LVMH to control and simplify Christian Dior
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LVMH to control and simplify Christian Dior

The world’s largest luxury company, Moët Hennessy Louis Vuitton (LVMH), is taking control of iconic fashion house Christian Dior. The deal, completed for €12.1 billion, will see LVMH’s chairman and CEO Bernard Arnault cough up a combination of cash and Hermes International shares in order to fold Dior into the LVMH stable of brands. LVMH’s share price, which has had a consistently solid year, jumped on the news.

LVMH’s share price has risen 24% this year

lvmh

SOURCE: Yahoo Finance

The move will simplify Dior’s structure. LVMH has owned Christian Dior Parfums for some time, and also has a significant stake in Dior itself. Stephen Mitchell, head of strategy for global equities at Jupiter Asset Management, told interviewers:

“Reuniting Christian Dior Couture and Christian Dior Parfums, so one brand under one leadership, has to be a good thing for LVMH shareholders. It does clean up the corporate structure.”

Arnault told reporters at the press conference: “This is an operation that shows our confidence in the French economy as well in LVMH going forward. It will allow us to increase the synergies that already exist between LVMH and Christian Dior Couture.”

However, while the business structure may simplify, the creative elements of Dior will likely remain. In the past, LVMH brands have been able to retain their individuality – and as the luxury sector looks to be picking up, having the iconic brand remain recognizable will likely be a winning move. Sydney Toledano, Dior’s CEO, said:

“As with creativity and product development, I believe that the Dior touch has to remain distinct in production.”

Disclosure

Dominion holds LVMH and Hermes International in its Global Trends Luxury Fund.


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