Kering vs LVMH: Luxury Fashion Giants Compared

Kering and LVMH are two of the most powerful players in the luxury fashion industry, with a combined market value of over $300 billion.

Kering was founded in 1963 by the Pinault family, while LVMH was formed in 1987 through the merger of Moët Hennessy and Louis Vuitton.

Kering's portfolio includes iconic brands like Gucci, Yves Saint Laurent, and Alexander McQueen, while LVMH boasts a diverse range of luxury labels, including Louis Vuitton, Christian Dior, and Givenchy.

Both companies have a strong presence in the global luxury market, with a combined revenue of over $60 billion in 2020.

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Kering and LVMH are two of the largest luxury goods companies in the world.

Kering, a French multinational corporation, was founded in 1963 by François Pinault and has since grown into a global leader in the luxury industry.

The company's portfolio includes iconic brands like Gucci, Yves Saint Laurent, and Alexander McQueen.

LVMH, on the other hand, was founded in 1987 by Bernard Arnault and has become the largest luxury goods company in the world by revenue.

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LVMH's portfolio includes a diverse range of brands, including Louis Vuitton, Moët & Chandon, and Christian Dior.

Both Kering and LVMH have a strong presence in the global luxury market, with a combined market value of over $300 billion.

Kering's revenue has grown significantly over the years, reaching $13.4 billion in 2020.

Recommended read: Kering Market Cap

LVMH owns 75 luxury houses, including Christian Dior, Tiffany & Co, and Tag Heuer, with sales reaching €79bn last year. This is a significant increase from 2012, when sales were only €26.3bn (three-fold increase).

Kering, on the other hand, controls 13 luxury houses, including Gucci, Bottega Veneta, and Yves Saint Laurent, with sales reaching €20bn last year. This is a two-fold increase from 2012, when sales were €10bn.

Here's a comparison of the two companies' valuations:

Both companies have seen significant growth in operating profit, with LVMH quadrupling to €21bn and Kering tripling to €5.6bn last year.

Crafting a brand that stands out from the rest is crucial for companies like LVMH and Kering. To achieve this, they control the value chain by producing, distributing, and selling their products in-house.

Both companies are vertically integrated, which means they oversee every detail to protect and reinforce their brand's quality, scarcity, and exclusivity. This is why a handbag can fetch $10,000.

These luxury goods are handmade by Italian and French craftsmen using the highest-quality materials, and each item is designed by an artisan. The prices that can be charged far outweigh the added production costs.

The customer experience is also carefully curated, with flagship stores located in prestigious areas like Fifth Avenue in New York and the Avenue des Champs Elysées in Paris. This ensures that customers associate the brand with exclusivity and high-end quality.

The Louis Vuitton store at Chadstone, for example, has a nightclub-like appeal, complete with queues, a velvet rope, and burly security guards. This is a deliberate attempt to make customers feel like they're part of an elite group.

Pricing and scarcity are also crucial elements of their brand strategy. With limited ranges and lengthy waitlists, the message is clear: these products aren't for just anyone.

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Kering and LVMH's financials are truly remarkable. They sport gross margins of over 68%, a feat that's hard to match in the industry.

Manufacturing in pricier countries doesn't seem to hinder their performance, unlike other companies that have to move production offshore to achieve lower margins.

Even the world's most valuable brand, Apple, only achieves 43% margins, a significant difference from Kering and LVMH's impressive numbers.

Their 25%-plus return on equity is equally impressive, especially considering they own real estate in some of the world's most expensive locations.

Both LVMH and Kering are leaders in the luxury industry, but they have distinct approaches to business. LVMH operates in various luxury sectors, including fashion, spirits, and more, while Kering primarily focuses on luxury fashion brands.

Their customer segments are similar, targeting luxury consumers and owning diverse luxury brands. However, LVMH's portfolio is more extensive, including high-end fashion, spirits, and more.

Both companies emphasize prestige and exclusivity in their value proposition, but LVMH is known for craftsmanship and heritage, while Kering highlights sustainability efforts.

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Their channels of distribution are also similar, using boutiques, department stores, and e-commerce to reach customers. However, LVMH owns and operates boutiques for its luxury brands, while Kering uses similar channels.

Both companies foster brand loyalty among customers and provide high-quality customer service, but LVMH's brands have a strong reputation for exceptional customer service.

Here's a comparison of their business models:

Overall, while both companies have similar approaches to business, their differences in focus and emphasis set them apart in the luxury industry.