GADFLY: Luxury goods giants remain untouched by market turmoil
Now is not the time, however, for European mega-brands to think of mergers and acquisitions
London/Washington — Markets are in turmoil, but the diamond-studded luxury goods juggernaut shows no signs of slowing down. Shoppers are snapping up Louis Vuitton handbags and Gucci loafers. Even the hard-hit watch market is showing signs of revival. It might be tempting to embark on some mergers and acquisitions, given how sales and shares of European mega-brands such as LVMH Moët Hennessy Louis Vuitton and Kering have held up. Michael Kors Holdings and Tapestry (formerly known as Coach) both want to turn themselves into luxury powerhouses. But they should all be patient. Bernard Arnault, LVMH’s chair and CEO reckons firms would be better off waiting for the next crisis before swooping. He’s right. Nobody wants to pay full price for a closet full of luxury brands. Yet that’s just what shareholders are paying: the Bloomberg Industries Global Luxury Competitive Peers index traded at about 22 times estimated earnings at the end of 2017 — a near 14-year high. Burberry, Hugo Boss and Ti...
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