organic fabrics and fosters sustainable employment by producing in India, Peru, Tunisia, Kenya, Uganda, Lesotho, Madagascar and Tanzania.
The Edun company, which recently experimented with pop-up shops, employs about 20 people in New York and six in Ireland. The business will now fall under the purview of Mark Weber, chief executive officer of LVMH Inc. and chairman and ceo of Donna Karan International.
Sounding relaxed and upbeat at the meeting, Arnault trumpeted the resilience of the group amid the global recession and voiced optimism for a rebound soon, stopping short of giving specific forecasts. He reminded the audience, spread over two rooms at the Carrousel du Louvre, that first-quarter revenues gained 0.4 percent to 4.02 billion euros, or $5.26 billion, and said “April continues this trend, with a very slight improvement.”
He noted “there are positive elements,” citing as an example, recent improvements in the wines and spirits division, hard-hit the last quarter, and robust sales of Vuitton’s Stephen Sprouse tribute leather goods, and Christian Dior’s Escale à Portofino perfume — to be followed up with Escale à Pondichéry. “I think confidence will come back quickly,” he said.
Arnault touted the benefits of globalization, noting China represents its second-biggest market for wines and spirits and the number-two clientele for Vuitton.
He asserted LVMH would emerge stronger and further ahead of the competition when the crisis ebbs by staying the course: focusing on product innovation, sustained communications and high quality, the latter being “an absolutely essential element to the success of the group and a pillar of our strategy.”
Characterizing steep discounts of designer products at American department stores as a “big deception,” Arnault said Vuitton benefits from the credibility of its never-on-sale policy.
At the meeting, and one later in the day for shareholders of LVMH parent Christian Dior SA, the luxury titan fielded questions about counterfeiting. He trumpeted a victory last year in French court, which ordered eBay to pay 38.9 million euros, or $61.3 million, to LVMH for allowing the sale of counterfeit products and the unlawful sales of authentic fragrances belonging to its stable of brands.
Arnault lauded French Web site PriceMinister.com for investing in screening out counterfeiters, which its American counterpart eBay does not, “for reasons of profitability.”
Asked if LVMH might shed some of its weaker brands, Arnault said nothing was planned, underscoring a “weak market” for mergers and acquisitions.