| PARIS, Sept 16
PARIS, Sept 16 Louis Vuitton's pricey new
Capucine leather handbags are selling like hot cakes in European
fashion capitals, store managers said, signalling the world's
biggest luxury brand could be regaining some of its lost
The news implies Louis Vuitton's efforts to strengthen its
offering of expensive leather bags to reposition itself as more
upmarket and exclusive - as did Gucci recently - is starting to
yield positive results.
An informal Reuters survey of Louis Vuitton shops in Milan,
Paris and London revealed shortages of the 3,500 euro ($4,600)
Capucine bags since their launch in June, with long waiting
On New Bond Street in London, there was only one sample bag
with a "not for sale" sticker on it and 40 people had already
reserved one but assistants said the bags were likely to be
available only at the end of September or early in October.
The Capucine handbag in full-grain Taurillon calf leather, a
material also used by rival brand Hermes, is several
times more expensive than Louis Vuitton's canvas 600
euro-LV-embossed bags with which the brand built its name and
Bernard Arnault, the boss of parent company LVMH,
said in January that Louis Vuitton planned to prune its
portfolio of canvas bags, which make up two thirds of its
business and generate gross margins of 90 percent.
Analysts expect gross margins from leather bags such as
Capucine to be slightly lower.
Shop assistants said they took delivery of only a handful of
Capucine bags every other week over the summer, intimating Louis
Vuitton may have deliberately caused the shortage to create a
buzz around the product - taking a leaf out of Hermes' book.
LVMH and Louis Vuitton declined to comment.
Officially citing production constraints, Hermes is known in
the luxury world for its shortages and waiting lists,
particularly for its popular 7,000 to 30,000 euro Birkin and
Kelly bags, which help strengthen the brand's appeal.
"I take it as a very positive sign that the Capucine bag is
sold out," Exane BNP Paribas analyst Luca Solca said.
"Louis Vuitton had to work on its exclusivity perception and
creating products for which there is high demand and not enough
volume to satisfy everyone, certainly helps."
Shares in LVMH have been underperforming since the beginning
of the year, partly on concerns consumers were losing appetite
for the French brand, which some regard as too ubiquitous.
Since Jan. 1, LVMH shares have gained only 1.4 percent while
shares in Cartier and Lancel owner Richemont rose 28
percent and shares of Gucci parent Kering were up 23
percent, while Burberry stock rose 31 percent.
Louis Vuitton, which generates more than half of LVMH's
operating profits, has seen its sales growth slow down this year
to around 5-6 percent after recording decades of growth above 10
percent, driven partly by an active campaign of store openings.
Analyst estimate Louis Vuitton generates around 7 billion
euros in annual sales, twice as much as rival Gucci, leading to
worries that Louis Vuitton is so big and present worlwide that
there is little room left for it to expand.