Louis Vuitton own designs slowdown

  For the first time in two years, Louis Vuitton launches next month, the doors of his studio in 1859 Open in Paris, invited the audience to "discover the exceptional know-how in this iconic resort."

The distinctive luxury suitcases and bags in Asnières and other workshops are the key drivers of profitability LVMH. However, Louis Vuitton has in the recent months, spitting, after a dramatic increase in the last two decades, high on the back of rapid growth in the number of stores and Outlet bags profit.

Analysts believe that Louis Vuitton is one-half of the operating profit of LVMH. Its slow sales led declines in sales and share price underperformance in the past six months.

Overreacts for Bernard Arnault, chairman and CEO, investors and the market. He told shareholders last month that the slowdown reflects lower demand, but it was designed by LVMH itself.

"At the risk of insulting towards those who [rate] revenue growth of Louis Vuitton is not a problem," he told shareholders at the annual meeting of the group. "Why is the fashion and leather goods rose 3 percent and 10 percent? This is because of a deliberate strategy."

Mr. Arnault said Louis Vuitton had put a stop to the opening of new stores, avoid over distribution. He and Michael Burke - New Head Vuitton since December - decided to develop more leather bags instead of bags iconic brand logo. Sales of leather were so good that Vuitton had trouble deliveries, he said.

Some analysts believe that upgrading is essential is his to keep for Louis Vuitton is an exclusive image. In this sense, the question of a conscious strategy is making a virtue of necessity, they say.

Organic sales growth Louis Vuitton rose 3 percent in the first quarter - well below the 10 percent annual increase in the last ten years. Similar to other product groups, LVMH has been affected by the economic slowdown in China, but the slowdown was had but much stronger than analysts expected.

The risk for mega brands, analysts say HSBC is "ubiquity -., The idea that the consumer to see the same products in the world, begins to feel like a brand" Too often, "We believe that the main victims of this topic Louis Vuitton, Gucci and Burberry as customers in developed economies, and even chinese [main] are The cities are less likely Products" logo to buy.

To avoid this, Louis Vuitton has the rate of new store openings reduced to two per year on average from 10-15. Its extensive network of 460 branches of Mongolia and Kazakhstan. The increase in revenue due to fewer stores should increase the profitability of each store.

It also moves its high-end bags in response to the tastes of the most demanding consumers, produces more leather and exotic skin bags.

Luca Solca, an analyst at Exane BNP Paribas, the motion of the multi-layer of Mercedes, the high-end and low-end models introduced around his car compares mainstream e-class strategy pursued.

The question is "informed consumers will prefer to buy high-end versions of the mega-brands such as LV in the future, or will they buy instead of niche brands" pure "premium such as Hermes," he asks.

Niche brands are strong, including increased Goyard, Bottega Veneta Celine PPR and LVMH. Mr. Arnault told shareholders that Celine was not on the "radar" Five years ago, but now joked that her daughter Delphine, often wore the brand, despite their alleged affiliation to Christian Dior LVMH, which is an administrator.

The problem says Solca is that LVMH's Celine previously held about Louis Vuitton, Bottega Veneta, unlike PPR, which has grown rapidly for a number of years, as an alternative high-end groom's Gucci brand.

"Chinese customers are increasingly demanding faster than expected luxury companies, while the economic slowdown in China has reduced the speed with which the new rich created and that would normally buy bags," says M. Solca.

However, analysts believe that Morgan Stanley pessimism is overdone and this month on their price target for LVMH 7 percent upgrade to € 162 per share, arguing that LVMH is expected to move faster than the market.

Fewer new openings will also return cash to shareholders could be free, they said.

For Mr. Arnault, what is at stake is the transformation of one of the greatest achievements in the industry. "What interests me is that in 15 years, Louis Vuitton is always the first luxury brand," he said.