Shares in the LVMH Group have been under-performing since early 2013. There are concerns that the brand is already too ‘ubiquitous’ or too ‘mass’, making consumers lose their demand for the French luxury brand.
However, this year has made a turnaround for Louis Vuitton with the release of its latest Capucines Bag released in June, with a hefty price tag of $4,600. Even if you have that amount of money, don’t just run to your nearest Louis Vuitton boutique just yet. The bag has been sold out since its recent release.
6 The Growth of the LVMH Shares
Since January 1, LVMH shares have only increased 1.4%, while Cartier and Lancer owner Richemont went up by 28%. Gucci parent Kering also increased by up 23%, and Burberry stock rose by 31%.
More then half of the LMVH’s operating profits come from the sales of its luxury brand, Louis Vuitton. Its sales growth has slowed down to about 5 to 6 percent after decades of growth of more than 10%, a part of which are influenced by active campaigns of boutique openings.
Estimates show that the French luxury brand Louis Vuitton actually generate annual sales of around 7 billion euros, which is twice of what Gucci sells in a year. Some say that Louis Vuitton is worried because there’s already not much room for them to expand or grow further.
5 What Makes the Capucines Bag Special
The Louis Vuitton Capucines is made out of full-grain Taurillon calf leather, the same leather used by another French luxury brand Hermes for its exclusive bags. The leather comes from the top layer of the cowhide, and is subjected to very minimal chemical processing. Hence, the subject leather with its signature texture is very durable, strong, and of very high quality.
It is a lot more expensive than the usual Louis Vuitton canvas, LV-embossed Neverfull, which retails at around $800.
Bernard Arnault, LVMH’s boss, stated that Louis Vuitton has plans to prune its portfolio of canvas bags. Currently, it makes up two thirds of the business and it generates 90% of gross margins.
The latest “it” bag, according to shop assistants in Louis Vuitton boutiques, only had deliveries of the Capucines bags every other week over the summer season. There are rumors that Louis Vuitton might have deliberately caused the shortage to create hype around the bag.
Looking at the same materials that Hermes and the Louis Vuitton Capucines Bag, it might be possible that there is an actual shortage. After all, Hermes is also known for its shortages and waiting lists, especially for the much-coveted Birkin and Kelly bags that cost from$10,000 to the expensive $40,000 bags. The demand and shortage for these bags help strengthen Hermes’ position and appeal in the elite market.
4 Vying Away from the Tan and Brown Monogram Design
It is not a surprise that Louis Vuitton has decided to do away with its signature monograms. The tan and brown monograms that Louis Vuitton has been well known for has been on the arms of a lot of women from all walks of life. Sometimes, it’s even hard to differentiate the authentic ones from the fake ones, as more and more copycats get better in counterfeiting Louis Vuitton bags, especially the LV Monogram.
With the understated Capucines, the luxury French label is moving away from trends and going back to the classic, timeless styles.
3 The Capucines Bag’s Two-Way Design
The name Capucines is considered a legend in the LV world. In 1854, Louis Vuitton first opened his boutique in Rue des Capucines in Paris. The name is actually taken from the street itself.
The bag has a very classic design, with a single flap. It is accented with a single ‘flower button’, reminiscent of Louis Vuitton’s icon in one of its signature monograms.
The flap can be hidden inside the bag, and it will show the LV initials embossed on the leather. The flap can also be clasped on the front, which displays the LV monogram flower button.
The bag is available in two sizes, the MM and the GM. The MM is priced at $5,150 while the GM is at $5,600. However, only the black and the red are available in GM. The hardware also depends on the color of the leather, and comes in either gold or silver.
The Capucine MM bags available in various colors: Pomme (apple green), Clementine (orange), Taupe (grayish-brown), Ocre (yellow), Blue Canard (dark turquoise), Quetsche (dark brown), Blanc Casse (white), Black, Cherry (red), Orient (light red-orange), and Purple.
2 The Need to Reposition Itself as Exclusive and Upmarket
So why are there rumors that Louis Vuitton is ‘dripping’ the bag in small quantities to maintain the demand? Most people believe that it is a way for Louis Vuitton to capture the exclusivity of the elite market, and to maintain its place in the luxury category.
The need stems perhaps from the low growth percentage of the brand for the past year. Add the low percentage of its stocks, and it is quite obvious that Louis Vuitton needed to regain back its lost exclusivity, since a lot of women (and men) are now lugging around the typical canvas monograms.
The move of Louis Vuitton to release a classic, all-leather bag that is hard-to-get successfully regained the brand’s exclusivity. Some analysts say that it is a quite positive sign that the LV Capucines is sold out in stores in the U.S. and in Europe. Indeed, creating a high demand for the bag, and not producing enough supply to satisfy that demand helped Louis Vuitton capture its former gleam in the world of luxury goods.
1 Sold Out
The LV Capucines has been sold out since its release in June 2013. In a boutique in London, there is only one bag on display with a ‘not for sale’ sticker. The pricey Capucines, despite the expensive prices, actually made the brand’s appeal stronger.
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