Course | Navigating the Field - Inspired from our Third Year Financial Management Course
Please do not copy work. Thank you!
(As a side note, this is not a case study bashing Saint Laurent. I truly admire the brand's unique and chic style and it is one of my favourites!)
Please do not copy work. Thank you!
(As a side note, this is not a case study bashing Saint Laurent. I truly admire the brand's unique and chic style and it is one of my favourites!)
Though the luxury fashion market has shown slower growth, some companies such as Dior, owned by LVMH, have done well. What can Saint Laurent, owned by the Kering Group, do to be on a trajectory of good growth?
Overview
The fashion house was created in 1961 by Saint Laurent and Pierre Berge. Saint Laurent popularised the beatnik look with tight pants and high boots. He was also the pioneer of the broad shoulder padded style that would go on to popularise fashion. He borrows much of his designs from Chinese traditional dresses, Russian ballets and pop art.
The fashion house was created in 1961 by Saint Laurent and Pierre Berge. Saint Laurent popularised the beatnik look with tight pants and high boots. He was also the pioneer of the broad shoulder padded style that would go on to popularise fashion. He borrows much of his designs from Chinese traditional dresses, Russian ballets and pop art.
Saint Laurent Mondrian Dress - 1965
Saint Laurent Beatnik Look (for Dior) - 1960
Saint Laurent Oriental Outfit - 1977
Saint Laurent is owned by a larger group: the Kering Group that also owns other brands including Gucci, Bottega Vaneta, Alexander McQueen, Balenciaga and more. Though the brand has diversified, which is generally considered to be a good thing, its stock prices have fallen.
Kering Group Subsidiaries
Kering Stock Price (1yr) - Investing.com
We can see that for Saint Laurent, their leather goods line has been the most profitable gaining almost 6 times more revenue than their next best, being ready-to-wear.
2023 Revenue by Category - Statista.com
Some of their most successful products from the leather goods section include Lou Camera Bag, Kate Bag, the Sac de Jour and the '5 a Hobo Bag'
5 à 7 bag
Kate Bag
Lou Camera Bag
Sac de Jour
What is causing high leather goods retention?
Fast fashion as a whole has seen a downwards trajectory. The LVMH Group, Kering's competitor has also seen its shares go down, though their downward trajectory started 7 months later - a lesser negative for LVMH.
Fast fashion as a whole has seen a downwards trajectory. The LVMH Group, Kering's competitor has also seen its shares go down, though their downward trajectory started 7 months later - a lesser negative for LVMH.
LVMH Group Stock Price (1yr) - Google
It can be assumed that the leather goods section maintained its performance for Saint Laurent due to the rise of fast fashion. Fast fashion focuses on goods with a 2-4 week turnover rate. Thus, no bags. Of course, Shein has done exorbitantly well within the past few years (when accounting for revenue figures), and if we look at similar brands such as Zara and H&M, we can see similar growth patterns.
H&M Group Net Sales - Statista.com
Inditex Group Net Sales by Subsidiary - Inditex.com
When we look at the left hand graph, we see that after a few tough years, H&M's growth has increased again for the last 4 years. It can be assumed that this is partly due to the pandemic, leading people to order goods more frequently and finding cheaper options, as opposed to the traditional in-store experience.
If we look at the right hand side table, we see that all brands under the Inditex umbrella have performed well.
If we look at the right hand side table, we see that all brands under the Inditex umbrella have performed well.
The Problem
With e-commerce allowing for greater accessibility, and with fast fashion companies providing cheaper and beautiful alternatives, luxury fashion houses are struggling. To see how a luxury fashion house can keep up, we can do a competitive analysis.
Competitive Analysis
When we look into LVMH Groups financial statement provided the firm, we can see that the overall performance was good with double-digit organic revenue growth in Europe, Japan and the rest of Asia.
When we look into LVMH Groups financial statement provided the firm, we can see that the overall performance was good with double-digit organic revenue growth in Europe, Japan and the rest of Asia.
LVMH Group Financial Highlights - LVMH.com
LVMH Group Revenue by Business Group
What is notable is that the LVMH group spends more money on marketing, and creating a digital presence each year.
LVMH Consolidated Income Statement - LVMH.com
LVMH Operating Cash Flow - WSJ.com
On the topic of marketing and selling expenses, the firm has spent 26% more from 2021-22 and 9% more from 2022-23. What is interesting is that this has not hindered its net operating cash flow, which has remained steady at around $18,000 year-on-year.
(*Note, though the net operating cash flow has stayed level, the operating cash flow ratio is below 1, suggesting a need for LVMH to also possibly reevaluate parts of its operations much like the Kering Group).
(*Note, though the net operating cash flow has stayed level, the operating cash flow ratio is below 1, suggesting a need for LVMH to also possibly reevaluate parts of its operations much like the Kering Group).
A Digital Solution
When we look LVMH's gained revenue and profits (an over 8% from last year), we can look at rates of engagement from its brands. Let's look at Dior for example.
We see that while Saint Laurent does not pursue digital avenues as much, Dior, a part of LVMH, does. In a digital age accelerated by covid, this is necessary. We see that Dior has a lot more followers and posts much more frequently. We can also see that the engagement rates (i.e. like counts) are much higher for Dior.
We see that while Saint Laurent does not pursue digital avenues as much, Dior, a part of LVMH, does. In a digital age accelerated by covid, this is necessary. We see that Dior has a lot more followers and posts much more frequently. We can also see that the engagement rates (i.e. like counts) are much higher for Dior.
Dior 10 Day Like Count
Dior Instagram
S. Laurent 10 Day Like Count
S. Laurent Instagram
Saint Laurent vs Dior Digital Competitive Analysis Table - Self Developed
We can also see that compared to fast fashion brands, Saint Laurent comes behind in numbers. While numbers aren't everything, they are a sign of engagement.
H&M Followers
Shein Followers
Zara Followers
Saint Laurent in fact owns its own Saint Laurent Productions. It is the only fashion house to have the ability to create fully fledged films. Three films have even made it to the Cannes Film Festival highlighting the company's artistry. These are things that need to be posted and advertised to the audience to attract customers and raise revenues.
What is special about Saint Laurent's position is that it has the opportunity to mark itself as a highly artistic brand with great online presence.
Parthenope - Saint Laurent Productions
Emilia Perez - Saint Laurent Productions
Of these, Emilia Perez, shown on the right, starring Selena Gomez, won the Jury Prize, one of the most prestigious honours in the film industry.
Conclusion
Saint Laurent is a brand with such great history. From it's Mondrian inspired dresses in the 60's, to its broad shoulder padded designs, and his female suited office worker outfits which dominated many decades, it is clear that with the right digital transition, there is potential for the fashion house to come back to its former success.
Digital marketing avenues such as Instagram, YouTube and TikTok has made it easier for former non industry players to expand their market share in the fashion industry. We can see this from the performances of those such as Inditex Group (Zara's owners), H&M and Shein, as we analyse their revenues and engagement rates.
However, when we look at our luxury fashion competitive analysis, we can see that traditional luxury fashion houses can still also make profits when they use social media avenues well. We can only hope that Saint Laurent bolsters its social media presence while maintaining its profound artistry, so that it can become the brand that it once was, and always has been.
Saint Laurent is a brand with such great history. From it's Mondrian inspired dresses in the 60's, to its broad shoulder padded designs, and his female suited office worker outfits which dominated many decades, it is clear that with the right digital transition, there is potential for the fashion house to come back to its former success.
Digital marketing avenues such as Instagram, YouTube and TikTok has made it easier for former non industry players to expand their market share in the fashion industry. We can see this from the performances of those such as Inditex Group (Zara's owners), H&M and Shein, as we analyse their revenues and engagement rates.
However, when we look at our luxury fashion competitive analysis, we can see that traditional luxury fashion houses can still also make profits when they use social media avenues well. We can only hope that Saint Laurent bolsters its social media presence while maintaining its profound artistry, so that it can become the brand that it once was, and always has been.
