LVMH looks to beat Kering in the sustainability stakes

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When Notre Dame Cathedral in Paris suffered a very serious fire in April this year the Pinault family, which heads up the Kering luxury goods group, pledged Euros 100 million on the night of the fire towards its rebuilding. That was then beaten the next morning with a Euros 200 million pledge by the Arnault family that owns the luxury conglomerate LVMH.

Such moves highlight that the two groups are massive rivals not only in the luxury goods industry but in life in general. It was therefore interesting to see that LVMH recently snapped up a minority stake in fashion label Stella McCartney, which comes less than a year after the company split from its 50:50 partnership with Kering.

This move by the Arnault family might be just to get one over on the Pinault clan but it could alternatively spell something very different and more meaningful. While the actual size of the deal is tiny – with the Stella McCartney brand having revenues of no more than Euros 300 million per year – the much more important factor was that it was done because of the Stella McCartney brand placing sustainability and ethical practices at the heart of its business.

This proved attractive to LVMH and it has stated that the deal highlights its broad commitment to sustainability. This is arguably the opposite of the stance taken by Kering, which ended its Stella McCartney tie-up because it said that it preferred to focus on its faster growth brands. The read across is that the ethical principles, which include not using leather or fur in its designs, was stymying growth at Stella McCartney so Kering ended the partnership.

Clearly one camp is placing a much greater focus on backing sustainability and ethics than the other if we are to take this move as indicative of the strategic stances of the two organisations. Only time will tell if this is the case as opposed to it just being another example of one family simply beating the other – whether that be through adding more brands to their luxury portfolio or committing money to high profile causes like Notre Dame Cathedral.

Glynn Davis, editor, Retail Insider

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