LVMH gives designer Virgil Abloh bigger role and buys stake in Off-White

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(Bloomberg) – LVMH entrusts rising star designer Virgil Abloh with the task of building brands and entering new business segments, underlining the luxury conglomerate’s desire to capture a younger and more diverse clientele.

As part of the deal, LVMH will buy a 60% stake in Abloh’s street fashion brand Off-White for an undisclosed price. Besides his expanded role, Abloh will continue as creative director of the Louis Vuitton menswear line, the French company said on Tuesday.

LVMH founder Bernard Arnault is trying to bring together the disparate parts of his empire, recently expanding with the purchase of a 50% stake in Jay-Z’s Champagne Armand de Brignac and preparing to open in September from a Cheval Blanc hotel next to the La Samaritaine department store. in Paris. Through L Catterton, a private equity fund backed by his fortune, Arnault has also made notable purchases such as German sandal maker Birkenstock for € 4 billion ($ 4.7 billion).

It is to move away from the more traditional classics of Dior and Louis Vuitton which made Arnault one of the richest men in the world. New companies like Off-White compensate for LVMH’s fashion and leather goods unit, which still generates more than 60% of the group’s total profit.

Street-Smart

Abloh, whose street-smart fashion contrasts with some of LVMH’s more traditional brands, is part of a new generation of luxury geniuses. LVMH will be able to help Off-White expand into new categories beyond fashion, according to Abloh, who said the partnership’s goal was more “disruption.”

The designer is emerging as one of the most powerful black executives in the luxury industry. LVMH, whose executive committee is entirely white and includes only two women, is betting that its collaboration with the social media star will keep its finger on the minds of trends ranging from video games and streetwear to concerns about diversity and inclusion. Abloh has over 6 million followers on Instagram, far more than other creative directors at Louis Vuitton and Christian Dior.

LVMH’s recent experiments with flagship brands have not always worked. A collaboration to create a ready-to-wear line with Rihanna has been put on hold because the brand failed to attract enough customers during lockdowns.

Abloh met Michael Burke, the president of Louis Vuitton and Tiffany, during an internship at Fendi in 2007.

“By breaking down boundaries and proclaiming a deeply inclusive philosophy, Virgil has extended the reach of the luxury world of Louis Vuitton,” Burke said in the statement.

The French luxury conglomerate founded by billionaire Bernard Arnault has withstood the pandemic better than its peers thanks to its fashion and leather goods unit. While the group is expected to release its second quarter results next week, analysts are already focusing on the third quarter forecast, wondering how the appetite for luxury is improving.

Concerns about the economic recovery sent stocks plunging on Monday, with LVMH slipping 2.2%. However, the title has still risen 55% in the past year.

LVMH was on the hunt for acquisitions after finalizing its record-breaking purchase of Tiffany in January. Last week, LVMH also announced that it would take a minority stake in the eponymous brand from Phoebe Philo. Philo was Creative Director at Céline until 2018 and his creations have a loyal following.

(Updates with details on Abloh, his role throughout)

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