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LVMH is working on a sale of its Marc Jacobs fashion brand as the luxury goods giant contends with a slump in demand, according to people familiar with the matter.
The Paris-based conglomerate behind brands including Louis Vuitton, Dior and Moët Hennessy had approached potential buyers including Reebok owner Authentic Brands, about a sale of the fashion label, which it has owned since 1997, two people said.
The attempt to offload one of its smaller brands follows a rough stretch for LVMH, which is controlled by French billionaire Bernard Arnault. The group has seen its share price slump 19 per cent over the past year, driven by a downturn in the luxury goods sector.
LVMH and its competitors have been hurt by a combination of trade uncertainty affecting consumers around the world, weakening demand from Chinese shoppers and price rises that have turned away US customers.
The talks, first reported by The Wall Street Journal, were ongoing and there were no guarantees that a deal will be concluded, the people said. LVMH and Authentic Brands declined to comment.
On Thursday LVMH said its operating profit declined by 15 per cent to just over €9bn in the first half of the year, a slightly better performance than analysts had forecast.
LVMH’s core fashion and leather goods business reported a steep decline in quarterly sales, highlighting continued weak demand for luxury goods after a period of price rises and heightened economic uncertainty.
On Thursday’s earnings call, Cécile Cabanis, LVMH’s finance chief, said the company, known as a serial acquirer, was open to selling brands that do not fit within its portfolio, citing the decision to offload stakes in the Off-White and Stella McCartney fashion labels last year.
“We will not keep brands if we believe they are not a good add-on, or we are not the right operator to operate them,” said Cabanis. LVMH’s last big deal was its $16.2bn acquisition of US jeweller Tiffany.
Founded in 1984 by Marc Jacobs, the eponymous brand is known for its designer handbags and upmarket accessories. Jacobs served as LVMH’s creative director between 1997 and 2014.
During a slow period for deal activity, Italian fashion group Prada in April struck a $1.38bn deal to buy rival Versace from Capri Holdings, paying $200mn less than the price tag originally under discussion, the Financial Times previously reported.
