Louis Vuitton Handbags Stand Test of Time, Worldwide Recession : Fashion: Sales are up 35%. With no clear, direct competitor, expansion is going into high gear.
LV monogrammed handbags, the ultimate status symbols of the 1980s, have withstood worldwide recession and careening currencies.
Walk down any fashionable street from New York to Tokyo and the gold and brown leather products by Louis Vuitton abound, perennially popular amid the ever-changing whims of fashion.
All this bodes well for the French luxury goods industry but the head of Louis Vuitton, Yves Carcelle, struggles to name a product with as high a profit margin as his own luxury leather-luggage range.
Business is booming, sales across its handbags-to-travel trunks line are up 35% so far this year, with customers rationed to just one or two of the same item from its own shops.
Japanese buyers who purchase half of Louis Vuitton’s output are busy buying, and Carcelle said his luxury-priced goods are seeing growth rates not seen since the boom years of the 1980s.
Louis Vuitton’s shop in Paris’ prestigious Avenue Montaigne is busy with buyers picking over a line stretching from a leather business-card holder for $73 to a luxury upright trunk carrying 30 pairs of shoes for $29,600.
Outrageous, one says? But the Louis Vuitton line is considered a long-term purchase, one untouched by yearly changes in style, like table silver or a diamond ring.
The luggage group, part of Bernard Arnault’s LVMH Moet Hennessy Louis Vuitton empire, stacked up $983 million of sales in 1993 with an operating profit margin of 42.5%.
With no clear direct competitor, and current sales strong in its worldwide chain of 177 company-owned stores, Carcelle sees no reason why profit margins should fall as the group struggles to meet an almost insatiable demand for its leather goods.
The business is a true money-spinner, showing sales just below LVMH’s Christian Dior and Givenchy perfume division, but producing nearly three times the profit.
Carcelle cannot think of a product with the 40%-plus margin of his own group. “Perhaps Rolex (watches), but there are few figures available,” he told reporters.
Carcelle said the key to the group’s success is quality, and that quality image is reinforced by only selling its goods through company-owned shops where cutting prices to boost sales is simply unthinkable.
And despite sluggish demand in other segments due to the lagging world economy, the 160-year-old company is busy building a new factory in central France to meet a burgeoning demand for its luxury goods.
“We’ve seen recovery in the United States since April, 1993, in Japan from September and in Europe from October to November,” Carcelle said.
And for the future, he sees expansion of its own stores into new countries at a rate of 10 to 12 stores a year, new leather products and a gradual upturn in consumer spending fueling further expansion.
The company, founded in Asnieres in northwest Paris by a luggage-maker who gave the company its name, invented the modern trunk for travelers with a sense of luxury in the last century and went on to produce its first famed monogrammed bag in 1959.
The line was expanded in 1986 with the Epi line of luxury leather goods, and the Taiga line was added in 1993 to appeal to male buyers. Today, around 2 million pieces are sold each year.
