MILAN — Loro Piana, a prized Italian firm that combines exclusive craftsmanship and technology, is entering the LVMH Moët Hennessy Louis Vuitton luxury sphere. The French giant is buying an 80 percent stake in Loro Piana for 2 billion euros, or $2.56 billion at current exchange. The enterprise value totals 2.7 billion euros, or $3.4 billion. Brothers Sergio and Pier Luigi Loro Piana will continue to helm the firm and maintain a 20 percent stake. Antitrust clearance is expected in the fourth quarter, followed by the official closing.
Chairman Pier Luigi Loro Piana said, “The Loro Piana family is proud that our name is now associated with the LVMH group. Under Bernard Arnault’s leadership, LVMH has proved that it respects and nurtures family businesses and is most likely to respect the values and traditions of our maison, as well as our desire to provide our clientele with unparalleled quality.”
Sergio Loro Piana, chief executive officer, added, “By joining LVMH, a group built around a unique set of other historic maisons, Loro Piana will benefit from exceptional synergies while preserving its traditional heritage.” Until now, the two brothers rotated their posts on a three-year basis.
LVMH chairman Bernard Arnault said, “Loro Piana is an exceptionally rare maison, rare in the unique quality and craftsmanship in its products, not least in cashmere and fine textiles, but also in the unbroken heritage and careful family husbandry over six generations.” Arnault said he was “very pleased” that the Loro Pianas believed the LVMH group “is best able to ensure the future” of their firm. “Indeed, we share the same values — family and craftsmanship allied to the tireless pursuit of quality — and I am convinced that our group will prove a good home in realizing the significant future potential of Loro Piana.”
In a document released upon the announcement of the sale, Loro Piana was described as “the largest cashmere manufacturer and the biggest single purchaser of the world’s finest wools.” It also highlighted its unique brand equity, vertically integrated from access to the finest raw materials to distribution and an entirely made-in-Italy policy.
Based in Quarona, Italy, the company closed 2012 with sales of 630 million euros, or $806.4 million at average exchange, up 13.1 percent compared with the previous year. The firm is expected to close 2013 with sales of 700 million euros, or $898 million, with earnings before interest, taxes, depreciation and amortization representing more than 20 percent of sales.
During a conference call, LVMH identified leather goods as a chief avenue for future expansion, along with further retail inroads in Asia, particularly Mainland China and the Middle East.
Chief financial officer Jean-Jacques Guiony characterized Loro Piana as “a bit different from the other brands we have,” calling it a “well-kept secret” with more “understated marketing.”
The top-of-mind brands in LVMH’s fashion and leather goods division, which include Louis Vuitton, Fendi, Givenchy and Céline, are known for their star designers, big-budget runway shows and trendsetting fashions.
Guiony called Loro Piana a “well-managed” company in possession of a “good recipe for success.”
That said, he noted LVMH plans to leverage its expertise with leather goods to bring that product category above the single-digit percentage it represents today.
Questioned about LVMH’s acquisitions policy, Guiony described it in a word: opportunistic.
“We move when we find an exceptional brand and with which we feel we can do something,” he said. “This is an exceptional asset.”
Guiony said the group would likely divert some of the firm’s exceptional textiles and yarns to its own brands, while continuing to do business with third parties. He noted that the “bulk” of Loro Piana’s textiles and yarns business “counts as Italian sales.”
The transaction is the latest signal that Europe’s big luxury groups are keen to secure suppliers of the rare raw materials and technical know-how needed to make their high-margin products.
The quality attributes of luxury products — and not just design and prestige — is becoming a primary talking point for consumers and investors alike.
According to sources, Antoine Arnault, son of Bernard Arnault and the ceo of Berluti, was instrumental in the Loro Piana deal, reflecting his rising stature within the world’s largest luxury group. It also suggests the young Arnault might leverage Loro Piana’s arsenal of plush and rare fabrics in his makeover of Berluti, an elite cobbler he is transforming into a lifestyle label with a complete ready-to-wear offer hinged on exceptional fabric research.
The Loro Piana family began trading wool and fine textiles at the beginning of the 19th century in Trivero, in northern Italy. Pietro Loro Piana founded the company as a wool mill in 1924 in the country’s Quarona. In the mid-Forties, Franco Loro Piana started exporting precious textiles outside of Italy, an activity further developed by his sons Sergio and Pier Luigi in the Seventies, when they started helming the firm and expanding into luxury retail operations.
The company offers exclusive men’s and women’s wear lines. It manufactures for its own use and supplies high-end garment manufacturers.
Loro Piana has for more than a decade awarded the World Wool Record Challenge Cup determining the world’s finest wool. Though the company has equally strong reputations in cashmere, vicuna and the lotus flower fabric, the Loro Piana contest spurs breeders to produce finer, higher-quality fiber each year.
This spring, Loro Piana acquired 60 percent of vicuna firm Sanin SA as part of the Italian group’s efforts to invest in the research and development of the finest yarns and fabrics. Sanin is an Argentinean company that owns the right to shear wild vicunas living on a territory of 210,000 acres in the province of Catamarca, Argentina.
The company established the Franco Loro Piana Reserve in the Lucana area in Peru in 2008 and has significantly contributed to saving vicunas from extinction.
Operating profit has grown from 24.7 million euros in 2009 to 97.9 million euros last year.
In 2012, exports accounted for 81 percent of sales. Excluding Italy, Europe accounted for 27 percent of total revenues and Asia for 30 percent of sales. China showed a 34 percent gain. North America accounted for 22 percent of sales, posting a 24 percent increase. “The U.S. market is very positive for us. In terms of the number of customers, Americans top the list, followed by the Chinese,” said Loro Piana in May, touting a balanced distribution of sales around the world. The group’s retail channel, which comprises over 130 stores, showed a 20 percent increase in 2012. There are 24 units in Japan, 31 in the rest of Asia and 21 venues in the U.S.
In terms of business divisions, textiles accounted for 32 percent of sales, and luxury goods for the rest.
LVMH said the 2 billion euro amount will be paid in 2013, financed by available cash and new debt. It also noted a limited impact on its debt profile and debt related ratios.
Citigroup analyst Thomas Chauvet wrote in a note that the sale “should be viewed as a positive, opportunistic deal for LVMH to acquire at a ‘reasonable price’ a niche, ultrahigh-end apparel brand with a lot of heritage, a sound management team and some strategic sourcing competencies. With midteens EBIT margins, we think Loro Piana has a potential to grow sales and EBIT significantly in the niche, fast-growing luxury daywear segment as well as creating some industrial synergies with the rest of LVMH’s Fashion & Leather brands (sourcing of textiles for Vuitton, Berluti).”
There'll be no rest for those headed to Europe for men's, as Paris just closed the gap with Milan. According to a provisional calendar released by the Chambre Syndicale, Paris Men's Week will now open a day earlier on January 16. See new highlights on the official lineup on WWD.com. #wwdnews #wwdfashion (📷: @kukukuba)
BREAKING: Jonathan Saunders is leaving @DVF. The designer has resigned from his position as chief creative officer of Diane von Furstenberg, the company said in a statement on Friday. At the time of his hire, von Furstenberg said Saunders’ arrival symbolized and facilitated her stepping back from the day-to-day duties that occupy the work of a full-time creative director. The British designer joined DVF in May 2016 and was in charge of all product categories. #wwdnews
For @versace_official’s spring ad campaign, the brand emphasized the archival prints from the spring tribute collection dedicated to the late Gianni Versace. Closing out the show were five of Gianni’s favorite models: Cindy, Naomi, Carla, Helena, and Claudia. Bowing on December 18, the new campaign is yet another tribute to supermodel-dom as the images by Steven Meisel are fronted by @iamnaomicampbell, @cturlington, @gisele and more. #wwdfashion
Four-time Oscar-nominated actress Annette Bening has been waiting 20 years to play Gloria Graham in "Film Stars Don't Die in Liverpool," which will be released on December 29. The movie about Graham – a Hollywood star known for her controversial relationship with a younger Englishman named Peter Turner – is based off a memoir Turned wrote. "She felt vulnerable to him, because she loved him, she really did love him. And anyone that we really truly are in love with, we re vulnerable to in a very deep way," said Bening. Read our full interview with the modern icon of an actress on WWD.com. #wwdeye (📷: @ninebagatelles; Styled by @cristinaehrlich)
The crisp white button down: a staple that can be dressed up or down and accessorized throughout the decades. Here, on a Art Basel-goer in 2017 on the left and on the iconic Audrey Hepburn in “Roman Holiday” in 1953 on the right. #tbt #wwdfashion (📷: Andrew Morales)
Known for her work with @victoriassecret, 25-year-old model @georgiafowler is raising her profile in Hollywood. Fowler stars in @vincecamuto’s holiday campaign, which launched in partnership with “Pitch Perfect 3.” “Almost every shoot with Vince Camuto, I’ve had to face a fear…It was definitely a challenge. I’m so grateful for it, though. I’ve always wanted to be a pop star, so that was the perfect chance,” Fowler said. Head to WWD.com to read about Fowler’s experience modeling, including at the #VSFashionShow, and her relationship with Nick Jonas. #wwdeye (📷: @jilliansollazzo)
EXCLUSIVE: Huda Kattan just became the first beauty influencer to land a major beauty deal. Kattan's business, @hudabeauty, has received a minority investment from private equity firm TSG Consumer Partners. The brand, which industry sources say is on track to do $200 million in retail sales for 2017, will receive support on product, retail and geographic expansion through the deal. Get all the details on the deal and read @_a_collins' interview with Kattan on WWD.com. Link in bio. (📷: @jgreenery) #wwdbeauty #wwdnews
Peruvian model @juanaburga_official – who is known for walking the runways of @rodarte, @viviennewestwood and @torybuch – is making the move to the big screen with drama “Los Últimos.” The film premiered in Argentina in November and arrives in the U.S. and Europe in 2018. On making the switch from modeling to acting, Burga told WWD: “It’s a completely different thing – a lot of people think it’s similar or try to connect things, especially like getting used to the camera or being looked at all the time or playing these different characrers, but film is a completely different story.” #wwdeye (📷: @jgreenery)
London’s newly opened @designmuseum will look back on the life and work of Azzedine Alaïa in a show that the designer helped to curate before he died of heart failure last month. The retrospective, which Alaïa had worked on with Mark Wilson, chief curator of the @groningermuseum, will look at the impact of his work worldwide. The show, “Azzedine Alaïa: The Couturier,” will run from May 10 to October 7. Read more about the exhibit on WWD.com #wwdnews #wwdfashion (📷: @zefashioninsider)