European Luxury Goods: How Long Is Your Tail?

(This article is only available to members of The Luxury Marketing Council)

Both LVMH and PPR rely on mega-brands – Louis Vuitton and Gucci – for the bulk of their Fashion & Leather Goods results. We estimate that LV represents 71% of LVMH F&LG sales and >100% of LVMH F&LG EBIT. Gucci accounts for 65% of PPR luxury sales and 82% of PPR luxury
EBIT. The 11 remaining brands in the LVMH F&LG portfolio account for 29% of F&LG sales and contribute negatively to EBIT, in our estimates. The remaining brands in the PPR portfolio account for 35% of luxury sales and 18% of luxury EBIT. Richemont does not have a mega brand in F&LG, its 5 brands produce € 642m in sales and € 1m in EBIT (includes small non-F&LG brand, Purdey).

In principle, it makes sense for leading luxury players to have a portfolio of niche brands to complement mega-brands.