LVMH’s Private Fund Targets Footwear Industry

NEW YORK — Luxury conglomerate LVMH Moet Hennessy Louis Vuitton is making big strides with its footwear investments via its private-equity vehicle.

L Capital, which in March took a 20 percent stake in the $250 million Asian footwear brand Charles & Keith, wants to grow the business fourfold over the next three years.

“We believe it can be a billion-dollar business,” said Ravi Thakran, managing director of L Capital Asia, adding that the fast-fashion chain has about a 30 percent rate of return.

L Capital plans to start by expanding the brand’s global retail footprint beyond the 230 stores it has across Asia. Thakran said in the first year it will be dedicated to conquering China. The next year will be devoted to Europe and the Middle East; and the last year to Japan and the U.S., where L Capital will leverage LVMH’s existing network of stores to work out ideal locations to set up shop, starting in California.

Thakran said the aggressive targets are realistic because “we are able to bring a phenomenal set of operational skills — in product planning, store design and retail merchandising — as well as reputation and scale.

“If small companies go directly to big department stores, say in the U.S., they’ll get squeezed,” he added. “When we negotiate store spaces, we can negotiate for all our portfolio companies at once. Costs and expenses saved in this way go straight to the bottom line.”

L Capital is no stranger to footwear, having previously held a $30 million stake in Belle International Holdings (China’s leading women’s shoe retailer), when it launched an initial public offering in 2007. Thakran said the firm wants to be a global mainstream footwear player, acquiring shoe assets that could make up as much as 25 percent of its $650 million Asia portfolio. For its next deal, L Capital is eyeing an athletic footwear target, Thakran told Footwear News. “But unless it’s something very attractive and differentiated, we’d rather build what we already have,” he said.

For now, L Capital has its sights set on a Chinese fashion company and an Australian beauty brand, the exec said, declining to name names.

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