Economy

LVHM Doubles Down With Bigger, Extra-Luxe Louis Vuitton Stores

With Louis Vuitton sales jumping more than 20 percent last year, the LVMH luxury goods group is sprucing (and scaling) up Louis Vuitton sales outlets across the globe.

Looking for new bags at Louis Vuitton store in Paris (Zoetnet)

How do you sell more and more luxury merchandise across the globe, without undercutting an image of craftsmanship and exclusivity? That is the delicate equation facing top executives at French fashion house Louis Vuitton, the star brand of luxury goods group LVMH. It's a balancing act they are achieving today by increasing their production capacity, raising prices on select items, fighting counterfeiting and opening increasingly luxurious stores.

In 2010, LVMH's cash cow was working at full capacity. Even at the height of the global financial crisis, when the luxury goods market was shrinking, Louis Vuitton posted double digit growth. Last year, with the rebound in the market, its sales jumped more than 20 percent, to more than 5.5 billion euros ($7.4 billion), according to analysts. This gives the brand a stellar operating margin of 45 percent, with the handbag and luggage maker generating half of LVMH's profits.

On the retail side, the company is going even more upmarket. The opening in London last May of its New Bond Street "Maison," LVMH's biggest retail space in Europe, set the tone. Boasting a private client suite aimed at VIPs, it is the most luxurious Louis Vuitton sales point anywhere.

"It has enabled us to double sales," says a buoyant Yves Carcelles, chairman and CEO of the brand. This approach now lies at the heart of the group's sales strategy. "Our aim is to enlarge and renew all our stores, to make them all more luxurious," he explains.

Its retail space in Rome, for example, is set to quadruple in size, thanks to the acquisition of an old cinema just off the main Via del Corso shopping drag. Fewer than ten new sales points will open this year, in comparison to about 20 in 2010.

On the manufacturing side, the challenge is to respond to demand, particularly for products made out of the brand's famous LV-monogrammed canvas, which represent 60 percent of sales. Just before Christmas, in order to avoid running out of stock, the Louis Vuitton store on the Champs Elysées in Paris closed its doors an hour early every evening.

"It takes time to recruit and train artisans," explains Bernard Arnault, the CEO of LVMH. "We're increasing the capacity of our workshops and also relying more and more on our subcontractors."

In April, the twelfth French-based workshop is due to open in Marsaz in the southern region of Drome, which will increase production capacity by 10 percent. A few miles away in Saint Donat, a factory that LVMH had been planning to close is now set to be refurbished.

Up until 1977, the company possessed a single production site in Asnières on the outskirts of Paris, dating back to 1854. Today, Vuitton employs 16,000 people, including 3,000 in France. Laser machines are used to cut the leather and canvas. "All the repetitive activities are now done by a machine. But 60 to 70 percent of the work is done by hand," says Patrick Vuitton, a top company executive who represents the fifth generation of the family. "But you know work done by hand isn't always a guarantee of quality."

In spite of this, Vuitton is keen to defend the brand's artisan image. "We have always made quality products, and we intend to remain faithful to our ancestors."

Read the original article in French

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Economy

Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money for a blockchain-powered e-commerce app. But the simplest of errors exposed the scam and limited the damage to investors. A cautionary tale for the crypto economy.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.


Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

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