Less Fashion Market, Louis Vuitton Parent Considers Selling Marc Jacobs

JAKARTA - Louis Vuitton's parent company, LVMH, plans to sell their fashion brand, Marc Jacobs, as the luxury product giant faces a decline in demand.

The Paris-based conglomerate oversees various brands including Louis Vuitton, Dior, and Mo total Hennessy, having approached potential buyers, including Reebok owner Authentic Brands, regarding the sale of its fashion label since 1997.

As reported by the Financial Times, Saturday, July 26, the person familiar with the matter said LVMH CEO Bernard Arnault was exploring the sale of the Marc Jacobs brand due to declining demand for high-end goods.

The group's share prices have fallen 19% over the past year, driven by a decline in the luxury goods sector. LVMH and its competitors have been harmed by a combination of trade uncertainty affecting consumers around the world, weakening demand from Chinese buyers, and rising prices have made US consumers reluctant to buy luxury goods.

The negotiations, which were first reported by The Wall Street Journal, are still ongoing and there is no guarantee that a deal will be reached, the source said. LVMH and Authentic Brands declined to comment.

LVMH said its operating profit fell 15% slightly above the 9 billion mark in the first half of this year, slightly better performance than analysts forecast. The core business of fashion and LVMH leather goods reported a sharp decline in quarterly sales, highlighting the weakening demand for luxury goods following a period of rising prices and rising economic uncertainty.

In financial reports, LVMH's chief financial officer, Cécile Cabanis, said that the company is open to selling brands that are not in accordance with its portfolio. This refers to the decision to release shares on the Off-White fashion labels and Stella McCartney last year.

"We're not going to keep the brand if we're sure the brand isn't a good addition, or we're not the right operator to operate it," Cabanis said.

LVMH's last big deal was the acquisition of US jewelry company Tiffany, worth US$ 16.2 billion. The company was founded in 1984 by Marc Jacobs, the eponim brand, known for its luxury designer bags and accessories.

Jacobs served as LVMH creative director between 1997 and 2014. In the midst of sluggish transaction activities, the Italian fashion group, Prada, reached an agreement worth US$ 1.38 billion to buy rivals, Versace, from Capri Holdings, at a price of US$ 200 million.