Is Sephora Publicly Traded in 2024?

With over 2,700 stores globally and sales of $4 billion in 2022, Sephora has emerged as a powerhouse in beauty retail. This has attracted interest from investors looking to get a piece of Sephora‘s success. However, Sephora is not a publicly traded company – it is a private subsidiary wholly owned by luxury conglomerate LVMH.

A Brief History of Sephora‘s Ownership

Sephora was founded in 1969 in Paris by Dominique Mandonnaud. It was acquired in 1997 by LVMH for an estimated $525 million. LVMH‘s goal was to expand Sephora internationally and build its presence in the United States.

The acquisition paid off – Sephora has grown rapidly under LVMH‘s ownership. According to LVMH‘s 2022 financial reports, Sephora now generates over 30% of LVMH‘s total revenue from selective retailing activities:

Sephora now has over 2,700 stores globally across 35 countries. It has become LVMH‘s star retail brand.

Why Sephora Remains a Private Subsidiary

There are strategic reasons why LVMH has chosen to keep Sephora private:

• Brand synergies: Sephora benefits from relationships with LVMH‘s prestige beauty brands like Fenty, Dior, and Givenchy. This gives it competitive edge.

• Global expansion: LVMH has invested over $1 billion since 2015 to help Sephora grow internationally. Sephora opened over 200 new global stores in 2022.

• Stable ownership: LVMH takes a long-term approach to growing its retail brands. Keeping Sephora private enables strategic decision making.

• High valuation: Bain & Company estimated Sephora‘s enterprise value at $15-$20 billion in 2018. Spinning off Sephora would mean giving up ownership of this valuable brand.

Sephora‘s Strong Financial Performance

Sephora has delivered stellar growth even through uncertain economic conditions:

• Over the past decade, Sephora‘s annual sales growth has averaged between 13-15% annually.

• In 2022, Sephora‘s sales grew 21% despite inflationary pressures.

• Sephora‘s operating margins are estimated to be around 14% – higher than key specialty retail competitors like Ulta and Macy‘s.

This financial performance demonstrates Sephora‘s strength as a brand and its potential for continued growth. LVMH is benefiting richly from its wholly owned subsidiary.

How Investors Can Access Sephora

While Sephora itself is not public, investors can gain exposure to the brand through its parent LVMH:

• LVMH (LVMUY or LVMHF): LVMH trades publicly on the Euronext Paris exchange and via ADRs on the US OTC markets. LVMH stock offers the closest direct exposure to Sephora.

• Luxury ETFs: Sephora makes up part of luxury-focused ETFs like the MSCI Global Luxury Index ETF (LUXE). This ETF has returned 9% over the past year.

• Mutual funds: A number of US and international mutual funds focused on luxury retail provide indirect exposure to Sephora via holdings in LVMH stock.

Assessing LVMH Stock as an Investment

For investors interested in Sephora‘s growth story, LVMH stock provides the clearest opportunity for exposure. However, is LVMH stock a good investment currently?

• LVMH trades at a forward P/E of 27x which is at a significant premium to broad market indexes. This reflects the strong growth and resilience of LVMH‘s luxury brands.

• Revenue was up 23% in 2022 powered by LVMH‘s fashion and leather goods division. Profitability also increased by 17%.

• However, an economic slowdown in key markets like China and the US could impact future results. LVMH‘s premium valuation leaves little room for error.

• Overall, LVMH appears to be an above-average growth pick within the luxury goods sector. But its rich valuation requires investors to have a higher risk tolerance.

The Bottom Line

Sephora is likely to remain a private subsidiary until LVMH decides to fully integrate it or spin it off. While not directly accessible, Sephora‘s future growth prospects remain strong under LVMH‘s ownership. Investors interested in tapping into this potential should consider gaining exposure via LVMH stock.