Is LVMH Moët Hennessy Louis Vuitton angling to take over Chanel? That seems to be the question that will not go away. On the heels of looming reports that luxury’s biggest brand – Louis Vuitton – will acquire its closest rival, Chanel, the Paris-based conglomerate’s honcho Bernard Arnault explicitly shot down speculation, calling it “fake news” at the group’s annual shareholder meeting in April 2018. Bruno Pavlovsky, Chanel’s president of fashion, similarly denied the acquisition rumors. Yet, the question resurfaced this week at a two-day closed-door briefing with Louis Vuitton, its parent company LVMH, and analysts.
According to Reuters, “Asked by analysts whether LVMH might buy Chanel – after the French label sparked speculation it was on the block when it published earnings for the first time last June – the group’s CFO Jean-Jacques Guiony said [Chanel’s] size would be a challenge for any buyer.” Per Guiony, as noted by Jefferies’ Flavio Cereda, “Chanel is worth closer to 100 billion euros ($113 billion) than the 50 billion euros often cited in media reports.”
(Guiony has since denied speaking to Chanel’s value, saying in a statement to WWD on Monday, “The LVMH group never comments on the value of its competitors.”)
Pavlovsky was also sure to clarify the brand’s decision to publish its earnings for the first time ever in June 2018, telling BoF in May that the privately-held company released financial information, which it will do again this month, was aimed at “stopping the fake news about the brand and [giving] our customers, our partners — suppliers — transparency about the situation, the impact and the power of the brand today.” Making 110-year old Chanel’s financial results available to the public was “the best way to do so,” he said.
The “fake news” that Pavlovsky says Chanel was trying to squash – or the “false or misleading information.,” as Chanel’s CEO Philippe Blondiaux worded it – centers on “claims that its brand image was getting dusty and that this was impacting business performance,” per BoF, as spawned by a 2017 report “filed [with] the Dutch Chamber of Commerce by an entity called Chanel International BV — a private limited-liability company that was incorporated in the Netherlands and reflects a significant portion of [Chanel’s] overall business.”
The revenue report revealed that Chanel’s sales for 2017 amounted to $9.62 billion, up 11 percent from the year prior. That figure – which takes into account sales of the brand’s ready-to-wear business, accessories, and cosmetics, including its world-famous Chanel No. 5 fragrance – is significant in large part because it means that Chanel “is likely the largest single fashion brand by sales” in the world, the New York Times’ Elizabeth Paton wrote last year – “outpacing rivals like Louis Vuitton and Gucci.”
While the publication clarified Chanel’s standing in the upper echelon of the luxury market, it has led to a whole new slew of rumors, ones that Chanel is potentially looking for a buyer.
As for what is likely to happen, Luca Solca, managing director of luxury goods at Sanford C. Bernstein, told BoF that “while an IPO, merger, investment or strategic acquisition are all possible outcomes, the most likely scenario would be that Chanel maintains the status quo. The likelihood of anything but is “probably 30 percent.”