Luxury Acquisitions Just Beginning as Big Players Consolidate: HSBC

Luxury consumers might be staying closer to home, but the high-end dealmakers are out and about — and could get busier.  

According to Erwan Rambourg, global head of consumer and retail research at HSBC, mergers and acquisitions are only going to continue to increase in the sector as the big players press their advantages and keep scooping up monobrand competitors.

This year started out big with LVMH Moët Hennessy Louis Vuitton chief executive officer Bernard Arnault completing his biggest luxury transaction ever, paying $15.8 billion in the off again, on again deal for Tiffany & Co.

“We speak to a lot of investors who tell us LVMH-Tiffany is the end of a decade of M&A  — and we think it was basically the beginning,” Rambourg told WWD in an interview on his new report, “Big Bad Beautiful Bling Binge,” released Monday.

The focus might be on the big buyers, but the flip side of that coin is that it’s a time when the smaller companies can get a good piece of the action. 

“This is a sellers’ market, it’s not a buyers’ market,” Rambourg said. “Transactions happen only when sellers are willing — and they weren’t willing when the world was coming to an end” last year during the first painful coronavirus lockdowns. 

Now monobrand companies are seeing their sales bounce back and are feeling better, but the analyst said they will be looking to the future and realizing they need to be part of bigger groups more than ever. 

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And in addition to be traditional three luxury buyers — LVMH, Kering and Compagnie Financière Richemont — there are more players looking at the big leagues. 

Rambourg pointed to Moncler and Exor. He said Moncler is testing the waters with its purchase of Stone Island and that it could become more aggressive if that acquisition turns out well in the longer run. 

But more interesting right now is Exor, he said, noting the company snatched up stakes in Shang Xia last year and Christian Louboutin this year. 

“I look at Exor as an alternative to Kering, LVMH, the usual suspects,” the analyst said. “Not everyone will want to be gobbled up by LVMH. The small independent guy is going to really struggle, especially as we’re still in a recruitment market. We’re not in a repeat purchase market.” 

Scale is important today and will still be important in another decade, he said, underscoring a major theme of the report. 

“Star brands have the means to dominate the social media discussion and to win the real estate battle within shopping malls and high streets,” he wrote. “Strategically, beyond outspending smaller players and getting the best locations, bigger brands have the capacity to invest in data analytics, [customer relation management] systems, concierge services and more to attract new consumers and keep existing ones happy. Knowledge is power in what remains a crowded luxury industry and scale enables you to rely less on third-party partners and thus derive insights from selling at retail.”

With fashions coming and going, the analyst said having different kinds of brands in a portfolio offers a natural hedge and an edge to multibrand houses. 

While Rambourg pointed to two exceptions — the major luxury stand-alones of Hermès and Chanel — he also singled out a long list of businesses that could be targets as LVMH, Kering, Richemont and other growing groups look toward the future.

The report identified candidates that could be “good fit” for the multibrand groups across many of the key luxury categories: 

Fashion, Leather and Apparel

Armani (2.2 billion euros, 2019 revenues)

Max Mara Fashion Group ($1.9 billion, 2019 revenues)

Dolce & Gabbana (1.4 billion euros, 2019 revenues) 

Ermenegildo Zegna (1.3 billion euros, 2019 revenues)

Valentino (1.2 billion euros, 2019 revenue)

Tory Burch ($1.3 billion, 2019 revenues)


Swarovski (2.7 billion euros, 2019 revenues)

Chopard ($936 million, 2019 revenues)

David Yurman ($650 million, 2018 revenues)


Patek Philippe (1.4 billion Swiss francs, 2019 revenues)

Audemars Piguet ($1.2 billion, 2019 revenues )

Gerhard D. Wempe ($629 million, 2019 revenues)


Uggs ($1.5 billion, 2019 revenues)

Christian Louboutin (580 million euros, 2019 revenues)

Bally (350 million euros, 2019 revenues)

The industry’s main consolidator has been Arnault’s LVMH — which leads with a market capitalization of 313 billion euros. 

And even though the company has signaled it was on the sidelines in the current consolidation — chief financial officer Jean-Jacques Guiony said the company has “other fish to fry” — Rambourg is not counting the luxury giant out. 

“M&A is embedded in the ‘growth algorithm’ of LVMH and the CFO himself was the key dealmaker at Lazard for the group before being brought in,” the analyst said. “So it’s difficult to imagine the nature of the beast will change and that they will not look at everything that could be of relevance. Given the scale of the group and the number of years of experience at deal making it has accumulated, we just think LVMH’s pan is big enough to fry several fish at once.” 


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