No COVID-19 blues for Hermes as sales soar

PARIS - French luxury goods group Hermes said Thursday that its sales jumped 38 percent in the first quarter of the year compared with 2020, bolstered by a strong performance in Asia.

The maker of Birkin handbags said its revenues reached 2.1 billion euros ($2.5 billion) in January-March, which was higher than even the same period in 2019, before the global Covid-19 pandemic struck.

The sharp rise was driven mainly by increased demand for the group's bags, clothing and watches in China and other Asian markets, with consumers turning to online shopping despite the hefty Hermes price tags.

"The success of online sales has been confirmed," finance director Eric du Halgouet told reporters by phone, adding that internet sales had seen "growth in three figures across all regions."

Sales in the United States climbed 23 percent from a year earlier, but they stagnated in Europe, where many major economies, including France, remain locked down.

Fellow French luxury group Kering, which owns brands such as Gucci and Yves Saint Laurent, announced Tuesday that its sales had also risen to a level higher than the same period of 2019, underlining how coronavirus-hit 2020 was a blip for the high-end luxury market.

Agence France-Presse

Gucci, YSL sue Alibaba over counterfeit goods

NEW YORK - A group of luxury goods makers sued Alibaba Group Holding Ltd on Friday, contending the Chinese online shopping giant had knowingly made it possible for counterfeiters to sell their products throughout the world.

The lawsuit was filed in Manhattan federal court by Gucci, Yves Saint Laurent and other brands owned by Paris-based Kering SA seeking damages and an injunction for alleged violations of trademark and racketeering laws.

The lawsuit alleged that Alibaba had conspired to manufacture, offer for sale and traffic in counterfeit products bearing their trademarks without their permission.

A spokesman for Alibaba, Bob Christie, said in a statement:

"We continue to work in partnership with numerous brands to help them protect their intellectual property, and we have a strong track record of doing so. Unfortunately, Kering Group has chosen the path of wasteful litigation instead of the path of constructive cooperation. We believe this complaint has no basis and we will fight it vigorously."

Concerns over fake products on Alibaba's platforms, including online marketplace Taobao, have dogged it for years, although the U.S. Trade Representative removed Taobao from its list of "notorious markets" in 2012 in light of progress made.

Friday's lawsuit marked the second time in less than a year that the Kering brands had sued Alibaba over the alleged sale of counterfeit products.

An earlier lawsuit was filed in July only to be withdrawn the same month with the ability to refile it while the Kering units worked toward a resolution with Alibaba, according to court records.

The lawsuit alleged that Alibaba and its related entities "provide the marketplace advertising and other essential services necessary for counterfeiters to sell their counterfeit products to customers in the United States."

The lawsuit cited, for example, an alleged fake Gucci bag offered for $2 to $5 each by a Chinese merchant to buyers seeking at least 2,000 units. The authentic Gucci bag retails for $795, the complaint said.

Alibaba has allowed for counterfeit sales to continue even when it had been expressly informed that merchants were selling fake products, the lawsuit said.

The lawsuit seeks a court order that, among other things, would block Alibaba from offering or facilitating the sale of counterfeit products and unspecified damages that could include $2 per counterfeit item under a statutory regime.

The case is Gucci America Inc v. Alibaba Group Holding Ltd, U.S. District Court, Southern District of New York, No.15-03784.

source: www.abs-cbnnews.com

LVMH and Hermes call truce in 'handbag war'

PARIS - A long and bitter battle that has gripped the luxury goods industry and pitted two of France's richest families against each other came to an unexpected end on Wednesday when LVMH and Hermes agreed to a truce.

Under the deal, LVMH - the world's No.1 luxury group, controlled by France's wealthiest man Bernard Arnault - agreed to relinquish most of its 23.2 percent stake in Hermes and not acquire any shares in its smaller rival for five years.

It effectively buried the possibility LVMH could make a full takeover bid for the 177-year-old maker of Birkin and Kelly handbags. Such a prospect had boosted Hermes's stock, which has been trading at a price-to-earnings ratios of about 30 times in recent years, a 70 percent premium to the industry average.

Shares in Hermes fell nearly 10 percent to 236.5 euros in early trading on Wednesday, wiping out 2.8 billion euros ($3.7 billion) off its market value - equivalent to around 350,000 Birkin handbags based on an average price of 8,000 euros . By market close, they were down 3.5 percent.

"The speculative premium has disappeared," said Barclays France director Franklin Pichard.

The deal, under which LVMH agreed to redistribute its stake in Hermes to its shareholders, ends four years of legal warfare between the luxury titans, dubbed the "handbag war" by the press.

In 2010 LVMH - whose brands include fashion labels Christian Dior and Louis Vuitton, Hennessy cognac and Dom Perignon champagne - revealed it had built up a 17 percent stake in Hermes. It made the investment through a series of equity derivatives instead of straightforward share purchases, which prevented it from having to declaring them.

Hermes, one of France's last major independent luxury group still controlled by the founding family, vehemently protested at having its arch-rival as its biggest external shareholder.

FAMILY FORTUNES
According to French magazine Challenge, the Hermes family is Frances's fourth richest with a fortune estimated at nearly 19 billion euros, behind LVMH's Arnaults - estimated at 27 billion euros, L'Oreal's Bettencourts and Auchan's Mulliez. They come just ahead of Chanel's Wertheimer brothers.

Arnault had long set his sights on Hermes as it is considered one of the luxury brands that best resists downturns, with its products increasingly regarded as investments and benefiting from a thriving second-hand market.

While the sales growth of rival mega-brands such as Gucci and Louis Vuitton have ground to a halt in the past year, Hermes has continued to enjoy an annual revenue rise of more than 10 percent, consistently higher than the industry average.

The deal marks the first time Arnault - whose LVMH group has gobbled up more than 60 brands in the past two decades, including sizeable ones such as Roman jeweller Bulgari - abandons the pursuit of a prized target.

But the truce nevertheless offers a profitable solution for LVMH, which began building up its stake in Hermes in 2007 and 2008. It stands to make a theoretical gain on its holding of around 3 billion euros, analysts estimated.

"This clears up the situation and it is one of the few divorces in which both the partners are winners," said Mario Ortelli, luxury goods analyst at Bernstein.

Groupe Arnault, the family holding company of LVMH, will own 8.5 percent of Hermes after the share distribution.

ELEGANT

Arnault is a proven master at exploiting family tensions when trying to buy a company. When the dispute started in 2010, industry observers thought the billionaire would seek to apply the same technique to Hermes' more than 100 family shareholders, divided between the Puech, Dumas and Guerrands.

A year later, most key family members except Nicolas Puech, who owned just under 6 percent of Hermes' shareholder capital, agreed to join a holding that controlled the company and bound them for two decades, making a takeover virtually impossible.

"LVMH has found an elegant way out of what was a deadlock," JP Morgan Cazenove said of the peace deal.

LVMH shares, flat since Jan. 1, rose about 3 percent on Wednesday. LVMH stock has underperformed the luxury goods industry in the past year over concerns about declining cognac sales in China and slower sales growth at its main profit generator Louis Vuitton.

The French stock market regulator fined LVMH last year for failing to properly disclose the stakebuilding and Hermes launched legal action against LVMH on allegations of insider trading and stock price manipulation.

LVMH fought back with proceedings against Hermes for libel.

The agreement signed on Tuesday night ended all legal proceedings between the two companies, they said in a joint statement issued on Wednesday.

For 21 LVMH shares, shareholders will receive 1 Hermes share, sources close to LVMH said. The distribution of Hermes shares will be completed no later than Dec. 20. (Additional reporting by Andy Callus, Pascale Denis, Alexandre Boksenbaum-Granier and Blaise Robinson; Editing by Pravin Char)

source: www.abs-cbnnews.com