LVMH shops for new outfit

LVMH Moet Hennessy Louis Vuitton is poised to pursue a takeover as revenue growth, led by sales of its eponymous handbags, slows the most in four years.

The US$87 billion company could go after Burberry Group, Britain's biggest luxury-goods producer, as a way to increase revenue while it worked on repositioning the Louis Vuitton brand, Berenberg Bank said. After LVMH bought Italian jewellery maker Bulgari in 2011, it also could pursue Tiffany & Co, the New York-based jeweller with a market capitalisation of US$8.1 billion, according to Cantor Fitzgerald.

Chief executive Bernard Arnault, who helped to build LVMH into the world's largest luxury-goods maker through acquisitions, "is going to need to buy growth", said John Guy, a London-based analyst at Berenberg. "He's going to need to buy time in order to sort Vuitton out."

Purchasing another blockbuster brand would allow LVMH to reduce its reliance on smaller labels such as Fendi and Celine, while buying it time to burnish Louis Vuitton and develop its other fashion lines, about half of which Guy estimates are not profitable.

LVMH's sales are projected to increase 7.3 per cent this year, the worst annual rate since 2009, according to data compiled by Bloomberg, as the Paris-based company slows expansion of its flagship brand to enhance Louis Vuitton's image and exclusivity.

A spokesman for LVMH did not return requests for comment on whether the company is pursuing an acquisition or would consider a deal.