Over the weekend, LVMH Moet Hennessy Louis Vuitton SA, the world’s largest luxury goods conglomerate, announced that it would increase its share in family-owned leather giant Hermes 14.2%, to a total of 17.1% stock ownership.

LVMH, which owns such famous labels as Louis Vuitton, Marc Jacobs, Givenchy and Fendi, claims that it will not seek control of Hermes or board representation, but news of the sharp increase in the conglomerate’s ownership of the brand has many wondering if that will remain true for long. Luxury isn’t just a lifestyle, it’s also big business, and Hermes has been among the most profitable properties on the high-end mass market through the recent economic downturn.

Part of the Hermes allure for many clients stems from the fact that the Hermes family still runs the company, even in this day of corporate fashion and massive conglomeration. LVMH doesn’t just buy up shares of luxury brands for fun, and although owning a chunk of Hermes stock is certainly a strong bet in today’s luxury market, one can’t help but wonder about LVMH’s larger goals. Although the company’s spokespeople claim that LVMH merely has its sights on being a longterm Hermes stockholder, luxury watchers would be advised to take that with a proverbial grain of salt.

If LVMH purchased a controlling share in Hermes, would it change your feelings about or perception of either company?

Source: Business Week.

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  • Ana JB

    LVMH owns A LOT of the luxury market and this “last” step doesnt surprise me at all.

    Just read the book “DELUXE How luxury lost its luster” (by Dona Thomas, 2007!). This book explains part of these luxury groups movements, acquisitions and etc.

    LVMH its not crazy to change what makes Hermes the top top luxury brand.

    • http://www.purseblog.com/ Amanda Mull

      I’d also recommend Dana Thomas’s book, it’s very interesting reading.

      • penelopeb

        have just started to read this book and am very interested in hoe luxury has become a business. not sure if it will actually changed my mind about luxury brands yet. will have to wait and see.

    • frp

      Could this be a partnership to avoid an intrusion from another company? My hope is true luxury will prevail!

  • M

    Let’s just put it this way. Personally, my favourite brands are Hermes, Valextra and Goyard. If LVMH were to have a controlling share in Hermes. I would totally drop the brand. Just a personal opinion.

    • Sophie

      I am absolutely there with you! My favorite- Hermes. What I buy the most? Hermes. If it turns into Louis Vuitton? I am dropping the brand, as I did LV a few years ago!

  • Mary

    Maybe my math is wrong but 17% is not a controlling majority. The sky is not falling. Hermes will remain as it is for generations. Even if lvmh owned 55% Hermes would remain what it is for generations, why because it is extremely profitable. A change in how Hermes is made and the quality would lead to a profound drop in profits and it would be fast, in part because Hermes does not have a logo based name. The Hermes name is the result of workmanship and superior materials first and secondly in the classic look, but that is second to the former.

    • http://www.purseblog.com/ Amanda Mull

      It’s not a controlling majority, but it’s a huge step forward toward having one at some point. It’s just a hypothetical question.

  • Bir

    I just wish Hermes can continue to be Hermes,the day (and I hope it never comes) LVMH takes over I will say goodbye to Hermes as it will never be the same .mr. Arnault takes luxury brands and turns them into fashion brands they die the true spirit of these examples of ever lasting artistry,Become mass produced easy fashion pieces that do not reflect the pillars and values that founded the tradition that these names represent I truly hope Hermes does not fall .

  • Jo Marie

    I have a friend with a lot of stock in LVMH. It’s keeping him in the lap of luxury. But more importantly, what is that beautiful bag in the shop window pictured in your article? Can I find a bigger picture of it?

  • EvaKnox

    Definitely not, are you kiddin me. Louis Vuitton and Hermes together, woohoo, I`m lovin 2011 already

  • mynewbag

    yes it would affect the image greatly, and as to whether 17% is a factor, one would need to know who
    else held stocks, to know if Hermes is controlling anything or not.

  • Jen

    It won’t change a thing. I love Bottega, can’t stand Gucci, and it means little to me as a consumer that the latter owns the former. Would it mean something to me a stockholder? Of course it would. Should’ve bought LV stock a long time ago!

  • Elly

    The only way it would change my opinion/perception of either company is if LVMH tried to in any way change Hermes to be more like Louis Vuitton. Don’t get me wrong, I am a huge Louis Vuitton fan for things like luggage and exquisite leather bags (not a fan of the monogram canvas), but Hermes is an exceptional company and should not be changed in any way!

  • Constance

    I guess I will have to wait and see if the style of the handbags change for the worst. I’m not quite sure how I feel about this yet.

  • advo

    It really depends on the designs. Imo, few people are really aware of which brands are owned by whom anyway. I would still like Hermes if they continue producing designs I like. I don’t dislike LV because it’s owned by LVMH but because they put their logo all over the bags which look so d*mn tacky.

    • Stacy

      Well put advo. I’m of the same mind.

      speaking for myself only, as I’m sure noone else feels this way, I have just one plea…Hermes is so timeless and is the epitome of luxury and if I’m to continue my love affair PLEASE don’t let Marc Jacobs anywhere near the design board. I have a strong dislike for ALMOST all of his designs. I feel like he does tacky just for the sake of it to see who, with money, will buy his bag. There might may have been one or two bags that I liked but that’s been too long ago for me personally.

  • Lisa

    Can’t afford or don’t want to ever afford a handbang that costs over $2000 so I don’t really care. Ebay rocks with like new to new authentic luxury brands, they keep me in the lap of luxury for $hundreds of dollars less than retail.

    T.

  • MizzJ

    I dunno, it would be kinda sad if they got taken over by this huge conglomerate. I don’t really like the idea of a monopoly over luxury brands by one company.

    http://highmaintenancewoman.blogspot.com

  • Zoe

    Apple owns Microsoft stock. Bill Gates has apple stock. It’s just an investment.

  • Bir

    Sadly it’s not , not when mr arnault is behind it again I can’t stress how much my perception of Hermes would change if it were part of LVMH .

  • Stylista

    It’s not going to affect the products that Hermes puts out, and so I don’t think much difference will come out of this, other than the loss of a family business. Which, don’t get me wrong, is sad, but that’s how business is run nowadays.

    http://red-soledfashionista.blogspot.com/

  • Andy-Kate.com

    That’s mutual investment.

  • Jennie McDonald

    I think if LVMH gets there hands on Hermes the quality of the bags and other products will go down while the price will stay up. I was planning to get an LV this new year now I have to rethink it. There are so many knock offs and the quality of LV seem to have gone down. I want my designer bags to be made in italy or paris not the USA! (I did purchase an LV online and returned it when I found out it was made in the USA :-s plus it was way too big but that USA stamp didn’t help. Years ago I would never see that on a LV bag! Mass produced luxury isn’t luxury at all. Anyone can get there hands on a LV now.

    • sable

      Rolexes are mass produced but yet it’s luxury! You see, it might be mass produced but such items are way beyond people’s budget.

  • Steph

    As long as the price stays high, exclusivity will be there!…nothing wrong in ramping up production, it is pure frustration to be forever waiting a damn bag..so stupid.

  • nini

    It depends on whether or not LVMH has a controlling seat on the board. (ipad)

  • Tiffany

    Agree with Steph! (ipad)

  • helen

    My feelings would stay the same. (ipad)

  • Nicole

    In my opinion Hermes should stay Hermes, LV bags are okay but they have nothing on Hermes. LV bags and Luggage is just leather, when you start using Chroc, Alligator, and Lizard Skin thats the Luxury it starts to remind me of the back in the day Fur Coats, but it all boils down to you are just supporting a name.

  • Jen

    That bag in the window is amazing! (ipad)

  • Emma G

    I must get me an Hermes asap (ipad)

  • Sarah

    From a business point of view, I think it is a smart move! (ipad)

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