Why Does LVMH Cooperate With Stella Mccartney?

More than a year after the French luxury group Kering SA separated from Stella McCartney, its main rival, LVMH, signed an agreement with the sustainable fashion brand.

Although the two companies will not disclose all the details of the new agreement until September, Lu Wei said that Stella McCartney will continue to be the creative director of the brand and retain majority interest. Lu Wei Hun Xuan is willing to hold a minority stake in the acquisition, which is very rare in the past.

Prior to that, Stella McCartney bought 50% of its brand name from Kai Yun group last March and terminated its cooperation with Kai Yun group for 17 years. Lu Wei Hun Xuan and Kai Yun are old rivals in the fashion business field, but it is not unusual to deal with similar brand ownership changes.

Stella McCartney said in a statement that she has been in touch with many investors since she left the cloud group, but "no one compares with my communication with Bernard Arnault and its sub Antoine". The two men she mentioned were the chairman of the board of directors of Lu Wei Mo Xuan and his eldest son, chief executive officer of Berluti and chairman of the board of directors of Loro Piana.

The investment in Stella McCartney aims to accelerate the global growth of the brand, Lu Wei Hun said. Bernard Arnault said, "we believe her company has great potential." However, the size of the Stella McCartney brand is just a drop in the bucket compared with the whole group. The group's annual revenue in 2018 reached a record 46 billion euros.

Kai Yun group did not announce its financial performance, but it is estimated that Stella McCartney's annual revenue is about 300 million euros. (through brand cooperation strategy, such as sports brand cooperation with Adidas, Stella McCartney's retail price is expected to further improve).

Stella McCartney brand always has a good reputation in the discussion of consumers and regulators around sustainable and moral fashion. McCartney has always been a vegetarian and actively advocates the protection of animal rights. Her product does not use leather, fur or other animal products. It may be a benchmark for sustainable development in the luxury goods industry.

Many people think that the fashion industry's efforts to change its image are far from enough. A report recently released by Global Fashion Agenda, Boston Consulting Group and Fashion Apparel Coalition shows that the efforts made by the fashion industry to reduce the negative impact on social and environmental problems are disproportionate to the rapid growth of the industry.

In this respect, Lu Wei Mo Xuan has been lagging behind Kai Yun. The latter will publish the environmental profit and loss report every year, and has launched an initiative authorized by French President Ma long, calling on the whole industry to focus on sustainable development goals. Gucci, the most profitable brand of Kai Yun, announced in 2017 that it would no longer use animal fur.

Speaking of cooperation with Stella McCartney, Arnault said: "one of the decisive factors is that she put the agenda of sustainable development and morality on the agenda as early as possible. This emphasizes LVMH group's commitment to sustainable development. Lu Wei Ming Xuan is the first French company to establish sustainable development department, which was 25 years ago. Now, Stella will help us further enhance our understanding of these important issues. "

As part of the agreement, McCartney will serve as a special adviser on the sustainable development of the Group Executive Committee.

Mario Ortelli, an industry analyst, said: "this is another concrete measure taken by the group to regard sustainable development as a trend of structural investment. Obviously, the deal will not affect the financial situation of Lu Wei Hun Xuan.

Lu Wei Ming Xuan's attempts to enter the field of moral fashion ended in failure. Last summer, Lu Wei Ming Xuan withdrew from the bankrupt African local brand Edun and transferred 49% of the shares to its founder Ali Hewson and Bono after the brand ceased operation.

Statement: Lu Wei Mo Xuan shares a small share of The Business of Fashion with other investors. All investors have signed shareholder documents to ensure that BoF has fully independent acquisition rights. Authors: Sarah Kent? Laure Guilbault