LVMH buys minority stake in Stella McCartney brand
Group seeks to burnish green credentials by partnering ethical fashion pioneer
LVMH has snapped up a minority stake in Stella McCartney’s eponymous brand, illustrating how the world’s largest luxury group by revenues is seeking to improve its environmental credentials.
The deal comes just over a year after ethical fashion pioneer Ms McCartney split from LVMH’s rival Kering, with whom she first launched her brand and had a 50-50 partnership.
LVMH said on Monday that Ms McCartney would continue as creative director and majority shareholder of the brand and will also become a special adviser on sustainability to Bernard Arnault, chairman and chief executive of LVMH, and its executive committee.
A life-long vegetarian, Ms McCartney does not use any leather or fur in her designs, and she has made ethical fashion a pillar of her label. The sale of a stake to LVMH is “to accelerate its worldwide development in terms of business and strategy,” the French fashion house said in a statement after European markets closed.
LVMH declined to comment on the size of the transaction or its financial terms, but said it would disclose more details about the tie-up in September.
Ms McCartney’s partnership with Kering lasted from its 2001 launch until March last year, when she bought back Kering’s 50 per cent stake to become sole owner. At the time, analysts believed Kering had made the move to focus attention on faster-growing brands such as Saint Laurent and Balenciaga.
Melania Grippo, a luxury goods analyst at Exane BNP Paribas, estimates the Stella McCartney brand has €280m-€300m in annual revenues. Ms Grippo said that while the deal will have a “limited impact” on LVMH’s accounts, it “confirms once again its ability to attract, nurture and develop brands”.
Mr Arnault said in a statement that he was “convinced of the great long-term potential” of Ms McCartney’s brand, adding: “A decisive factor was that she was the first to put sustainability and ethical issues on the front stage, very early on, and built her house around these.” Mr Arnault said that the deal “emphasises LVMH’s . . . commitment to sustainability”.
The tie-up reflects how luxury groups are trying to demonstrate a commitment to sustainability and ethics, from sustainable sourcing and supply-chain traceability, to reducing carbon dioxide emissions from energy consumption and guaranteeing the wellbeing of models.
At LVMH, Mr Arnault’s eldest son Antoine Arnault has played a key role in many of the group’s initiatives in these areas, including a partnership with the UN world heritage agency Unesco to safeguard biodiversity that was announced in May
Consumers and regulators are increasingly concerned about the environmental cost of fashion, pushing luxury houses such as LVMH and Kering to announce new commitments on sustainability.
A report in May by consultancy BCG and sustainable fashion groups, found that rapid growth of the global fashion industry risks “exerting an unprecedented strain on planetary resources” by raising annual production of fashion to more than 100m tonnes.