The alliance forged by LVMH and Moncler’s CEO enables Remo Ruffini to strengthen his position in the capital of the down jacket specialist. The Number One in luxury goods is an ultra-minority shareholder, but is getting its foot in the door of a luxury nugget that is resilient to market slowdowns, including in China. The stock market appreciates…
For some time now, the Moncler Group, Italy’s luxury nugget, has been making the sector’s predators salivate.
In 2019, Kering was rumored to be interested in Moncler. The CEO, Remo Ruffini, confirmed contacts, while refuting the idea of selling the company.
But while the group headed by François-Henri Pinault is currently weighed down by the slowdown of its own flagship Gucci brand, it is finally its rival Lvmh, which is gaining a – albeit modest – foothold in the Italian beauty, known for its sophisticated down jackets.
A Remo Ruffini-LVMH rapprochement
The world’s number one luxury brand has approached Remo Ruffini to help strengthen its control over the House.
According to an agreement announced on September 26 by both parties in a press release, LVMH has acquired initially, “through an ad hoc company, a 10% stake in Double R, which holds a direct stake in Moncler corresponding to approximately 15.8% of the capital”. Double R itself is the investment vehicle controlled by Ruffini Partecipazioni Holding, Remo Ruffini’s holding company.
In a second phase, lasting around 18 months, “Double R will increase its stake in Moncler to a maximum level of 18.5% through additional purchases of Moncler shares”. And “the financing of these purchases will be”, again, “carried out by LVMH, which will increase its stake in Double R to a maximum of around 22%.”
The amount of Lvmh’s investment in Double R was not disclosed.
French origin
In 2003, Remo Ruffini acquired the French brand Moncler, founded in 1952 in Monestier-de-Clermont, Isère. Although the brand owes its success to an Italian entrepreneur, it does not have transalpine roots. In 2020, the Moncler group also acquired its transalpine competitor Stone Island, also a specialist in high-end skiwear, for 1.15 billion euros.
According to Fashion Network, LVMH now owns the equivalent of 1.58% of Moncler. The media outlet interviewed a source close to the matter, according to whom “this is not a question of LVMH acquiring Moncler shares” but “a partnership between Remo Ruffini and the LVMH group at Double R level, with rights”.
For its part, Reuters quotes analysts who explain the absence of a direct share buyback by LVMH by “the uncertainty linked to tax treatment” in France, and stress that “minority investments in already established groups are the best alternative for using surplus cash”.
The joint press release also makes a point of presenting the arrival of LVMH as a simple partner of Remo Ruffini and Moncler, anxious to remain in the background. It is referred to as a “stable, long-term minority shareholder of Double R”, which “supports Remo Ruffini’s vision for the future of the Moncler Group”.
Remo Ruffini confirmed at the helm of Moncler
The agreement strengthens the Moncler CEO’s position as principal shareholder.
The Italian leader “will continue to define the strategy and steer the development of the Moncler Group and, as Chairman and CEO, remains fully committed to Moncler’s success”.
Lvmh will nevertheless have a say in the matter: while “the governance structure confirms Remo Ruffini’s exclusive control over Double R”, it also provides, “among other things, the right” of the world leader in luxury goods, “to appoint two members to the Board of Directors of Double R and one member to the Board of Directors of Moncler”.
To avoid any misunderstanding, “the parties have entered into an agreement governing their relationship as direct shareholders of Double R and indirect shareholders of Moncler”.
Remo Ruffini, Moncler’s CEO, believes that “this partnership” “brings the necessary stability to implement” his “vision for the future”. He also admires the “entrepreneurial spirit of Bernard Arnault”, Lvmh’s CEO, “as well as his unique understanding of the luxury sector”.
Lvmh’s CEO described Moncler as “ one of the finest entrepreneurial success stories in the sector over the last twenty years” and Remo Ruffini’s “vision and leadership” as “remarkable”. He said he was “delighted ‘ that ’Lvmh is investing in its holding company to strengthen its position as Moncler’s main shareholder and support the Moncler Group’s independence.”
A highly resilient House
All these declarations do not prevent a number of observers fromimagining that Lvmh’s stake in Moncler will eventually increase.
Moncler’sresilience in a troubled luxury goods market, particularly in the wake of the Chinese slowdown, is all the more appealing.
In the first half of 2024, the Italian group again posted consolidated revenues up 16% at constant exchange rates to 818 million euros.
And Moncler, the group’s main brand (80% of sales), grew by 15%, driven by strong momentum in Asia, particularly Japan and…China!
An enthusiastic stock market
The announcement of the Moncler/Lvmh alliance did a world of good on the stock market for both protagonists, who had suffered somewhat since the start of 2024.
Lvmh shares jumped by 9.88% on the day of the announcement on the Paris Bourse, and by a further 1.37% on September 27, a few minutes before two o’clock. It was down 16.3% over the last six months and has fallen 5.3% since the start of the year.
Moncler, for its part, gained +6.16% on September 26 and +1.88% on September 27, at midday. It had fallen by 17.37% over the last six months, but had gained +1.88% since the beginning of 2024.
This new announcement allows Lvmh to regain some of its bearings after the disastrous sequence of Bernard Arnault’s blacklist affair recently revealed by Lettre A.
Blacklist
On September 18, the investigative newsletter reproduced an internal e-mail attributed to Bernard Arnault, dated January 17, 2024, in which helisted seven media to which group executives were “ absolutely forbidden to speak ”. In addition to Lettre A, the blacklist also included France’s Mediapart, Le Canard enchaîné, Glitz Paris, Miss Tweed, L’Informé and the American Puck. These were all publications described by Lvmh’s CEO as “biased”, “mostly of a negative nature” and accused of “using the public’s attraction to luxury to attract a new readership in a racy manner”.
Sent to 16 recipients, mainly members of the Group’s Executive Committee, the letter “formally condemned any behavior consisting in maintaining relations with unscrupulous journalists” and “giving them information or comments on the life of the Group”. The CEO stated that he would be “ intractable in the face of any breach of these rules”, which he considered “an intolerable breach of loyalty”.
The public revelation of this letter, which the Group did not comment on, was all the more damaging in that it partly overshadowed the excellent return on investment of the Group’s commitment, as a Premium Partner, during the Paris 2024 Olympic and Paralympic Games.
Paris 2024: a rewarding commitment
According to a recent assessment by Launchmetrics, the media analysis platform specializing in fashion, luxury and cosmetics, several Lvmh Houses are among the Top 20 brands that benefited most from the sporting event.
LaunchMetrics calculates Media Impact Value (MIV),the specific monetary value attributed to brands based on their media interactions (articles, posts, newsletters, TV quotes, etc.).
Dior tops the podium with $53 million in MIV, Louis Vuitton is fifth ($38 million in MIV), Chaumet 11th ($4.1 million) and Berluti 13th ($3.6 million)…
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Read also > The Moncler Group is off to a good start in 2024
Featured Photo: © Moncler
