LVMH SCORES ANOTHER BIG RETAIL BEAUTY BUY, GETS 30% OF DOUGLAS
PARIS — LVMH Moet Hennessy Louis Vuitton is making another stunning addition to its retail beauty juggernaut — an alliance with Douglas, a leading multibrand retailer based in Germany.
Under an agreement announced Monday, LVMH will acquire a 30 percent stake in Douglas’s retail beauty products subsidiary, Douglas International, while Douglas will take a 30 percent stake in Sephora, France’s biggest perfumery chain, which LVMH acquired in July.
The deal gives Sephora a foothold in the 190 Douglas stores in the Netherlands, Austria, France, Italy, Switzerland and the U.S., but it excludes the almost 400 Douglas stores in Germany.
Douglas International had 1996 sales of $254.9 million (1.52 billion francs) at current exchange.
Sephora has 54 perfumeries in France; its volume in 1996 was $229.7 million (1.37 billion francs), 8 percent of the French prestige fragrance and beauty market. LVMH acquired Sephora for $268.3 million (1.6 billion francs). Based on that number, the 30 percent Douglas is acquiring is worth $80.5 million (480 million francs).
The Douglas deal, LVMH said, will “enhance the value of Sephora and Douglas International through international development of their respective distribution networks.”
LVMH’s distribution network already includes the massive DFS group, with its 180 traveler-oriented retail outlets. LVMH holds a 61.25 percent interest in DFS, having acquired this control in January.
In the first half of this year, DFS contributed $1.16 billion (6.93 billion francs) to LVMH’s volume. DFS’s sales are part of the business sector LVMH calls “selective distribution of luxury products,” which comprises its perfumes and beauty products, including such operations as Christian Dior, Givenchy, Kenzo and Guerlain.
This total sector contributed $1.85 billion (11.06 billion francs) to LVMH’s overall first-half sales of $3.62 billion (21.59 billion francs). Among LVMH’s other businesses are leather goods and luggage — Louis Vuitton, Loewe and Celine; the fashion houses Givenchy, Christian Lacroix and Kenzo, and champagnes and cognacs.
The Sephora buyout came some six months after the DFS acquisition, and at the time LVMH boasted it had become “the world’s leading distributor of perfumes and beauty products.” It became the biggest customer of a number of prestige brands and tightened its control over its own brands.
The Douglas deal also is a testimony to the unstoppable ingenuity of LVMH chairman Bernard Arnault in building what is already the world’s largest conglomerate in luxury goods.
In an interview in July following the Sephora acquisition, Daniel Piette, LVMH managing director and the executive in charge of strategy and operations, was asked what might be the next retail takeover target for LVMH. “I can’t say whether there will be other acquisitions,” he said, “but I can tell you there are not a lot of attractive retailers for sale and not a lot of concepts that are truly new.”
And even as LVMH was putting together the Douglas deal, Arnault was busy preparing a new proposal to link the Moet Hennessy drinks business with those of two unwilling giants, Grand Metropolitan and Guinness, who want to effect their own merger — minus LVMH. An earlier proposal by Arnault was flatly rejected, and Arnault has opposed the Grand Metropolitan-Guinness merger since it was announced in May.