LVMH’s Investment in Moncler

By Mimosa Spencer and Anna Pruchnicka

PARIS (Reuters) – Shares in Moncler surged on Friday following French luxury rival LVMH’s investment in the Italian outerwear brand, sparking speculation about the long-term intentions behind this move. LVMH, owner of Louis Vuitton and Moet & Chandon champagne, acquired a 10% stake in Double R, the investment vehicle of Moncler CEO Remo Ruffini’s Ruffini Partecipazioni Holding, which currently holds a 15.8% stake in Moncler.

The deal represents approximately a 1.6% stake for LVMH in Moncler, with analysts indicating it could expand to 4% within 18 months. According to analyst Luca Solca from Bernstein, this investment positions LVMH advantageously for any future acquisition opportunity regarding Moncler.

Moncler shares increased by 10% by 0944 GMT, recovering from a 6.5% decline earlier this year. LVMH shares also saw a 2% rise, despite being down 7.5% year-to-date amid a slowing luxury market.

Known for its upscale puffer jackets, Moncler has emerged as a strong contender for potential acquisitions or mergers among luxury groups seeking growth.

Luxury Sector Dynamics

While LVMH’s current stake in Moncler remains modest, market analysts compared this situation to LVMH’s earlier investment in Tod’s, which was seen as supportive at that time.

On the same day of the investment news, Reuters reported potential stimulus measures in China, which positively impacted luxury shares and raised hopes for revived spending on luxury goods. However, investors remain concerned about a slowdown in the luxury sector, especially in the crucial Chinese market affected by economic growth deceleration and ongoing property challenges.

From LVMH’s perspective, this investment serves as a valuable strategy amid current luxury market weaknesses, according to RBC analyst Piral Dadhania. He suggests that this minority stake in established brands is an effective use of excess cash, particularly in light of potential new taxes on share buybacks in France.

Before the pandemic, Moncler had been considered for a partnership with French fashion group Kering, which has since focused on revitalizing its brand Gucci, acquiring high-end perfumer Creed and a stake in Valentino.

In an announcement about the Moncler deal, LVMH emphasized its commitment to supporting Ruffini’s ambitious plans for Moncler, which have included high-profile collaborations and strategic acquisitions like the 2020 purchase of Stone Island.