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French luxury goods powerhouse and British upmarket clothing firm both decline to comment on rumoured deal

Luxury goods powerhouse LVMH, which was recently linked with Italian bike manufacturer Pinarello, is reportedly in talks to buy upmarket British cycling clothing brand, Rapha, according to the Mail on Sunday.

The London-based business, which has supplied Team Sky for the past three seasons but will no longer do so in 2017, was founded in 2004 by Simon Mottram, whose background is in brand consultancy.

Helped by the boom in road cycling over the past decade or so in the UK and elsewhere – the US, Australia and Japan are all significant markets for Rapha – the company achieved turnover of £48.8 million in the year to 31 January 2016, with pre-tax profit of £1.1 million.

The Mail on Sunday says that while a source confirmed the two parties were in talks, neither LVMH nor Rapha would comment.

Paris-based LVMH, owner of brands including Louis Vuitton, Moet & Chandon, Marc Jacobs, Dior, TAG Heuer and Bulgari, is known to be keen to build its presence in the sports and leisure sectors.

> More details emerge of rumoured LVMH Pinarello deal

Earlier this year, LVMH together with the family holding company of CEO Bernard Arnault, took a stake in American private equity house Catterton, which specialised in investing in mid-market companies.

The new business, L Catterton, has investments in businesses including activewear brand Sweaty Betty and pet food manufacturer Lily’s Kitchen, while its holdings in the sports sector include compression clothing maker 2XU, the Peloton at-home fitness bike, sports drinks and supplements manufacturer X2 Performance, and the 360fly action camera brand.

Rapha is a brand that splits opinion like few others. Critics see it as overpriced, pretentious and taking itself too seriously, and it has inspired several spoof websites.

The company’s success, however, demonstrates that Mottram and his team understand their target market, who besides buying its products can unwind, watch races or join group rides at its shop-café Rapha Clubhouse stores.

There are 14 worldwide now as well as an outlet store in Somerset, complemented by occasional pop-ups elsewhere and Mobile Clubhouses on four continents.

Talking to BikeBiz in 2011 about one of those spoof websites, set up by a group calling itself Jens Voight Army (JVA), Mottram said: "Having detractors is part and parcel of having a distinctive brand.

"If you mean a lot to some people, you are almost bound to aggravate others. We would always rather have people loving or hating us than people not having an opinion. People don't parody or copy weak or uninteresting brands. Team JVA is proof to me that we are getting things right."

Born in Scotland, Simon moved to London aged seven and now lives in the Oxfordshire Cotswolds with his miniature schnauzer, Elodie. He fell in love with cycling one Saturday morning in 1994 while living in Italy when Milan-San Remo went past his front door. A daily cycle commuter in London back before riding to work started to boom, he's been news editor at road.cc since 2009. Handily for work, he speaks French and Italian. He doesn't get to ride his Colnago as often as he'd like, and freely admits he's much more adept at cooking than fettling with bikes.

30 comments

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Leviathan [2863 posts] 1 year ago
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Loius Vuitton, sounds fake, don't do it Rapha.

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Dr_Lex [464 posts] 1 year ago
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Outlet? Archive store, with a carefully curated selection, surely... 

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tritecommentbot [2268 posts] 1 year ago
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Please no. That said, it could raise the capital they need to go all in and do a full women's range. Women are still buying mens Rapha kit in 2016, especially those aero jerseys.

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Danger Dicko [282 posts] 1 year ago
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Dr_Lex wrote:

Outlet? Archive store, with a carefully curated selection, surely... 

It's where I get all my Rapha kit.

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handlebarcam [1060 posts] 1 year ago
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Can we look forward to Louis Vuitton's usual customers - rappers and reality TV celebrities - wearing Rapha jerseys on the red carpets at award ceremonies? It's the logical next step for such a brand-focussed company.

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antonio [1168 posts] 1 year ago
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Cyclists strutting their stuff in 'Dior' on the catwalk, can't wait!

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TheDoctor [248 posts] 1 year ago
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For me this would end any purchases of clothing from Rapha! 

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kitkat [480 posts] 1 year ago
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If this is true it's very frustrating and seems to be endemic in Britain. A great company is developed, by dedicated people then the whole lot is sold off to a holding brand and the managing directors go off to buy cottages in the Cotswolds  

Come on Rapha, take it on. Take pride in your background instead of selling out. Go and take on the market. Diversify & build into a brand that buys LV. Not throws in the towel at the sniff of cash 

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Simon_MacMichael [2504 posts] 1 year ago
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antonio wrote:

Cyclists strutting their stuff in 'Dior' on the catwalk, can't wait!

In a previous life, I wrote about retail including luxury goods. This is a picture from a Dior collection in the early-mid Noughties.

What was that about cycling being the new ... you know ... ?

 

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fretters [53 posts] 1 year ago
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TheDoctor wrote:

For me this would end any purchases of clothing from Rapha! 

 

seconded 

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Hipshot [61 posts] 1 year ago
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kitkat wrote:

Go and take on the market. Diversify & build into a brand that buys LV. Not throws in the towel at the sniff of cash 

 

I thought flogging your business at the highest possible price and then retiring to the Cotswolds is what capitalism was all about.

There is nothing authentic or 'great' about Rapha (est 2004), certainly nothing to inspire loyalty they have always been about the money. Luis Vuitton owning them won't change a thing.

 

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arfa [855 posts] 1 year ago
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Having a 21 year old autistic child that is still in nappies and needs round the clock care might have something to do with it.
I quote: "If I'm going to do something, I really do it - there's no messing around. And it's got to make some money because I know Oscar is going to be needy for the rest of his life".

Perhaps walk a mile in another man's shoes before jumping to conclusions.

http://www.telegraph.co.uk/men/relationships/fatherhood/10998174/Rapha-b...

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tritecommentbot [2268 posts] 1 year ago
5 likes
arfa wrote:

Having a 21 year old autistic child that is still in nappies and needs round the clock care might have something to do with it. I quote: "If I'm going to do something, I really do it - there's no messing around. And it's got to make some money because I know Oscar is going to be needy for the rest of his life". Perhaps walk a mile in another man's shoes before jumping to conclusions. http://www.telegraph.co.uk/men/relationships/fatherhood/10998174/Rapha-b...

 

Heading a business like Rapha while dealing with that at home. Pretty remarkable really.

 

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Veloism [75 posts] 1 year ago
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It's a pretty good testiment to the success of the brand and it'll be really interesting to see if these rumours actually materialise to anything. No bad thing at all...

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Awavey [356 posts] 1 year ago
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but I thought Simon has only ever been a minority stakeholder in Rapha, because of all the private equity they needed to get them going in the first place, but he's always been good at PR so became the public face of the company.

But so even if all the stakeholders agreed to sell up the money would be split many ways, and Im not sure Rapha is worth as much even to Louis Vuitton to provide enough to retire to the Cotswolds for ever,, as although Im sure the quoted profits above are just a typo, I dont think they make oodles of cash, its always more been about their growth.

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Simon_MacMichael [2504 posts] 1 year ago
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Awavey wrote:

although Im sure the quoted profits above are just a typo, I dont think they make oodles of cash, its always more been about their growth.

Intrigued why you think a profit margin of what, 2.25 per cent in a high-margin business is wrong? That supports your point that they are reinvesting for growth.

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Gromski [58 posts] 1 year ago
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fretters wrote:
TheDoctor wrote:

For me this would end any purchases of clothing from Rapha! 

 

seconded 

Why?

What do you have against LVMH?

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ConcordeCX [506 posts] 1 year ago
2 likes
Gromski wrote:
fretters wrote:
TheDoctor wrote:

For me this would end any purchases of clothing from Rapha! 

 

seconded 

Why?

What do you have against LVMH?

can't speak for the two above, but Rapha is a cyclists' brand at heart, LVMH isn't. The success of Rapha is down to the fact that they know cycling, and they know what works, by and large, while looking good. They have dragged the whole market average upwards as a result. LVMH is a luxury goods brand, they are predominantly interested in selling bling, not in cycling.

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Bob F [42 posts] 1 year ago
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Firstly: I wish Simon and Rapha all of the very best. The product, under his guidance, is amongst the very best: great fit, quality and designed for purpose. The pseudo nostalgia angle, entirely overplayed, is nevertheless enjoyed and I can [eyes wide shut?] buy into the Cycling lifestyle spin.

Secondly: LVMH? I have never sought to buy any of their products specifically. I have definitely purchased on an ad hoc basis, but there is no sense of lifestyle connection, bespoke design, loyalty, nor commitment.

And that, I guess, is precisely why  LVMH would like to add to their portfolio.

 

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Chuck [590 posts] 1 year ago
2 likes
ConcordeCX wrote:

Rapha is a cyclists' brand at heart, LVMH isn't.

 

I suspect that if you go far enough upwards many cycling brands are owned by companies who have no interest in cycling other than the business opportunity.

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tritecommentbot [2268 posts] 1 year ago
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There is a fear because Rapha are possibly the only brand who really hit every note just right for many cyclists. I don't personally know of any other brand who does in this market. Not 1. So losing Rapha's quality, style, affordability (lol it could get worse) etc - just one of those, would trash the brand.

 

That said, what Rapha has done is brilliant, and if they do become less desireable, there is plenty of room for a new business to capitalise on what has gone on before. Rapha came out of nowhere, and it will be even easier now for another company to do the same.

You just need the talent and the investment will be easy. They'll be throwing cash at you in the city (Retail Week reckons city investors are loopy about cycling growth right now).

 

Not that I think Rapha will be going to the dogs any time soon anyway. Rare to see such a brilliant little British company, would be a shame to see it falter.

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arfa [855 posts] 1 year ago
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LVMH are pretty shrewd operators and if they did acquire Rapha, I very much doubt many of us would notice beyond an announcement. Of course they would wish to expand the footprint and sales of the company and that may be where the strategic fit lies and where LVMH's expertise comes to the fore.
Rapha is a hugely impressive start up growth story but sometimes founders discover that they need something extra to take it to the next level. Perhaps certain parties wish to step back or perhaps they don't as we're all speculating at this stage.
I did hear that Nike approached Rapha last year but they were rejected (cultural fit might have been an issue). So if they do sell up, expect things to carry on as they are but with significantly more capital behind it to take the brand global. We are all free to make our own choices but I personally really wouldn't begrudge anyone cashing their chips in.

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Sax_Huret [2 posts] 1 year ago
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Simon_MacMichael wrote:

Intrigued why you think a profit margin of what, 2.25 per cent in a high-margin business is wrong? That supports your point that they are reinvesting for growth.

The article states that earnings before tax was .1 million (100,000) quid, which is a fraction of a percent of sales for the period, not 1 million.

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Simon_MacMichael [2504 posts] 1 year ago
1 like

Sax_Huret wrote:

Simon_MacMichael wrote:

Intrigued why you think a profit margin of what, 2.25 per cent in a high-margin business is wrong? That supports your point that they are reinvesting for growth.

The article states that earnings before tax was .1 million (100,000) quid, which is a fraction of a percent of sales for the period, not 1 million.

Agh. Should have double-checked before that comment yesterday. £1.1m is correct, missing digit added.

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J90 [421 posts] 1 year ago
1 like

Expect the quality to go down because LV will start producing Rapha stuff in cheap illegal sweatshops, like they do with a lot of their current line, yet the idiots buying it think it's "handmade".

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ConcordeCX [506 posts] 1 year ago
0 likes
Chuck wrote:
ConcordeCX wrote:

Rapha is a cyclists' brand at heart, LVMH isn't.

 

I suspect that if you go far enough upwards many cycling brands are owned by companies who have no interest in cycling other than the business opportunity.

 

possibly, but they're not the ones who revolutionised the market, Rapha are.

Some takeovers work out fine. If the new owners leave the company to get on with things because they know best. Others shackle the founders and some of the creatives with golden handcuffs for a year or two, for continuity, but when they're gone a bunch of unimaginative middle managers and accountants move in and everything starts to slide towards the safe mean.

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P Dooley [1 post] 1 year ago
1 like

Mottram is an accountant.

More importantly, the source article does not mention L Catterton. So, is it LVMH or L Catterton who are in talks with Rapha?

To say that LVMH and Groupe Arnault took a stake in L Catterton is, I think, a slight mischaracterisation. Groupe Arnault's private equity arm, L Capital combined with Catterton after L Capital's Asian office lost a shed load of money. LVMH/Groupe Arnault have a minority position in the combined firm, but it seems to me that they put their unruly child for adoption whilst retaining some visitation rights. The original press release: http://www.lcatterton.com/Press.html#!/Catterton_Creates_LCatterton

 

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Toshi San [10 posts] 1 year ago
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The photo is captioned 'Wiggins Hour jersey'. He did 54.526 km so why have they got it showing 55. something? Perhaps an early design test? And I would never buy Rapha kit, way over priced, perhaps it's because I am a tight Yorkshireman.

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Rapha Nadal [660 posts] 1 year ago
1 like

Toshi San wrote:

The photo is captioned 'Wiggins Hour jersey'. He did 54.526 km so why have they got it showing 55. something? Perhaps an early design test? And I would never buy Rapha kit, way over priced, perhaps it's because I am a tight Yorkshireman.

Oh, well, thanks for clarfying that last crucial piece of information.

In relation to the jersey picture, I'm to understand that they were stitched in the velodrome for Wiggins during the event so may have been a predicted time before it was changed!

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brooksby [2693 posts] 1 year ago
2 likes
J90 wrote:

Expect the quality to go down because LV will start producing Rapha stuff in cheap illegal sweatshops, like they do with a lot of their current line, yet the idiots buying it think it's "handmade".

Even if it is made in a sweatshop, then it's still technically "handmade".   Sweatshop workers have hands too.   If it was being made in a factory by robots then yes, its no longer handmade.  Just saying.