When Apple acquired Beats (the headphones company founded by Dr. Dre), Ian Rogers joined Apple as a senior music executive. He has now left to join LVMH, the luxury and fashion house, as its chief digital officer.
What does this mean?
Luxury brands need to start doing a much better job of selling their products online, especially as sales growth in Asia (a huge market for them) has slowed considerably. The good news for luxury brands is that there is plenty of room to grow: according to Sanford Bernstein, only 5% of luxury sales took place online in 2014. In the meantime, online brands are evolving, like Warby Parker or Nasty Gal -- a trend that further reinforces the urgency with which traditional brands need become more “digital.”
Why should I care?
LVMH stock has been absolutely pummeled in the past month: it’s down 18% since its peak in early August, due primarily to concerns emanating from China.
However, in July it had reported strong sales growth of 5% for the first half of this year, due primarily to solid growth in Europe and the US. This growth combined with the news that it is investing more heavily in its digital strategy is probably good for its long term future. It might eventually be enough to counteract slowing Asian growth and ultimately drive its stock higher.
Originally posted as part of the Finimize daily email.
The top 2 financial news stories in 3 minutes. Join over 400,000 Finimizers