Is LVMH Acquiring Ralph Lauren?
The LVMH Group recently bought renowned American luxury brand Tiffany for a staggering $15.8 billion price tag, the conglomerate’s biggest acquisition yet. Tiffany recently made headlines by collaborating with long time watch partner Patek Philippe for its 170th anniversary by shocking the timepiece industry with a mind-blowing auction price of $6.5million with its Ref. 5711 Tiffany dial limited edition watch.
It does make financial sense. Forbes reports that LVMH currently trades at about 16x its earnings while Ralph Lauren is well under 9x. With both parties neither confirming nor denying these rumors, it further feeds on the speculation that a deal might just be around the corner.
With a market cap of $9 billion, Ralph Lauren Corporation is a huge investment that LVMH is fully capable of handling, even with buyer’s premium. Adding another American label to its portfolio allows LVMH to better position itself in the lucrative US market.
LVMH currently has around 75 luxury brands, 150,000 employees worldwide and $73 billion (P3.7 trillion) in annual revenues, making it one of only a handful of companies who can undoubtedly take care of the brand and continue its growth.
At 82 years old, Ralph Lauren himself is no doubt already considering the legacy he has built.
“Ralph Lauren started with a tie,” his son David, who is EVP of the company, said. “My mom and my grandmother used to help sew the labels into them, and he would take these ties and go door-to- door to department stores, trying to get people to buy them.” From these humble beginnings rose the brand’s timeless and signature Polo cotton mesh shirts and emblematic preppy clothing line. There is no doubt that, whatever happens, Ralph Lauren’s place in history as a powerful global brand and a symbol of Americana fashion is secure.