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When asked by the Financial Times last night how much money LVMH has spent to acquire 60% of Off-White from Virgil Abloh, its CEO Michael Burke replied: “We paid the right amount.” Even when done so discreetly, money always talks. However what’s much more interesting to everyone but Abloh’s accountant is not how much LVMH has paid, but what exactly it is that LVMH has purchased—and what that means for everyone involved.
First and foremost: What LVMH has not purchased is the tangible day-to-day operations of Off-White. To understand why, you have to look back to 2012 or so when, the story goes, Abloh was in a club and fell into a conversation with his fellow DJ Marcelo Burlon. Abloh told Burlon about his plans for a brand named Off-White that would succeed his previous guerrilla upcycling project, Pyrex Vision. Burlon directed Abloh to Claudio Antonioli and Davide De Giglio, the partners who were helping him develop County of Milan with great success, and Abloh duly struck a deal to produce Off-White with the men in Milan. By January 2014, the first Off-White collection was ready for launch at Paris menswear, and it was successful from the get-go. In 2015, the same year Off-White was nominated for the LVMH Prize (alongside Vetements, Abloh was pipped to the post by Marques ’ Almeida) Burlon, Antonioli, and De Giglio formed New Guards Group as the parent company of County, Off-White, and its various other operated brands.
Today, however, the ultimate owner of Off-White’s physical operations is Farfetch, the e-tailer, which purchased New Guards from the founding trio in August 2019 for a cool $675 million. My excellent former Style.com colleague Matthew Schneier got the exclusive story on the formation of Off-White back in December 2013 in which Abloh told him: “Streetwear has a one-trick-ponyness to it. I want to give my point of view and merge street sensibilities in a proper fashion context. I think that if I can merge the two, it’ll make something interesting.”
So LVMH has not bought the body of Off-White, because unlike, say Ermenegildo Zegna (which is preparing to go public), Off-White is not vertically integrated. Instead, it’s purchased something of potentially far greater value: a significant stake-holding in the brain of Off-White. LVMH has paid an untold sum to purchase Off-White LLC. This is the Limited Liability Company through which Abloh conducts his personal business operations. It is also, presumably, the holder of the IP pertaining to the trademark and copyright of Off-White.
Abloh’s model is like that of Karl Lagerfeld, or indeed any other inveterate freelancer: He is horizontally integrated (which sounds amusingly dubious) through his LLC and perhaps other entities with a series of clients that includes Nike, the clubs that commission him to DJ, the galleries with which he exhibits, and the partners with which he works to forward the product that is, ultimately, the most significant of all Abloh end-product: his “Post-Modern” Scholarship Fund and his other projects designed to generate social uplift.
And this is where we get closer to understanding the true potential value of this deal to LVMH. Because while taking a stake in Abloh’s most personal business identity, it is also both implicitly and explicitly handing him a stake in LVMH’s own identity, above and beyond his work on menswear at Louis Vuitton. As the release detailing the deal announced: “Additionally, LVMH and Mr. Abloh have agreed to another arrangement to join forces. It will leverage together the Group’s expertise to launch new brands and partner with existing ones in a variety of sectors beyond the realm of fashion. Initial discussions have already begun.”
This means that in the future Abloh’s commitments to LVMH will be beyond the silo system of different designers in different houses. Instead he will hover above, acting as an internal creative consultant and lightning rod at an executive level. This represents a significant inflection that affects the identity of LVMH itself, because it introduces to the world’s largest luxury conglomerate both in fashion and beyond a value with which “luxury” is not often—but these days would love to be—associated: social progress. Or as Abloh said in the release: “I’m also honored to use this partnership to deepen my longstanding commitment to expand opportunities for diverse individuals and foster greater equity and inclusion in the industries we serve. This is an incredible new platform to take the disruption we’ve achieved together to a whole new level.”
What today’s deal really means is that LVMH has bought the ticket it needs to transition from “luxury” to “progressive luxury”—and given the value shifts across all facets of wider society so far this decade, that adaptation might well turn out to be priceless. Because when your ultimate end-product is equality, access, and opportunity, you might just solve luxury’s ultimate conundrum: how to make the exclusive inclusive.
And then there is one final question: What does this deal mean to Virgil Abloh? Only he can fully answer that but there are a few things to consider. Firstly, there is no inherent risk to him in this deal; unlike Romeo Gigli, Christian Lacroix, and even John Galliano, Abloh has not sold the rights to his name, but his operating trademark. He cannot forcibly be divorced from his design identity.
This is a low risk deal, then, but also one with great potentially great reward, and not only financially. In a recent interview for L’Uomo Vogue Abloh said: “I operate by my own rules, in my own logic, and I’m not fearful… And I’m focused on progression… You know, everything niche becomes pop culture that is valuable…. We’re making a global community regardless of the elitism or sort of territorial-ness that can happen in subculture.” This deal with LVMH enables him to pursue this core of his design agenda in realms that before were beyond him, so he should rightly feel very pleased indeed. One thing, however, I suspect he neither feels nor needs to feel is validated, because when you remember that Abloh’s first employ with LVMH was as an intern at Fendi alongside Kanye West in 2009, the fact that he has deservedly progressed very far indeed is entirely self-evident.
What would be especially elegant is if Burke and LVMH have paid Abloh for Off-White in shares, because this would make him as much a stakeholder in LVMH as LVMH now is in him. And that really would be “the right amount.”