...Case Study LVMH: Managing A Multi-brand Conglomerate Team 5: Ilario Fulvio Giannetti Chen Peng Priyesh Salunke Harjeev Sabherwal Inna Zinina What does globalization mean to the luxury industry? Opportunities • Market expansion • Low-cost raw materials, equipment and labor available in the local market • To achieve economies of scale and scope • Increased margins due to pricing policy • New consumer groups available in the local market • Extension of the definition of luxury • To adapt local and new trends for the local market • To source talent globally • Transfer of skills and strengths Threats • Counterfeiting • “Grey” market • Vulnerable to PEST-EL Factors • Successive decrease in brand value • Increased competition • Creation of new competition by sharing know how Conclusion Although there are significant number of threats to the luxury industry, globalization is unavoidable for continuous growth. Assessment of LVMH’s diversification LVMH diversification 25% 8% 5% 4% 18% 60% 35% 38% 18% -2% Sales Operating profit Wines&Spirits Perfumes&Cosmetics Selective Retailing Fashion&Leather Goods Watches&Jewelry Assessment of LVMH’s diversification Strengths • Share operational resources and competencies' across brands and divisions • Maintaining exclusivity by multiple brands under one division • Strong Balance Sheets help to absorb losses from unprofitable divisions and maintain position • Selective retailing complements other brands...
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...Case 3-4: LVMH: Managing the Multi-Brand Conglomerate 1. LVMH’s diversification represents the group’s strong presence in the luxury goods market as a whole with products from the fashion and leather range, wines and spirits range, watches and jewelry range, perfumes and cosmetics range, and finally the selective retailing range. This strategy aims to claim market share in market segments that are interrelated with the specific customer segment as the common denominator. LVMH is a market leader in some markets and has a decent market share in others and aims to be the leader in the luxury market as a whole where the elite customers can recognize its brands from all of its product ranges and the company plans to build brand loyalty within those customers so that a customer who chooses LVMH for watches for instance, is also inclined to choose an LVMH product for wine and spirits. Diversification also spreads the company’s costs over a number of brands and the revenues as well so that it can always insure good rate of return for investors. 2. For a company like LVMH to compete on a scope that includes champagne, jewelry, fashion, cosmetics, and retailing is logical and even necessary for it to keep a competitive edge because its competitors have implemented the same strategy to fight for market share in the luxury market in all of its segments. The company’s policy aims to build the idea in their customers’ heads that they can always expect the same consistent high-end...
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...Title | | LVMH | | | | Author | | Rohan Narula | Course | | Strategic Management | Teacher | | Dr. Jeffrey Kerr | Location | | EGP – University of Porto Business School, Porto, Portugal | Date | | 2011/12 2nd Term | 2. Does LVMH corporate add value to the companies in its portfolio? Are the portfolio companies more effective and competitive because they are part of LVMH? Explain. LVMH is a world leader in luxury products and services with a portfolio of over 50 prestigious brands. Brands under the conglomerate operate in the areas of: Wines and spirits, perfumes and cosmetics, fashion and leather goods, watches and jewelry, etc. LVMH manages a large portfolio; but ensures that there is consistency in marketing each of these brands. Although there exists product diversification, LVMH tries to create synergies in order to integrate each of these businesses with the parent brand. LVMH has stressed on the importance of quality, and in turn creating a heritage brand, by facilitating innovation in each independent brand as the driver of its growth and profitability. LVMH has developed several distinctive resources and capabilities that allow its brands to have competitive advantages: * Central advertising service thereby reducing the cost of an advertising campaign performed by a single company by more than 20%. * Support international development using the experience of administrative and legal support; local cultural awareness; pre-established...
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...Louis Vuitton Moet Hennessy Write Up Introduction: The Rise of LVMH Louis Vuitton Moet Hennessy (“LVMH”) was formed in 1987 when Louis Vuitton, a leading luxury fashion brand, formed in 1854, merged with Moet Hennessy. Moet Hennessy had been formed in 1971 when Hennessy, a cognac manufacturer, merged with Moet et Chandon, a high end champagne producer. This formation of LVMH would signal the creation of one of the world’s most profitable and encompassing luxury goods conglomerates. In 1989, Bernard Arnault would enter the picture, become the major shareholder of LVMH and take up position as chairman. An entrepreneur and art admirer, Arnault had amassed a personal fortune in real estate and in other luxury goods markets before purchasing the majority share of LVMH. Under him, LVMH would grow exponentially, acquire even more brands, expand into new markets, and see unprecedented growth. By the late 1990’s to early 2000’s, the company would be posting net revenues in the billions of Euros, comprise some fifty sub companies, all of brand names synonymous with high end fashion and luxury, and have over 1,500 retail stores operating in every major market on a global level. LVMH became the parent company to some fifty sub companies across a variety of different product industries and types. All were owned by the same company, but most operated independently and, in some instances, were direct competitors of each other. Regardless, each company no matter how different had...
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...TABLE OF CONTENTS 1 4 6 7 8 9 10 11 12 13 14 16 17 19 21 Chairman’s Message Consolidated Highlights The LVMH Share Shareholder Relations Wines and Spirits Fashion and Leather Goods Perfumes and Cosmetics Watches and Jewelry Selective Retailing Other Activities Consolidated Balance Sheet Consolidated Statement of Income Activity Review Consolidated Statement of Cash Flows Consolidated Statement of Changes in Stockholders' Equity CHAIRMAN’S MESSAGE The slowdown of the world’s economies, the shock of the attacks of 11th September and their grave geopolitical consequences, very poor short-term visibility for economic and financial markets : these were all defining characteristics of 2001. The accomplishments of our teams in this exceptionally unstable environment were remarkable. Thanks to their talents, their efforts and their great ability to be reactive, our activities continued to grow, sustained by the entrepreneurial and innovative spirit which is at the very foundation of our position of leadership and which allows us to gain market share, even when times are difficult. Bernard Arnault Chairman and CEO EXCELLENT PROGRESS FOR OUR GREATEST BRANDS The performance of the great brands which are at the heart of our business was excellent. Louis Vuitton saw further growth and its new products, which accounted for 18% of the year’s sales, are objects of infatuation. Parfums Christian Dior saw numerous successes and Hennessy continued to gain ground in the United States...
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...favourable position to capitalise on the global 5% CAGR expected for cognac over 2011-2016, as the growth will be driven predominantly by China, where the company has its own strong distribution network, further enhanced with capacity and market knowledge via the acquisition of the Wenjun distillery. Hennessy: Volume Sales by Geography Spirits: Cognac vs Total Spirits Market by Y-o- Growth 2011-2016 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 2006/2011 Rest of the World Eastern Europe US 6 5 4 3 Western Europe 2 Other Asia Pacific China 1 2006 2011 0 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 Global spirits volume growth Cognac volume growth © Euromonitor International SPIRITS: LVMH MOËT HENNESSY LOUIS VUITTON SA PASSPORT 19 Volume sales '000 litres % y-o-y volume growth Absolute volume growth, '000 litres % CAGR 2011-2016 MARKET AND CATEGORY OPPORTUNITIES Emerging economies driving growth Global cognac volumes are expected to grow at a 5% CAGR (+23 million litres) over 2011-2016, with China...
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...------------------------------------------------- LVMH Moët Hennessy Louis Vuitton Purpose The purpose of this report is to fully analyze the conglomerate, LVMH Moët Hennesy Louis Vuitton SE at both an internal and external level in order to come up with a synopsis of the business’s current performance in the stock market. This project includes research of LVMH’s company background, competitive strategy, the industry: a financial study of the macroeconomics, short and long-term goals, the organizational structure, and financial management. This report will depict LVMH’s present position at all industry aspects to reach the final evaluation of its performance in the stock market. Introduction LVMH Moët Hennessy Louis Vuitton is the world’s largest multinational luxury goods conglomerate, formed in 1987 when Louis Vuitton merged with Moët Hennessy in a $4 billion deal. This group was formed after the 1971 merger between Moët & Chandon and Hennessy. The French conglomerate is headquartered in Paris, France. The LVMH group comprises 70 houses. It is the only group present in all five major sectors of the luxury market, selling: Wines & Spirits, Fashion and Leather Goods, Perfumes & Cosmetics, Watches & Jewelry and Selective Retailing (LVMH Company - An Operational and Functional Model). LVMH has 70 brands, consisting of a retail network of over 3,700 stores and employing 120,000 employees worldwide (LVMH Company - An Operational and Functional Model). With...
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...-5000 LVMH Case Analysis By Kavya October 6, 2008 External Analysis for LVMH. Environmental analysis (PESTEL): See Exhibit 1 for comparison of PEST factors: Key findings on the analysis were: * The luxury goods industry was very sensitive to the fluctuation of the economy and any economic drift could have a great influence on its sales. * If the economy was depressed its sales growth went down sharply (e.g. SARS attack 2003) and so did the consumer spending for the luxury goods. * Socio cultural challenge for LVMH was to cater to the needs of the different target customers. (Middle class customers to elite group customers). * Although the luxury market seemed to be dull between years 2001-2003 there was a turnaround and the world economy was recovering enormously and LVMH net sales was still better than the average industry performance. * Positive economic climate (periods of relative prosperity with low interest rates and increased consumer spending), tax cut rates along with the optimistic attitude of the firm all favored the growth of LVMH. * There were enormous growth opportunities in new regions such as China, India and Russia. Inspite of the economic downturn, LVMH’s growth was positive and maintained its leadership position in the luxury industry. As the affluent middle class primarily drives the rapid growth of the luxury goods industry, LVMH needs to monitor them more closely and cater to their needs. Industry analysis: LVMH belongs...
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...Business presentation LVMH Good morning, everyone, The subject of today’s presentation is LVMH also know as Louis Vuitton Moët Hennessey. This is a holding company, a company that doesn’t produce goods or services but only owns shares of other companies. The presentation will last about 20 minutes and if you have any questions, we’ll be glad to answer them at the end of our presentation. Let’s begin by looking at our table of contents. As you can see we will start with business. This contains the competitors, projects, market position etc. Then we will discuss the 4 Ps and 4 Cs and finally we will look at the website. Well, that’s all I wanted to say about the table of contents moving on to our first subject of the presentation: the mission statement. Thank you for your attention, if there are any questions, we’ll be pleased to answer them. Core activities LVMH is the world's largest luxury goods conglomerate, they own around 60 sub-companies. We can say that LVMH has 5 core activities because these are the activities that are the most profitable. The group has a large variety of goods: Wines and spirits In this category you can find several kinds of alcohol. You have wine (Château d’Yquem), champagne (Moët & Chandon, Dom Pérignon and Veuve Clicquot), brandy (Hennessy), whiskey (Glenmorangie), vodka (Belvedere vodka) and rum (10 Cane). They have more than 20 different species of wines and spirits so it covers a big range of their products. Clothing...
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...ach ieved th rough strat egy will su rely b e of in terest to firm s struggling with lack of brand power or those looking to boost brand power. Key words: luxury brand, brand management, Louis Vuitton. 1. Introduction Consumers like brand items, while researchers like brand theory. Although scholars also use the word “brand” to refer to the likes of Coca-Cola and McDonald’s, there is a vast gulf between these brands and the luxury brands we e xplored i n t he p revious b ook. I n researchers’ brand m anagement theories, one r arely fi nds m ention o f representative luxury brands like Louis Vuitton or Dior, or of LVMH. Based on this awareness, we carefully scrutinized the ecology of the unique LVMH firm, considering the nature of the brand as distinct from commodity markets, although small in scale [1]. This time let us focus on the grand champion of the LVMH empire: the Louis Vuitton brand. By systematically breaking down the strategy of the single Louis Vuitton luxury brand into the four Ps (Product, Price, Place, and Promotion), our aim of this study is to extract the rules or principles of its brand marketing that differ from that of general consumer goods. In other words, the object is to...
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...(Because it couldn’t compete with local department stores and drug stores.) * Sephora has entered into Spain by joint venture on 2005 Feb, then into China by JV as well on 2005 April. Exit form UK at 2005. * Target is to have 100 stores by 2010 in china. * Expect to have more stories in China than France in the future. LVMH's Sephora leaps into China, exits UK.(forms joint venture with Shanghai Jahwa United )Cosmetics International| April 08, 2005 | Ching, Han Mui | COPYRIGHT 2009 Communications International Group. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information) LVMH-owned cosmetics retailer Sephora has entered into a joint venture with Chinese company Shanghai Jahwa United to make its presence felt in the fast-growing Chinese market. A total of US$50m is expected to be pumped into the venture-Sephora (Shanghai) Cosmetics--to set up a retail network. Sephora will open its first flagship store in Shanghai later this month, followed by another five stores within the next two years (though not limited to the main commercial city of Shanghai). Sephora said that it will bring about 10 new brands from its worldwide collection to China. The company has set a target of 100 specialty stores by 2010 in China, and could possibly have even more stores than France in the future. To start, Sephora's first priorities...
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...NOTE ON KERING AND LVMH LEADING EUROPEAN FASHION AND LUXURY GOODS COMPANIES: FINANCIAL COMPARISONS | Revenue, €m | 5-year revenue growth | Operating margin | ROE | ROCE+ | Prada SpA | 3,587 | 130% | 26.2% | 23.4% | 31.7% | Salvatore Ferragamo SpA | 1,258 | 103% | 17.4% | 41.1% | 46.7% | Burberry Group plc | 2,936 | 97% | 18.9% | 27.7% | 34.4% | Hermes International SCA | 3,755 | 96% | 32.4% | 28.0% | 42.3% | Kering SA | 9,748 | (28%) | 13.4% | 8.2%* | 8.5% | LMVH | 29,149 | 71% | 20.2% | 12.9% | 16.6% | *Before extraordinary items + Operating income/Equity+Debt KERING Kering SA is a France-based company that specializes in retail and luxury goods distribution. The Company operates through two core segments: LUXURY, which operates the Luxury Group division of PPR SA and designs, manufactures and markets luxury items, such as ready-to-wear clothing, leather goods, shoes, watches, jewelry, fragrances and cosmetics products; and SPORT & LIFESTYLE segment, which designs and develops footwear, apparel and accessories under the brand names Puma, Volcom and Electrics. LUXURY's various brands include Gucci, Saint Laurent, Alexander McQueen, Brioni, Christopher Kane, Stella McCartney, Sergio Rossi, Boucheron, Girard-Perregaux, JEANRICHARD, Pomellato and Qeelin. On March 26, 2013, it acquired France Croco, which specializes in the sourcing, tanning and processing of crocodilian skins. On June 4, 2013 it closed the sale of its Nordic brands Ellos and Jotex...
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...Finale LVMH History A world leader in luxury, LVMH Moët Hennessy - Louis Vuitton possesses a unique portfolio of over 60 prestigious brands, almost 100,000 employees and more than 3000 stores around the world. The Group is active in five different sectors: ►Wines & Spirits ►Fashion & Leather Goods ►Perfumes & Cosmetics ►Watches & Jewelry ►Selective retailing In June 1987, a $4 billion merger was effected between Louis Vuitton with Möet-Hennessy, which allowed Louis Vuitton to expand its investments in the luxury business, while saving Möet-Hennessy from the threat of takeover. Moreover, the merger respected the autonomy of each company over its own management and subsidiaries. As Möet-Hennessy was three times the size of Louis Vuitton, its president, Alain Chevalier, was named chairperson of the new holding company, Möet-Hennessy Louis Vuitton (LVMH), and Racamier became executive vice-president. Massive disagreements and feuding followed, however, as management at Louis Vuitton believed that Möet-Hennessy was trying to absorb its operations. The 60 percent ownership that Racamier and the Vuitton family had held in Louis Vuitton became a mere 17 percent share of LVMH. After several disputes and legal battles between Racamier and Chevalier over the running of the conglomerate, Racamier invited the young property developer and financial engineer Bernard Arnault to acquire stock in the company. Hoping to consolidate his position within LVMH with the...
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...LVMH 2012 — ANNUAL REPORT BUSINESS REVIEW CONTENT — Group’s profile 03 06 09 10 11 CHAIRMAN’S MESSAGE FINANCIAL HIGHLIGHTS INTERVIEW WITH THE GROUP MANAGING DIRECTOR GOVERNANCE EXECUTIVE AND SUPERVISORY BODIES A coherent universe of men and women passionate about their profession and driven by the desire to innovate and achieve. An unrivalled group of powerfully evocative brands and great names that are synonymous with the history of luxury. A natural alliance between art and craftsmanship, dominated by creativity, virtuosity and quality. A remarkable economic success story with more than 100,000 employees worldwide and global leadership in the manufacture and distribution of luxury goods. A global vision dedicated to serving the needs of every customer. The successful marriage of cultures grounded in tradition and elegance with the most advanced marketing, industrial organization and management techniques. A singular mix of talent, daring and thoroughness in the quest for excellence. A unique enterprise that stands out in its sector. Our philosophy can be summarized in two words: CREATIVE PASSION. 12 22 36 46 58 WINES & SPIRITS FASHION & LEATHER GOODS PERFUMES & COSMETICS WATCHES & JEWELRY SELECTIVE RETAILING — The values of LVMH Innovation and creativity Because our future success will come from the renewal of our product offering while respecting the roots of our Maisons. Excellence of products and service Because we embody what is most noble and accomplished...
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...report of: LVMH Hand-in date: 25.11.2010 Campus: BI Oslo Examination code and name: GRA 62123 Financial Reporting and Analysis Table of Contents EXECUTIVE SUMMARY 3 MARKET REVIEW: 4 COMPANY REVIEW 5 Management compensation 6 BUSINESS DESCRIPTION 7 Business Risk Analysis 8 FINANCIAL PERFORMANCE 9 Profitability 9 Activity Ratios 12 Financing and Liquidity 13 CASH FLOW ANALYSIS 15 VALUATION 16 CONCLUSION 17 References 19 Appendix 20 EXECUTIVE SUMMARY This paper analyzes LVMH group. Taking the recent developments and prospects in luxury goods industry as a starting point, the first part analyzed and compares LVMH with Hermes International and GUCCI, focusing in particular on performance which is analyzed through their activity, liquidity and financing and profitability position. The next part scrutinizes LVMH’s cash flow statement in order to evaluate its operating activities as well as the ability to cover its investments. The paper will conclude that LVMH presents a good investment alternative considering other companies in the same industry. Second, LVMH have a low risk given its solid financial structure and sufficient liquidity. Sales have grown at an average annual rate of 7.5% over the past five years driven by organic growth and acquisitions. MARKET REVIEW: APPAREL, ACCESSORIES & LUXURY GOODS INDUSTRIES Concetta Lanciaux, ex head of the Human Resources for LVMH states which...
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