LVMH, one of the world’s leading luxury goods groups, is paying 295 million Euros ($259.2 million) for majority control of Fendi, the well-known Italian fashion house, whose popular accessories include handbags and wristwatches.
LVMH’s majority ownership is effective at the end of 2001, a company spokesman told JCK.
The announcement was made Nov. 24 in a joint statement by LVMH and Prada, another leading Italian fashion firm. Together, they had held 51% of Fendi since 1999.
LVMH is buying Prada’s 25.5% stake (and is paying for it through 2005), which gives it 51% of Fendi’s share capital. The Fendi family hold 49%.
Yves Carcelle, president of the LVMH Fashion Group, called the transaction “a very positive strategic step. The quality and geographic transferability of Fendi’s products position the brand amongst the luxury leaders. [It is] a star brand with long-term growth potential.”
As for Prada, Patrizio Bertelli, its chief executive officer, said the transaction “gives Prada the financial wherewithal to strengthen its development strategy [by] focusing on brands in which it owns either all, or a majority, of the share capital.”
The change in control won’t affect the production, worldwide marketing or distribution of Fendi watches ($400 to $1,000 retail) by Swiss-based Taramax S.A., under license with Fendi, says Thomas Venable, Taramax president. However, it could open new opportunities for Taramax to “diversity” in the future, producing for other brands in the group, he says.
Also, narrowing ownership and management of Fendi means, “more focus strategically, stronger product development and a more manageable situation.”
The deal “paves the way for accelerated development of one of Italy’s greatest luxury brands,” said the Nov. 24 statement. “Since October 1999, significant progress has been made in reorganization and development [of Fendi] in cooperation with Prada and the Fendi family.” In just 18 months, for example, the number of Fendi stores in its global network has risen from 4 to 83. Almost two thirds of Fendi’s sales now come from its stores, compared to less than a quarter in October 1999.
The expanding Fendi store network won’t affect or alter Taramax USA’s decision this summer to concentrate its U.S. distribution solely through independent and chain jewelers, dropping some 600 department stores.
Fendi has also terminated a number of licenses in the past 18 months and reorganized on both operational and industrial levels to position it for international development. One exception, though, is its long-term licensing agreement with Taramax to continue to produce and develop the Fendi watch brand in coming years.