Suitcase on Red Square has brought losses to Louis Vuitton

At the end of 2013 of Louis Vuitton East had the first loss for its work time in Russia. "Business expenses" rose sharply.
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In Paris this autumn with a shocking scandal huge Christmas tree installed on the Place Vendome in the heart of Paris - a design height of 24.4 m many recalled products sex shops. Against this background, the Moscow authorities gave Paris 25-foot live Christmas tree, it was installed in front of the Notre Dame Cathedral. "News" decided to find out the financial results, which resulted in a scandalous publication on Red Square pavilion as a suitcase, which provoked a scandal in November-December 2013. It turns out that the Russian "daughter» LVMH Group (Louis Vuitton Moët Hennessy) - OOO "Louis Vuitton East" - completed last year with a loss, for the first time all of its work in Russia.

According to the SPARK database, the net loss "Louis Vuitton East" for the last year amounted to 1.6 million rubles against 288 million rubles of net profit in 2012. At the same time the company's revenue, by contrast, has grown considerably: from 3.38 billion rubles in 2012 to 3.77 billion last (+ 12%).

In contrast to the statements of the Russian company LVMH Group demonstrates the positive trend for the year 2013: net profit amounted to € 3,94 billion (+ 1%), VõruPFA - € 29,15 billion (+ 4%). Almost 30% of the revenues brought the Asian market, in the second place of the United States (23%), Europe is in third place - 19%.

The scandal erupted with a suitcase in November of 2013. Then, on the Red Square in Moscow we have established a huge pavilion fashion house Louis Vuitton in the framework of the jubilee events dedicated to the 120th anniversary of GUM: preparing a charity exhibition "Soul wandering." Suitcase 9 m high and 30 m long, has caused a wide public resonance and mass corruption suspicions, and experts praised quite successful marketing campaign, brand awareness has really grown.

Rosreestr said the pavilion installed in violation of land legislation. At the same time, Mikhail Kusnirovich, owner of Bosco di Ciliegi, which leases gum, said that the installation of the pavilion has been agreed "with the prefecture, the city authorities, the federal authorities." Representatives of the City Hall and the Manager of the president insisted that the application of the GUM department store was not. Profit from the exhibition of hand luggage organizers intended to convey in Natalia Vodianova "Naked Heart" charity fund. But stanka, which would open on December 2, did not take place, and Louis Vuitton and gum were charged with violation of the Administrative Code ( "Arbitrary restrictions on access to land public") and imposed a fine of 10 thousand. rubles. A year ago, the suitcase was dismantled.

The company did not disclose the cost of the installation and dismantling of the pavilion - perhaps that they obtained can be explained by the French company losses. Indirectly, this assumption is confirmed by the data from the reports: business expenses "Louis Vuitton East" in 2013 amounted to 1.5 billion rubles, which is 50% higher than a year earlier. But experts believe that the actual installation of the suitcase could hardly generate losses.

- Installation of a suitcase is not a factor that could affect the statements of the company, - says the analyst of the Criminal Code "Finam Management" Maxim Klyagin. - Additional 600 million rubles - a marketing and distribution costs, which put pressure on margins. Negative financial results for 2013 is not critical for this large company. The prime cost increased by 13%, and the share in the cost tohandle was about 55% - about half a percentage point higher than in 2012. Profitability also increased by more than 1 percentage point. It may be noted that the pressure on margins has had an increase in selling expenses.

According to Anna-Lebsak Kleimans, general director of Fashion Consulting Group, the story of the suitcase brought the company an extra PR.

- This suitcase-exhibition traveled to many capitals of the world, and such a strange reaction to the exhibition in Moscow was the occasion for more information and PR frequent mention of the company name in dozens of media outlets, - the interlocutor said. It is estimated that an increase in the company's expenses due, most likely, with the opening of new boutiques, including in the Olympic Sochi.

According to interviewed experts, companies in luxury-segment will continue to invest in the Russian market significantly in contrast to the mass brands, which reduce its presence. In the "Louis Vuitton East" could not imagine operating a comment.

Louis Vuitton is specialized in the production of luxury suitcases and sumto, clothing and accessories. Currently, the company is part of the international holding company LVMH (Louis Vuitton Moët Hennessy). In Louis Vuitton own five stores in Russia: two - in Moscow, one - in St. Petersburg, Yekaterinburg and Sochi.