By Miles Socha
with contributions from Luisa Zargani
 on October 4, 2016
Rimowa campaign image

PARIS — Artist collaborations, digital features and a push into the U.S. are among probable new growth avenues for elite luggage maker Rimowa in the wake of its acquisition by LVMH Moët Hennessy Louis Vuitton.

This story first appeared in the October 5, 2016 issue of WWD. Subscribe Today.

Investors smiled on the deal, which values the German firm at 640 million euros, or $719 million. Shares in LVMH, which took an 80 percent stake in the family-controlled luggage firm, rose 3 percent on Tuesday to close at 156.60 euros, or $175.39.

The deal thrusts LVMH into the robust travel sector — and LVMH chairman and chief executive officer Bernard Arnault’s 24-year-old son Alexandre into his first executive role.

He is to move to Cologne and become co-chief executive officer alongside Dieter Morszeck upon completion of the deal, expected in January.

“It has all the values of LVMH — a strong link to craftsmanship, quality and a strong link to innovation,” Alexandre Arnault said. “We have the exact same DNA, the same values and the same spirit.”

An engineering student, Arnault recently completed his studies, including a master’s degree in innovation at the elite Paris school Polytechnique. He also studied computer science at Télécom ParisTech.

He spent half his time getting acclimated to the family business, devoted mainly to missions alongside Ian Rogers, LVMH’s chief digital officer. Earlier this year, he spent six months at Fendi with its ceo, Pietro Beccari.

The luxury scion recounted how his personal appreciation for Rimowa prompted him to write to Morszeck, grandson of the founder, about two years ago, just to introduce himself.

An invitation to tour Rimowa’s headquarters — and production facilities in Germany, Czech Republic and Canada — followed, and was reciprocated as Arnault guided Morszeck through Louis Vuitton’s leather workshops in Asnières-sur-Seine, near Paris, and in the Drôme region.

Not long after, Morszeck proposed that LVMH invest in the company, telling Arnault he had earned his trust and considered the French luxury group the best partner to help Rimowa reach its full potential.

The transaction mirrors LVMH’s 2013 investment in Loro Piana, another family-controlled firm.

Arnault related that his father and other members of his family shared his enthusiasm for Rimowa, renowned for its sleek and lightweight suitcases and a string of innovations and patents.

“I’m very passionate about the product itself, and I’m attracted to the fact that Rimowa, like LVMH, is an entrepreneurial business,” he explained.

Founded in 1898, Rimowa is credited with launching the first suitcases in aluminum and polycarbonate, in 1937 and 2000, respectively. Four-wheel designs and waterproofing are other breakthroughs.

More recently it introduced a case with an electronic tag that links it to a smartphone via Bluetooth, simplifying the check-in process.

Arnault said further digital innovations, collaborations and new materials would fan Rimowa’s leadership.

While acknowledging the brand’s popularity among the fashion crowd — as anyone who’s waited at an airport carousel during fashion weeks in Europe can attest — he said “we are not going to become a fashion company. But we see this trend and we’re going to capitalize on it.”

Well-known in Germany and Asia and identifiable by its grooved sides, Rimowa still harbors “a lot of potential in the U.S. and the rest of Europe,” Arnault said.

For example, the brand operates only four stores in America: New York, Miami, Boston and Los Angeles.

In June, it opened a unit on New Bond Street in London opposite Louis Vuitton, and later this year it will open a boutique on Rue du Faubourg Saint-Honoré in Paris facing the Bristol hotel.

Rimowa counts about 150 stores and is expected to generate revenues this year of more than 400 million euros, or $450 million. In 1980, Rimowa’s revenues were estimated at 3 million euros. It is understood the brand has outperformed the luggage market over the last decade.

It is the first German company to be acquired by LVMH, parent of such brands as Fendi, Marc Jacobs, Givenchy, Kenzo, Bulgari, Tag Heuer, Guerlain, Dom Perignon and Sephora.

“By entrusting this family venture to the LVMH Group, we are guaranteeing a promising future to all Rimowa employees,” said Morszeck, who has been with the company 44 years.

He expressed confidence in Alexandre Arnault’s ability “to accelerate the development of the business by my side.”

The company employs about 3,000 people worldwide and produces mainly in Germany, where artisans manually hammer into shape the aluminum cases.

According to LVMH, the global luggage market has been growing about 5 percent a year for five years, fueled by the surge in Asian travelers.

The number of Chinese outbound travelers is expected to increase by almost 50 percent over the next four years, according to the World Travel & Tourism Council.