Marc Jacobs on the Block as LVMH Looks for $1B

Yahoo

6 days ago

The Marc Jacobs brand might be coming back to America.
Twenty-eight years after Bernard Arnault stepped in to first help support the designer's brand, LVMH Moët Hennessy Louis Vuitton is said to be working with investment bankers at J.P. Morgan to find a buyer willing to pony up $1 billion for the business.
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WWD had heard in January that the brand was quietly being shopped, but high-level sources at LVMH denied at that time that there was a process under way.
The process ultimately drummed up a good deal of interest from the licensing experts. Multiple sources said Authentic Brands Group, WHP Global and Bluestar Alliance are all said to be interested and involved in the talks.
Of the three, Jamie Salter's Authentic is the largest and has a joint venture with Saks Global to develop luxury brands using its licensing chops.
But Salter is by no means the only IP specialist angling for luxury brands. WHP bought Vera Wang earlier this year and Bluestar bought the late Virgil Abloh's Off-White from LVMH last year.
LVMH, J.P. Morgan, Authentic and WHP all declined to comment. Bluestar could not be reached. The talks for Marc Jacobs were earlier reported by The Wall Street Journal.
The potential sale of such a well-known and respected designer brand shines a bright light on big changes in luxury on both sides of the Atlantic.
LVMH is the undisputed powerhouse in the sector, but is also in the midst of a kind of evolution.
Arnault, who built the company through decades of hard-nosed dealmaking and absolute fidelity to brand, has been positioning his children in key positions throughout the company, with one of them expected to step up eventually.
Meanwhile, the luxury market is down, Jonathan Anderson has stepped up as creative head at the company's Dior brand and even the powerhouse Louis Vuitton, which Jacobs once designed, has not been immune to a more sluggish consumer.
LVMH's track record for buying and developing U.S. fashion brands is not its strongest suit. Arnault, who is known for buying and holding, also once owned Donna Karan, but sold the business after several difficult years to G-III Apparel Group, which has been building the brand with U.S. retailers.
Marc Jacobs itself has gone through its share of ups and downs under LVMH's ownership. With Jacobs at the creative helm and his business partner Robert Duffy overseeing operations, the brand had a strong run in both fashion and accessories, especially with its Marc by Marc line (since discontinued) and there was even talk of floating the company separately on the stock exchange.
But Duffy exited a decade ago and the brand has seen a series of different strategies ever since. The most recent under chief executive officer Eric Marechalle has Jacobs, who remains one of the most exciting and creative designers in fashion, focusing on fantastical collections for the fashion connoisseur and a separate team creating the more commercial products that take only some inspiration from what Jacobs shows. The brand has been performing at retail, sources say, and its fragrances remain strong performers.
If having Marc Jacobs on the sales block speaks to a new focus at the big European luxury houses, having companies like Authentic, WHP and Bluestar jockeying for position on the other side of the transaction illustrates where the American market is.
The onetime consolidators of the industry — including PVH Corp., VF and any number of private equity players — have ceded much of the acquisition market to the licensing houses as they push through their own transformations. (The private equity companies are still involved indirectly, they've just shifted to backing the IP players).
But the intellectual property model that takes ownership of a brand and focuses on marketing, while cutting licensing deals for production to partners, is not as well tested in luxury, which delicately balances image and product quality.
Marc Jacobs would be a big test of the budding luxury IP model.
— With contributions from Jean E. Palmieri
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