Published September 19, 2011
LVMH to continue investing in Asia-Pac
There will be fewer store openings, but more investment in improving store size
(SINGAPORE) LVMH Moet Hennessy Louis Vuitton SA, the maker of Celine handbags and TAG Heuer watches, will continue to invest in the Asia-Pacific region as it taps demand from growing numbers of the wealthy from the region.
Speaking at the opening of Louis Vuitton's first floating boutique in the world at Marina Bay Sands in Singapore on Saturday, Yves Carcelle, who runs the fashion and leather goods unit, said that there will be less net opening of stores and more investment into improving the size of stores, because 'luxury retail has to be a luxurious experience'.
The company is expanding its store in Manila and adding one level to its Lee Gardens store in Hong Kong to double its floor space, Jean-Baptiste Debains, president of Louis Vuitton Asia-Pacific, said at the opening. It's also making its Sydney outlet 'two or three times bigger' and expanding its store in Ho Chi Minh City in Vietnam, he said.
The biggest market in the world is still Japan, while the No 1 clientele is mainland Chinese, who shop 'a lot' when they travel to places such as Singapore, Hong Kong, Macau and Paris, Mr Carcelle, 63, said.
Luxury goods sales in China are set to rise 18 per cent a year to 180 billion yuan (S$34.88 billion) between 2010 and 2015, consultant McKinsey & Co has estimated. Cie Financiere Richemont SA said this month that it sees no signs that demand is weakening in the country, after posting a 46 per cent increase in Asia-Pacific sales in the five months through August.
In India, 'one of the things that slows down the penetration of luxury and of course investment is the fact that today the global infrastructure, and especially the commercial infrastructure, are missing,' Mr Carcelle said. Allowing companies to own a maximum of only 51 per cent of shares in retail companies is holding back foreign investment in the country, he said.
Mr Carcelle also sees no signs of slowing demand for luxury products in Europe or America.
'Even in period of crisis, people want to treat themselves,' Mr Carcelle said. 'We don't see any signs of slowing down whether it's in Europe or in America. The world of luxury doesn't obey the same rules.'
LVMH has lost 6.4 per cent to 115.25 euros in Paris trading this year, giving the maker of Moet & Chandon champagne and US$6,000 TAG Heuer chronographs a market value of 58.6 billion euros (S$100.33 billion).
Two weeks ago, LVMH named former Danone SA executive Jordi Constans to replace Mr Carcelle as head of Louis Vuitton at the end of 2012. Mr Constans, 47, will work next year with Mr Carcelle to familiarise himself with LVMH and the Vuitton brand, which Mr Carcelle has led since 1990.
Mr Carcelle will become president of Fondation Louis Vuitton, an art museum that's slated to open in 2013, LVMH said. He will remain on LVMH's executive board and undertake strategic roles alongside chairman Bernard Arnault, the company said.
'The succession of Mr Carcelle had to happen one day,' Pierre Lamelin, an analyst at CA Cheuvreux, wrote in a Sept 15 note to clients. 'We are reassured by the smooth transition process over 18 months and believe that Mr Constans has the management and brand-building skills required by the top job at Louis Vuitton.'
Net income climbed 25 per cent to 1.31 billion euros in the first half, the Paris-based company said in July. The average estimate of five analysts surveyed by Bloomberg was for profit of 1.25 billion euros. Second-quarter sales advanced 9 per cent to 5.05 billion euros. -- Bloomberg
Mr Carcelle: 'We don't see any signs of slowing down whether it's in Europe or in America. The world of luxury doesn't obey the same rules.'
The biggest market in the world is still Japan, while the No 1 clientele is mainland Chinese, who shop 'a lot' when they travel to places such as Singapore, Hong Kong, Macau and Paris, Mr Carcelle, 63, said__________________________________
My observations & thots......
1) Biggest mkt is still Japan after decades of deflation!!
2) No 1 clientele is mainland Chinese, and they are NOT shopping in mainland China !!
3) Luxury bizs don't obey the same rules?
- up to a certain point, perhaps ?
- and evidently, the likes of LVMH are not feeling the pinch from current market forces yet.