Late last week, there were rumors that luxury retailer Louis Vuitton Moët Hennessy (LVMH) planned to acquire Ralph Lauren, and the story ignited the fashion world with excitement. However, a new article from Business of Fashion suggests it was all bunk and points out reasons why the partnership would be improbable in the first place.
To start, the 82-year-old Ralph Lauren is still the executive chairman, chief creative officer, and majority shareholder of his eponymous brand, and he’s never given any real indication of wanting to sell the company. As a matter of fact, the company raked in $4.4 billion in the fiscal year, and sales across North America (its No.1 market) have risen more than 300% from the year before per BOF.
Another potential source of conflict stems from the fact that each company actually caters to different target sectors, although there is some overlap. LVMH focuses on the high-end market with brands like Givenchy, Christian Dior, and Kenzo, and the $360B conglomerate recently added jeweler Tiffany & Co. to its massive portfolio of luxury labels.
However, except for men’s suits, the sweet spot for Ralph Lauren is the mid-luxury market. Their goods lack the appropriate margin to be profitable to LVMH long-term, and RL doesn’t possess the type of cachet to effectively compete with other established European brands outside of America.
PVH Corp. (formerly known as the Phillips-Van Heusen Corporation) would actually be a better fit for Ralph Lauren, with its American roots and already being home to brands like Calvin Klein, Tommy Hilfiger, and Michael Kors.
For now, RL and LVMH have both declined to offer any official comment — and none of this matters if Ralph Lauren himself doesn’t want to sell the company in the first place.