The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
PARIS, France — Louis Vuitton is curtailing hefty discounts for staff members and their families after a French tax authority decided that bargain prices on high fashion should be considered a taxable benefit, according to people familiar with the matter.
The LVMH brand agreed to put an end to staff discounts as high as 90 percent for unsold products, said the people, asking not to be identified because they were discussing an internal matter. The company is now capping the reductions at around 75 percent, which will more than double prices for French employees.
Limiting the cherished perk could also complicate Louis Vuitton’s policy of never selling at a discount in stores, because the internal sales have helped the brand clear away extra stock when items like €2,500 ($2,765) silk vests fail to find buyers. The maker of monogrammed handbags and trunks has boosted its range of seasonal products like ready-to-wear fashion and shoes in recent years, increasing the risk of excess stock.
LVMH Chairman Bernard Arnault has long prided himself on never discounting his biggest brand's items for consumers.
ADVERTISEMENT
A Louis Vuitton spokeswoman declined to comment. The French tax authority did not immediately respond to a written request for comment.
The limit on Vuitton’s staff discounts comes as fashion brands face public outcry and new regulations over another longstanding method for managing unsold products: destroying them. Image-conscious manufacturers have been known to burn products or bury them in landfills to avoid their wares being spotted in bargain bins. France’s Senate voted in September to ban that practice.
The French tax authority’s move could eventually be a boon to Vuitton staffers outside France, as the brand could be forced to send unsold products elsewhere if too many pile up in France, one of the people said.
By Robert Williams; editors: Eric Pfanner and Anne Pollak.
The designer has always been an arch perfectionist, a quality that has been central to his success but which clashes with the demands on creative directors today, writes Imran Amed.
This week, Prada and Miu Miu reported strong sales as LVMH slowed and Kering retreated sharply. In fashion’s so-called “quiet luxury” moment, consumers may care less about whether products have logos and more about what those logos stand for.
The luxury goods maker is seeking pricing harmonisation across the globe, and adjusts prices in different markets to ensure that the company is”fair to all [its] clients everywhere,” CEO Leena Nair said.
Hermes saw Chinese buyers snap up its luxury products as the Kelly bag maker showed its resilience amid a broader slowdown in demand for the sector.