The LVMH Group is paying 295 million euros (US$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 was 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, the two had held 51% of Fendi since 1999.
LVMH acquired Prada’s 25.5% stake, giving the group 51% of Fendi’s share capital. The Fendi family holds 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 production, worldwide marketing, or distribution of Fendi watches (which retail for $400-$1,000) by Swiss-based Taramax S.A., under a license with Fendi, says Taramax president Thomas Venables. However, it could open new opportunities for Taramax to “diversify” 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 four to 83. Almost two-thirds of Fendi’s sales now come from its stores, compared with less than a quarter in October 1999.
The expanding Fendi store network won’t affect or alter Taramax USA’s decision this summer to sell solely through independent and chain jewelers, dropping some 600 department stores.
Fendi also has terminated a number of licenses in the past 18 months and reorganized on both operational and industrial levels to position the brand for international development. Unchanged, though, is its long-term licensing agreement with Taramax to continue to produce and develop the Fendi watch brand in coming years.