LVMH’s fashion sales drop 9% in Q2

“This topic is beyond Loro Piana. It’s a topic that the full industry in Italy is facing and it’s something that we will all have to manage collectively with the associations, with the government. In the meantime, for us it’s very clear we are reinforcing control. We are reinforcing the way we look at the relationship and the way we are going to control, in terms of how we audit. But it’s not a Loro Piana issue,” Cabanis continued.

Cabanis was asked whether or not the findings would harm Loro Piana’s image: “It’s not going to create and it shouldn’t create an impact on the image, because it’s not what happened. Still, we need to make sure that, collectively, we can solve or at least improve the situation of the industry. There should be very fair practices and a clean supply chain. Obviously there is still progress to be made.”

LVMH has other pressing challenges as it works to turn around a string of quarterly declines. HSBC describes Louis Vuitton as “LVMH’s big issue” in a 12 June note, citing “a schizophrenic pull between low end (chocolate, beauty) and high end (exclusive leather ranges), fashion content (Murakami) and more subtle travel-related luxury items”. HSBC analysts are asking: “What does LV really stand for? Who is it targeting? What is its USP?”

On Thursday, Cabanis dismissed concerns about the portfolio sprawl by emphasising that 60 per cent of Louis Vuitton’s portfolio is leather goods. “But having said that, the brand is very much focused on bringing more sophisticated products. But you also need to connect with the younger generation. You also need to have some offer where you can meet them, onboard them and then they can go through your value later. And we refuse to do that with cheap bags,” said Cabanis.

Instead, Louis Vuitton uses accessible product categories such as perfume and small leather goods. “We are working on bringing the best product and with that making sure that the value that is in the product is recognised by our clients. That’s really what we do and what we will continue to do because Louis Vuitton has continued to gain market share and if you remove the current context, something where Louis Vuitton has been leading for a while in the industry,” said Cabanis.  She added that Louis Vuitton’s new stores on New York’s 57th Street, Dubai and Macau are growing sales in the double digits and stressed the house’s “financial muscle”.

Cabanis noted that for the rest of the year, the comparison basis will start improving in China in July but will be tougher in the US in Q4, given last year’s post-election surge in luxury goods demand. Arnault said in a statement: “We head into the second half of the year with great vigilance, and I am confident in LVMH’s tremendous long-term potential and the commitment of our teams to further reinforce the group’s leadership position in luxury goods. Our main shared priority is about offering our customers the most exceptional products.”

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