|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's range||321.05 - 321.05|
|52-week range||321.05 - 321.05|
|Beta (5Y monthly)||1.15|
|PE ratio (TTM)||25.17|
|Forward dividend & yield||N/A (N/A)|
|1y target est||N/A|
(Bloomberg Opinion) -- With the Covid-19 pandemic closing top-end stores and decimating international travel, 2020 is set to be the worst year for the global luxury market in modern history. Yet a new book called “Future Luxe: What’s Ahead for the Business of Luxury” by Erwan Rambourg is optimistic.Among the book’s insights into the next decade are that health will become the ultimate luxury, and that sellers of handbags, shoes and watches will face competition from a new breed of upmarket goods, including cannabis.Rambourg, who has spent 25 years in the industry and is currently HSBC’s global head of consumer and retail research, also predicts a shakeout in the ownership of luxury goods groups. By 2030, he expects LVMH Moet Hennessy Louis Vuitton SE to hold 90 to 100 brands, up from 76 today — or 77 if it follows through with its offer to buy U.S. diamond jeweler Tiffany & Co. By contrast, many smaller competitors will merge, go out of business, be bought or, in some cases, such as puffer-jacket maker Moncler SpA, acquire others. Amid slower growth for so-called accessible luxury handbags, he expects ownership of the Michael Kors, Coach and Tory Burch brands to change in the next 10 years.I caught up with him to discuss the future of luxury. The following is a lightly edited transcript of our conversation.Andrea Felsted: This year will be the worst for the luxury industry in modern history. Yet your book paints an upbeat picture.Erwan Rambourg: There is already evidence of a very strong rebound, in mainland China, but more recently in the U.S. Part of it is artificial and short-term because it is pent-up demand, or revenge purchasing. But part of it is more fundamental. You are not spending a lot on what you used to spend on, such as vacations and going out to restaurants. There is this psychological, almost survival spending. I have gone through this. It has been tough. It has been at times depressing. It has been a bit nerve-wracking. Let’s reward ourselves.AF: One of the things that struck me the most in the book is the chapter on health. After the Covid-19 crisis, could health become the ultimate luxury?ER: We have had a lot of people seeing health as the new wealth. For the time being, the overlap with luxury is more in streetwear and sneakers. Could an LVMH or a Kering SA invest in premium health-oriented companies? You could look at Lululemon Athletica Inc. buying Mirror, a company that helps you stay fit at home. The example of Equinox Group is a good one. Equinox is now at the border of health and hospitality and is also well positioned to benefit from premiumization, and the aspiration of wealthy individuals to be healthy in bodies and minds — part of the health-is-the-new-wealth movement. For the next 10 years, travel is not dead, hospitality is not going to be dead. Health is going to be a great compounding growth sector if there is a way to combine them. In the book I also talk about LVMH’s mission to redefine what luxury should be in the next 10 years. There are not a lot of taboos.AF: Could that include cannabis? You predict that it will become one of the fastest-growing categories.ER: It’s very unlikely that the luxury brands will invest, mostly for issues of regulation. But in some streets in Los Angeles, cannabis companies are competing with luxury companies for locations, for staff and for share of wallet. And you have high-end developments, such as food and wine and cannabis combinations. There is cannabis oil, which is being aged a bit like whiskey and cognac. All of these theoretically can take away some money which would have been spent on luxury brands.AF: You predict that very few companies will remain independent, with the possible exceptions of Hermes International, Chanel and Rolex. How could this play out?ER: Once we get out of this crisis meaningfully, I think we will see a new era of frenzy in M&A. There are very few forced sellers. It’s more about the realization from many families that scale matters. If you are on your own, it is way more difficult to emerge from a crowd. I think families will be merging or selling their assets, not because they have to, but because they understand it is probably the better solution for their name to still be around in 30 years’ time.AF: So the million-dollar question: Will LVMH end up buying Tiffany?ER: Whatever happens, developing jewelry makes sense for LVMH. They have explained they are not going ahead with the deal because of a six-week delay. Yet LVMH is incentivized to take a 30-year view. Either they are looking to get a better price, or there are bigger things that we are not aware of, possibly a tie-up with Richemont. People are talking about them switching brides. But there are a whole bunch of intricacies. The story is not over. We will hear about this for months ahead.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Yahoo Finance speaks with Echelon CEO Lou Lentine about a dust-up with Amazon.
(Bloomberg Opinion) -- It seems logical that six months of pandemic-era living would be a boon for Peloton Interactive Inc. Gyms were closed for long stretches, and even as some have reopened, crowded fitness classes don’t feel safe or are no longer offered. These dynamics have led more people to embrace digitally connected at-home exercise – an emerging business of which Peloton is a standout. That, in turn, has helped send Peloton shares soaring.The hard part now is making sure this moment isn’t as good as it gets. However strong Peloton’s business has been in recent months, it faces big challenges in the year ahead. These include branching more successfully into new product lines while also fending off fresh competition. On Tuesday, investors thought one such rival had landed when Echelon Fitness announced that it had collaborated with Amazon.com Inc. on a $499 Prime Bike. In a weird twist, Amazon later said the bike was not an Amazon product and that it was asking Echelon to stop selling it. But the dip in share price that Peloton saw after Echelon’s initial announcement underscores the fragility of its position. At the outset of the crisis with lockdowns in place, Peloton orders spiked, driving revenue growth of 172% in its June quarter from a year earlier. Demand was so hot, the company temporarily paused marketing as it worked to meet orders. As ad spending ramps back up, the window of opportunity remains open to reach customers who would not have considered buying a Peloton in February but who now want at-home alternatives to the gym. Peloton has already been shrewd at adapting to the moment, offering a 90-day free trial of its app in the early days of the pandemic that included access to such classes such as interval training or yoga that can be done without its signature bikes or treadmills. Sign-ups surged, and the company now has 500,000 digital subscribers, up from 176,600 at the end of March. The app isn’t a moneymaker, but its growth is important because the company believes it is among its most effective gateways for people to buy the equipment and pricier subscriptions that are the core of the business. The pandemic appears to have helped Peloton evolve its business in a key way: an explosion in the number of workouts per subscription. It seems being stuck at home has been an impetus for Peloton owners to either use its offerings more often or, crucially, tap into the company's wider range of classes, such as stretching and meditation. In other words, it is serving for many as a bona fide replacement for a gym membership — just as Peloton has long intended. That should help with customer retention and make its steep price tags look like a good value instead.Despite those favorable shifts, caution is warranted. Peloton is only in the earliest stages of becoming a not-just-a-bike company. It first offered a treadmill in 2018, but that item hasn’t quite taken off like its flagship stationary bicycle — in part because it cost around $4,000. Peloton recently began offering a new treadmill that costs about half the price of the original one — still not cheap, but the same as one of its stationary bikes. So now comes a huge test: Can Peloton score big in a new product category, proving it is not destined to be a fitness fad, a super-expensive version of P90X or Tae Bo? Working in Peloton’s favor is the fact that treadmills are generally more popular than bikes; the company says that about 5 million treadmills are sold in the U.S. each year, compared with 1.6 million stationary bikes. Treadmills are the most-used equipment at fitness clubs, according to the International Health, Racquet & Sportsclub Association. But shoppers have many cheaper options to choose from, based on what I found from a quick scan of the treadmills available on the Dick’s Sporting Goods Inc. website. Peloton, then, must convince consumers of the merits of having a machine that offers its trademark on-demand and live programming. If it doesn’t succeed, it will raise serious questions about the company’s ability to evolve beyond its bike business. The lower-priced Prime Bike may have turned out to be a fantasy, but the competition for Peloton is undoubtedly heating up. Earlier this year, Lululemon Athletica Inc. acquired home fitness startup Mirror, vowing to give the newcomer visibility in its brick-and-mortar apparel stores. SoulCycle now offers an at-home bike, which could have appeal in cities where it has high brand awareness thanks to its fitness studios. Apple Inc. this month announced Fitness+, a home fitness option that integrates with Apple Watch. Any one of those, or all of them together, could thwart Peloton’s progress. Peloton, which has about 1 million connected fitness subscribers, has audacious growth goals, but I am skeptical. The company has several layers of criteria to calculate what it calls its serviceable addressable market — or the sales potential for its current lineup at current prices — beginning with people ages 18 to 70 with household incomes of at least $50,000. While Peloton has made inroads with less affluent customers, shoppers at the low end of that income group seem like a tough get for products that cost $1,895 and up.Dig into its market assumptions more deeply, and there are more reasons for caution. In a recent research note, BMO Capital Markets analyst Simeon Siegel compared Peloton’s figures from last year with ones it released this month. In its 2019 IPO offering document, Peloton estimated 52 million people were interested in learning about Peloton products before hearing their price. In a September investor presentation, the estimate of that same potential market was unchanged at 52 million. If the pandemic has dramatically upended Peloton’s prospects, Siegel notes, shouldn’t that figure have grown? Peloton pegged its serviceable addressable market at 14 million units in its 2019 estimates. As of this month, that estimate had risen to 20 million, in part reflecting the theory that there will be a significant increase in families that have more than one Peloton product in their households. Perhaps. And yet, despite the many meme-able images of Peloton users cycling in their cavernous, lavishly appointed, mid-century modern abodes, I have to wonder how many people have space (let alone the budget) for an expanded suite of Peloton hardware. Peloton is emblematic of a broader Netflix-ification of how people spend their time, an embrace of on-demand and at-home consumption of everything from movies to restaurant meals. But it is also selling pricey, discretionary products in a gloomy economy to customers who have a growing array of choices. Investors would do well to keep that in mind before they bet on a repeat of this year’s breakout success.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Sarah Halzack is a Bloomberg Opinion columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.