Hermès has potential to surpass LVMH’s flagship Louis Vuitton in the coming years as the luxury industry’s biggest brand by turnover, according to Citigroup Inc. analysts.

The Birkin bag maker’s sales are set to hit the “symbolic” €20 billion ($21.3 billion) level by 2027 or before, Thomas Chauvet wrote in a note dated April 12 — a milestone that the Louis Vuitton fashion label reached in 2022. Hermès generated group revenue of €13.4 billion in 2023.

“Hermès enjoys one of the most predictable growth, margin and cashflow profiles in the luxury industry,” said Chauvet. The analyst highlighted the French firm’s pricing strategy, which ranges from affordable to ultra-luxury, its control over distribution and opportunities to grow in categories beyond leather such as ready-to-wear, watches, jewellery and tableware.

While there have been concerns over a slowdown in demand for high-end items following a post-pandemic boom, Hermès’ shares have outperformed fellow luxury goods stocks with a 20 percent gain so far this year. A gauge tracking the industry is up just 6.8 percent over the same period, while LVMH has risen 8.2 percent.

The stock gained 1.8 percent Monday, taking it closer to Chauvet’s price target of €2,350. He has had a neutral rating on Hermès since initiating coverage in 2020.

Hermès is considered to be more insulated from an industry downturn, due to its exposure to very wealthy clients and a unique business model which is driven by scarcity. The company is due to give an update on first-quarter sales on April 25.

Conglomerate LVMH is the world’s biggest luxury group, with its 75 brands making products ranging from handbags to Champagne. HSBC analysts have estimated that Louis Vuitton alone generates around 50 percent of LVMH’s profitability, and accounts for 26 percent of sales.

By Kit Rees

Learn more:

Hermès Created Europe’s Biggest Family Fortune After Spurning LVMH

Once vulnerable to predators as complacent family members got involved in other endeavours, Hermès’ success has provided the group its best defence.

Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholders’ documentation guaranteeing BoF’s complete editorial independence.

CVC Capital Partners revived plans for an initial public offering in Amsterdam, seeking to raise at least €1.25 billion ($1.3 billion) with its investors in a listing that potentially paves the way for other private equity firms to go public.

The company aims to raise €250 million by selling new shares, while existing holders also plan to sell stock, the firm said in a statement Monday. None of the firm’s active employees are selling in the IPO, according to the statement.

CVC has been working on a listing since at least 2022, with previous attempts buffeted by volatile markets. While a rebound in European IPOs is adding to chances of a successful market debut now, the announcement comes after Iran’s missile attack on Israel that’s raising concern of an escalation in Mideast hostilities.

“This is very much a long-term structural decision for the business and we expect the IPO to take place in the coming weeks, obviously subject to market conditions, and we’re monitoring events in the Middle East very very closely,” Rob Lucas, chief executive of CVC, said in an interview.

“We’ve been looking at this for a very long time clearly and we have been very cautious in terms of how we’ve approached it,” he said. Sentiment from investors over the last couple of months has been “so positive and so strong” that it has given CVC the confidence to move forward, he added.

CVC, one of Europe’s best-known buyout firms, manages about €186 billion of assets and owns stakes in companies including Swiss watchmaker Breitling and Lipton Teas and Infusions, according to its website.

The firm is targeting a valuation of around €13 billion to €15 billion, Bloomberg News reported Sunday, citing people familiar with the matter.

A listing of CVC, which was valued at about $15 billion when it sold a minority stake to Blue Owl Capital Inc. in 2021, will test investor sentiment toward alternative asset managers at a key moment for the industry. It will also mark a revival for listings in Amsterdam, which lost its position as one of Europe’s busiest listing venues after a blowout year in 2021.

Private equity firms have seen the path to exiting investments heavily constrained in recent years, with inflation, high interest rates and elevated volatility weighing on dealmaking. A slowdown in returns has also made it harder for private equity firms to raise new funds.

Still, CVC has had more success than its peers in this regard. It raised €26 billion last year for the world’s biggest-ever buyout fund and has been diversifying its business into new areas including infrastructure and so-called secondaries, or existing portfolios of private equity fund holdings.

“The raising of Fund IX in record time at the most difficult point in the market and to create the largest private equity fund ever raised has really hugely underpinned the sentiment that there is out there at the moment,” Lucas said.

Shareholders that are selling in the IPO include Singapore sovereign wealth fund GIC Pte, Kuwait Investment Authority, a wealth fund run by the Hong Kong Monetary Authority and certain management shareholders. Blue Owl plans to invest in as much as 10 percent of the offering, according to the statement, increasing its stake.

CVC plans to use IPO proceeds to fuel growth, including scaling the next generation of its funds, pursuing acquisitions and funding a part of the price tag for its acquisition of a majority stake in DIF Capital Partners, announced in September.

The offering also may encourage other private asset managers to go public. General Atlantic, the investment firm whose bets have included Facebook Inc. and Airbnb Inc., confidentially filed for an IPO, while private credit firm HPS Investment Partners did the same more than a year ago, Bloomberg News has reported.

While investor appetite for listings is improving, the rebound in Europe has been uneven. Galderma Group AG, a skincare company backed by CVC’s private equity rival EQT AB, has soared 20 percent above its offer price, and Spanish beauty and fragrance group Puig Brands SA said April 8 it would press ahead with an IPO.

CVC-backed German perfume retailer Douglas AG suffered a more disappointing stock market debut, however, having slipped 24 percent since its March listing. And Spain’s Bergé y Compañía on April 5 scrapped plans to float its Astara unit.

Stock-market gains for listed European peers such as Bridgepoint Group Plc, Partners Group Holding AG and EQT are also boosting sentiment around a CVC listing.

By Swetha Gopinath and Dinesh Nair

PALM SPRINGS, CALIFORNIA — At one time, a photo with the Coachella ferris wheel was the most iconic Instagram status symbol to come out of the two-weekend concert. Then, the Revolve Festival carousel swing came along. The fashion e-tailer’s carnival ride became a flex that separated the influencers and A-list celebrities from the masses, signifying attendance at the invite-only event held annually on Coachella’s first Saturday.

This year, the swing was no more. Hosted on the grassy grounds of the Parker Palm Springs hotel, the Revolve Festival was noticeably smaller, and not just because it was back to a single day, from two in recent years. Known for its ability to draw attendees such as Timothée Chalamet and the Kardashians, the party’s guest count was also down to 1,200 from 5,000 at its 2022 peak.

There were still influencers clad in short shorts, tiny crop tops, see-through dresses and cowboy boots, lining up for Havaianas flip flops, Quay sunglasses and other festival-appropriate products. A photo booth dispensing the cult Peptide Lip Treatment by Hailey Bieber’s beauty brand Rhode was by far the biggest draw. A bar stocked full of 818 margaritas and vodka Red Bulls fuelled singalongs to performances of “Get Low” by the Ying Yang Twins and “What’s Your Fantasy” by Ludacris. Celebrity appearances included Bieber, who also sponsored a frozen yogurt stand that encouraged people to add the “Hailey’s Way” toppings of chocolate chips and peanut butter, as well as Megan Fox, Emma Roberts and Charli D’Amelio.

But the scaled-back event is partly a reflection of how Coachella hype has faded. And Revolve, which helped invent influencer marketing as we know it with over-the-top events like the Festival, is looking to new ways to leverage social media hype in order to sell clothes.

It was becoming increasingly clear that something needed to change. Coachella parties have made headlines in recent years as much for long lines and ubiquitous advertising as the music or the looks. The influencer trip format, where social media celebrities are sent to exotic locations and exclusive events, frequently generates backlash, and worse – boredom.

Revolve’s net sales, which crossed $1 billion in 2022, dipped 3 percent last year. The 2023 Revolve Festival generated about half the earned media value – a measure of attention online – as it did in 2019, according to influencer marketing platform Creator IQ.

The company is responding by expanding its focus from festival outfits, party dresses and beachwear to everyday categories including office wear and beauty. Its marketing is also, if not exactly staid, certainly toned down from its pre-pandemic heyday. Overall marketing spend decreased from $181 million in 2022 to $171 million in 2023, according to regulatory filings. While Revolve sent influencers on a trip to the Super Bowl and to visit its pop-up store in Aspen this year, it has not yet done any of its signature #revolvearoundtheworld global brand trips.

“We do have some trips and events already planned, but I don’t know if we’re going to do as much as we did last year,” said Revolve’s chief brand officer Raissa Gerona.

Inventing the ‘Influencer Olympics’

Founded in 2003, Revolve hit its stride when it went all-in on influencers in the early 2010s.

It was one of the first e-tailers to hold influencer trips, generating aspirational content from luxurious locales like Dubai or Turks and Caicos. It also became synonymous with bringing that aspirational aesthetic to Coachella, sending its first group of influencers to the California desert music festival in 2013 at the height of the flower crown era. That led to the creation of the Revolve Festival in 2016, which ballooned into a full-blown separate two-day music festival that brought in performers such as Cardi B, SZA and Travis Scott over the years.

“Raissa made the whole ‘Revolve Around the World,’ and she’s a genius for that,” said Megan Levy, head of talent acquisition at influencer management agency Shine Talent Group, which has influencer clients who attended Revolve Festival. “It kicked off a whole new wave of influencer marketing.”

Sales soared, year after year. Revolve went public in 2019, earning a $1.2 billion valuation. Unlike other e-tailers that held initial public offerings around that time, its sales and profits continued to climb, with compound annual revenue growth of 22 percent since its IPO. By late 2021, its share price had more than doubled.

But the first cracks in Revolve’s strategy began to appear the following year. In 2022, the first Revolve Festival since the pandemic confronted a new culture of outspoken Gen-Z TikTokers. After the festival hit capacity on its first Saturday back, disgruntled influencers took to the short-video platform to rant about being denied entrance. In 2023, Revolve reduced its festival size to 3,000 people and cut the length on both days.

Influencers at Revolve Festival on Saturday seemed happy with the more exclusive guest list and easier logistics.

“I thought it was perfect because it wasn’t overcrowded, but there were definitely a lot of people there and everyone was having a good time,” said model Marianne Fonseca, who gave out products from her body-care brand Gente Beauty to influencers in Revolve’s gifting suite this year.

Even the biggest influencer events aren’t packing the same marketing punch, and not just for Revolve. Other brands, such as the makeup line Tarte, have also faced scrutiny for their influencer trips, whether for showcasing an out-of-touch lifestyle or a lack of diversity, or both. Beyond the controversies, consumers seem to be getting bored with watching social media celebrities frolic on the beach or at Coachella. Gerona herself has said that the traditional influencer trip feels “dated” these days.

“This trend for festivals and big festival brands is similar to the emerging consensus around influencer trips: they drive [attention] for the brands in question, but there’s more negative sentiment,” said Alex Rawitz, the director of research and insights at Creator IQ.

Fewer Bikinis, More Blazers

Influencers have also been evolving past the 2010s Instagram aesthetic. Aimee Song, one of the influencers known for driving the Coachella influencer fashion boom and a regular attendee at the Revolve Festival, is no longer doing her Song of Style fashion collaboration with Revolve as she launched her own standalone luxury line last week.

Revolve is undergoing a style makeover of its own.

While its activations have often centred around event-based dressing like festivals, parties or vacations, Gerona said that influencer trips have become more focused on everyday clothing like activewear, blazers and basics. This also applies to its collaboration strategy, which is still going strong – the company just appointed Marianne Hewitt the creative director of its in-house label L’Academie, which offers suiting separates and work-appropriate clothing.

Location choices have expanded from tropical hotspots to cities – last year’s destinations included Singapore, Tokyo and the Netherlands. Rather than flying American influencers to international locations, these trips are increasingly tapping local talent in a bid to grow Revolve’s international sales. The Singapore trip featured influencers from across Asia, while a Mexico trip last year brought influencers from countries across Latin America.

According to its latest earnings report, the company is also focusing on expanding high-growth categories including menswear, home and beauty, which saw a 49 percent year-over-year net sales increase in the fourth quarter last year.

“We travelled a ton in the last decade and it has been so fun, and has been obviously so important and pivotal to the brand, but now it’s also trying to think about ‘Okay, there’s so many different categories that we sell on Revolve,’” said Gerona.

The new approach has some converts. In March, TD Cowen analysts upgraded their outlook for Revolve’s stock, citing “early signs of improvement.” For growth to return to 2022 levels, Revolve “will need to execute on reaching new customers while retaining their existing Gen-Z and Millennial base as they grow older,” the analysts said.

The old Revolve isn’t going anywhere. While Song may be done with Revolve, influencer Camila Coelho was on hand at Revolve Festival in a look from her collection with the retailer.

And at Stagecoach, the country music festival held on the same site as Coachella later this month, Revolve is launching its inaugural afterparty. Some 1,000 attendees are expected, including plenty of influencers.

“Festival will always be a signature and just a part of what we do because we’ve been doing it for so long,” said Gerona.

They didn’t call him the “king of bling” for nothing.

There was nothing subtle about Roberto Cavalli, the designer known for his maximalism and over-the-top animal prints, not on his runways and certainly not in his personal life, which was splashed all over the Italian tabloids every time he went to the beach in a tiny bathing suit or fathered another child, which was with some frequency in his later years. Cavalli, who died in Florence on Friday at the age of 83, was a larger-than-life character who built a fashion empire based on his own image, a picture of Italian swagger, which he called the “Cavalli World.”

From his 15th century farmhouse outside Florence, Cavalli commanded 40 acres of Tuscan hillside populated with thousands of olive and cypress trees, sprawling gardens, swimming pools, a Turkish bath, an armada of racing cars (including a 1970 Ferrari Daytona) and a massive garage built for his custom-designed, iridescent-painted helicopter, which he piloted himself for his daily commute to work. His elaborately carved bed frame was a prop from a runway show inspired by Marchesa Luisa Casati. Most of the furniture was upholstered in fabrics from past collections featuring animal prints not found in nature. Live animals, too, were everywhere: squawking cockatoos, a large German shepherd, two tiny Yorkshire terriers and, once upon a time, a spotted Savannah cat named Cialis.

The excess of his surroundings, he often told visitors while chomping on a cigar, was a tribute to his success: annual sales at Roberto Cavalli — which offered everything from ready-to-wear to accessories, watches, jewellery, fragrance, eyewear and underwear — peaked around $250 million in 2014, the year before the designer sold a majority interest in his business. Befitting his decadent lifestyle, he also designed nightclubs and mega-yachts and had his own brand of vodka. For much of the 2000s and into the next decade, Cavalli’s outré designs became red carpet staples, his body-baring tropical dresses worn by the likes of Beyoncé and Jennifer Lopez. But his company was also plagued by operational and management issues that were never fully resolved under a series of owners and new designers once Cavalli retired.

Cavalli himself seemed to recognise that his cultural impact was very much tied to a moment when sex sold. Although he began designing in the 1960s after his studies at the Art Institute of Florence, Cavalli — whose grandfather Giuseppe Rossi’s paintings are exhibited in the Uffizi Gallery — struggled to find an audience for years. When he started the Roberto Cavalli company in 1970, already selling vividly printed boho fashions, even printed leather, no one was buying his look. It wasn’t until the breakthrough of Gianni Versace in the 1990s that minimalism began to fade, leaving space for the more provocative style favoured by the young Italians.

“Before that, everything was flat in fashion,” Cavalli said in 2001, when he had become the go-to designer for celebrity flash. “It was like perfume or soap in that everything was the same. Glasses were normal. Watches were normal. There was a flattening in creativity, but I brought something different.”

During the “Sex and the City” years, Cavalli became as much of a celebrity as the women he dressed, opening stores around the world. Courtney Love and Lenny Kravitz promoted his work, and Cavalli latched onto the Hollywood set, befriending producers and directors and inviting them to enjoy the spoils of his villa. (Anthony Hopkins came by to use the gym almost daily during the filming of “Hannibal.”) In 2003, he served as the grand marshal of New York’s Columbus Day parade, blowing kisses to strangers on Fifth Avenue from a teal Alfa Romeo Spider convertible, surrounded by an entourage of 20 models riding Ducati motorcycles.

“The celebrity connection is very important,” Cavalli said. “It’s more important to me personally than to anyone else because it makes me feel important… It’s important because it’s adrenaline, and that’s what starts creativity.” By 2014, the company had 179 stores for his signature brand and the denim-focused diffusion label, Just Cavalli, which accelerated the brand’s international growth but also caused the business to lose money for years as it faced complications with its licensees. As with everything Cavalli, the excess sometimes became too much, as critics sniped over the increasingly loudness of his clothes. His 2007 collaboration with H&M, which included leopard tights and sheer briefs, was panned for its cartoonish sex appeal.

After Cavalli sold a majority stake in the company to Clessidra, a private equity fund, in 2015, Peter Dundas took over the brand’s creative direction, only to be replaced two years later by Paul Surridge, who himself left the house in 2017. After a bankruptcy in 2019 that saw the closure of the brand’s stores and operations in the United States, Cavalli was sold to the Dubai luxury real estate developer Hussain Sajwani, who named Fausto Puglisi creative director in 2020. “It is the greatest honour of my career to work under your legacy and to create for you the brand you founded with such vision and style,” Puglisi said on Instagram.

Cavalli’s personal life was the subject of much public fascination, too. He met his second wife, Eva Duringer, during the Miss Universe pageant in 1977, when he was a judge and she was Miss Austria. Eva Cavalli was his design partner for many years and together they had three children. The couple continued working and living together after ending their marriage around 2010. Last year, at 82, Cavalli had a son, his sixth child, with Sandra Nilsson, a former Swedish model. Cavalli had a sense of humour about himself and often poked fun at his own narcissism, which was not always politically correct. He collected rare animals and objects with the same sense of abandon that he designed his prints, even at the risk of causing offence.

“I remember at the beginning, some of my friends said, ‘Oh Roberto, you use too many kinds of decoration,’” he said. “What do they care what I put in my house? I choose pieces that remind me of my life.”

Milan’s Salone del Mobile design fair has taken on new proportions in recent years. In addition to luxury furniture makers courting decorators and their wealthy clients, it now attracts scores of fashion brands looking to make a splash among top-spenders. Proposing an 360-degree luxury lifestyle to their wealthiest customers is an bigger focus than ever this year as aspirational customers continue to spend less.

Salone doesn’t officially start until next Tuesday, but this year the fashion action will mostly be over by then: brands are trying to squeeze in their moments before tastemakers and top clients decamp for the Venice Biennale, where previews begin Wednesday. Armani/Casa’s opening dinner will be Saturday, followed by a flurry of fashion events Sunday and Monday.

A handful of luxury fashion brands have actually built substantial businesses in home design: Loro Piana’s home universe has seen real success in recent years, anchored by its expertise in top-end fabrics for upholstery. Hermès produces a full range of furniture in addition to its best-selling H-logo pillows and leather tchotchkes. Armani/Casa, Versace and Fendi have also established furniture and homeware extensions.

But even as sales of luxury homeware show promise, the focus for many brands during Salone isn’t on conversions, but being part of the conversation. Prada, for example, recently launched a new homeware range, but that collection won’t be the focus during the fair: rather the brand will stage the third edition of its “Frames” symposium, a series of talks which “delves into the complex relationship between the natural environment and design.”

Brands also just understand the power of hosting influential people, particularly during Salone when the Italian spring creates a potent backdrop for gatherings. It’s a big moment for cross-industry networking, as the event tends to draw a broader range of people from culture- and design-adjacent fields (architecture, fashion, design, art, media and advertising) than more insular events like fashion week or Cannes Lions.

One activation to watch will be Gucci: the decor for new designer Sabato De Sarno’s first flagship store in Milan hinted at a passion for Italian post-modern design. Exploring that avenue could add texture to the brand’s reboot after a year of palette cleansing.

Earnings Kick Off

As brands stage frothy events in Milan, they’ll be gearing up for sobering news, too. On Tuesday, sector leader LVMH is expected to report a further slowdown, with sales growing 3 percent. Smaller rivals who report in the following weeks are set to fare worse: Kering has forecast a 10 percent drop in sales; Burberry is also expected to post a double-digit decline.

LVMH’s commentary on when and how business might pick up in China and the US will be closely examined. In China, slowing economic growth and mounting trade tensions with the EU won’t help turn things around. Investors are also hungry for signs that the US luxury market has passed the bottom of the curve after sales pulled back from post-pandemic highs.

Additional reporting by Dan Thawley.

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Background:

Prosper and Martine Assouline’s business began with a passion project: A book dedicated to their love for La Colombe d’Or, a boutique hotel in the South of France; Martine produced the images and Prosper was responsible for the text. But since publishing that first title 30 years ago, Assouline Publishing has gone on to capture the history and visual memory of places like Ibiza and Jaipur, industry icons such as Estée Lauder and Valentino Garavani, as well as fashion houses like Saint Laurent and Louis Vuitton.

“The idea was to make a book about the spirit of a place … to mix the past, the present, the people, and all the DNA,” says Martine.

“I always say to my team in the art department that when a book is finished, we need to start it … You think it’s finished but it’s just beginning,” says Prosper.

This week on The BoF Podcast, founder and editor-in-chief Imran Amed sits down with the Assoulines to learn how this fixture of fashion publishing was born and how they intend to maintain that original creative spark while growing it into a global lifestyle business.

Key Insights:

• While Assouline may be a leading luxury publishing house today, Martine and Prosper were outsiders without prior experience or contacts in this world. They had to learn along the way. “We learned that it was a real job. A real industry, a club where everyone knew each other,” said Prosper Assouline. “We learned while doing - everything,” added Martine.
• Prosper Assouline says the process of creating a new book is architectural and the magic lies in the details. “We didn’t just want to do books because Amazon is full of proposals and other publishers are full of proposals.”
• For Martine, the continual consumption of culture and arts is a key ingredient in Assouline’s secret sauce. “You have to eat culture. You have to go to a museum. You have to see films of today, of yesterday. You have to look at magazines, hear music, all kinds of different books. It’s very important.”
• In the Assoulines’ view, what they’re doing is much bigger than simply publishing books. “The idea was not just to make books, it was to create a luxury brand on culture,” said Prosper Assouline.
• Looking towards the future, the luxury publishing house is narrowing its focus on lifestyle. “Lifestyle is the project. It’s our way to live and work, it has always been our direction,” said Martine Assouline.

Additional Resources: