Future of Marc Jacobs at Louis Vuitton in doubt

PARIS, France - Marc Jacobs may be on the verge of leaving Louis Vuitton when his contract ends next month as designer's future at the French luxury brand remains unresolved, an industry source told Reuters.

Since joining the group in 1997 Jacobs has steered Vuitton's growth into a global luxury brand which generates nearly 7 billion euros ($9.46 billion) of revenues a year and more than half of parent LVMH's operating profits.

"His contract may not be renewed," the source told Reuters on condition of anonymity, without going into further detail. The French magazine Challenges this week said his departure had already been approved internally.

Marc Jacobs and Louis Vuitton declined to comment on Wednesday.

The potential move comes as the brand, famous for its LV-embossed canvas bags, is trying to regain some of its lost prestige, having failed to anticipate quickly enough consumers' move away from logo-branded products, particularly in China.

Louis Vuitton's sales growth has slowed down to 5-6 percent this year after decades of more than 10 percent annual sales growth, driven by an aggressive international expansion and demand in Asia, where it opened shops earlier than rivals.

Uncertainty about future growth at Louis Vuitton has been weighing on the stock price of LVMH shares which have gained 7 percent since the beginning of the year while the European luxury sector has gained more than 17 percent on average.

Marc Jacobs helped develop Louis Vuitton's women and men's ready-to-wear lines and runs his own eponymous brand which ranks among the most profitable smaller fashion subsidiaries within LVMH, fuelled by demand in the United States and Japan.

The Marc Jacobs brand also launched in August a cosmetics products line in the United States, exclusively distributed by Sephora, LVMH's beauty products retail chain.

"Nothing has been decided yet," a separate industry source told Reuters about Jacobs' contract.

On Tuesday Louis Vuitton announced it had hired Proenza Schouler accessories designer Darren Spaziani as part of its upmarket drive and efforts to beef up its high-end offering of leather bags.

Earlier this month, signs emerged that Louis Vuitton's revamp could be yielding results as the brand's new bags have been flying off the shelves since their summer launch, according to a Reuters survey of shops in Milan, Paris and London.

Looking ahead, names in the hat to replace Marc Jacobs include that of Nicolas Ghesquiere, a darling of fashion editors, who left Balenciaga last year after having successfully infused new life into the Kering fashion brand.

Ghesquiere is regarded as close to Delphine Arnault, Louis Vuitton's deputy chief executive and one of LVMH's main talent-spotters. She is also the eldest child of Bernard Arnault, founder and chief executive of LVMH and France's richest man.

Industry sources said it was possible that Marc Jacobs's fashion show on Oct. 2, as part of Paris Fashion Week, could be his last.

Jacobs introduced collaborations with famous artists such as Richard Prince, Takashi Murakami and Stephen Sprouse to help make Louis Vuitton bags more relevant to fashion followers.

"Marc Jacbos has done fantastic work at Vuitton but I think that today we need to reframe the leather goods and fashion proposition which has until now mainly been focused on the bags," a luxury goods expert said, declining to be named.

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