MANAGEMENT OF KNOWLEDGE
Case Study - LVMH
REVIEW OF SECTOR SPECIFIC FACTORS
LVMH is the largest luxury goods conglomerate in the world, with a portfolio of around 50 brands known the world over. LVMH (despite the ordering of the initials, the fashionable firm's full name is officially Mo Hennessy-Louis Vuitton) is active in all the essentials. The LVMH Group is organized in five main branches: wines and spirits, fashion and leather goods, perfumes and cosmetics, watches and jewelry, and selective retailing.
Wines and Spirits: The LVMH Group’s Wines and Spirits activities regroup prestigious brands such as Moët & Chandon, Krug, Veuve Clicquot Ponsardin or Dom Pérignon for champagne, Hennessy for cognac, Glenmorangie for single-malt whisky and Belvedere for premium vodka. Served by a powerful international distribution network, these emblematic brands sell exceptional products worldwide, making LVMH the world leader in prestigious wines and spirits.
Fashion and Leather Goods: Along with Louis Vuitton Malletier, the Fashion and Leather Goods business group includes the Givenchy fashion house, as well as Céline, Loewe, Berluti, StefanoBi, Kenzo, Marc Jacobs, Fendi, Emilio Pucci, Rossimoda, Thomas Pink and Donna Karan.
Perfumes and Cosmetics: LVMH is a major world player in the Perfumes and Cosmetics sector with the large French houses Parfums Christian Dior, Guerlain, Parfums Givenchy and Parfums Kenzo. In addition to these world-renowned brands, this business group also includes BeneFit and Fresh, two young, high growth American cosmetics companies, the prestigious Italian brand Acqua di Parma, Parfums Loewe, developed for the Spanish Fashion and Leather goods company, and Make Up for Ever, a French company specializing in professional make-up products.
Watches and Jewelry: The most recent LVMH business group holds a portfolio of high-quality watch and jewelry brands, with highly complementary market positions: TAG Heuer, Zenith, Montres Dior, Hublot, Chaumet and Fred.
Selective Retailing: The selective retailing businesses operate in two segments: distribution to international travelers, the business of DFS and Miami Cruiseline, and selective retailing concepts represented by Sephora and Le Bon Marché.
Other activities: LVMH is present in the media sector through Groupe Les Echos, which holds various print media publications, as well as the French radio station, Radio Classique, and in the designing and building of custom mega-yachts through Royal van Lent (and its brand Feadship).
LVMH operates on all major markets. In 2010, the breakdown of total net sales by geographic region of delivery was as follows: France: 13%; Rest of Europe: 21%; United States: 23%; Japan: 9%; Rest of Asia: 25%; Other markets: 9%. The U.S. accounts for 27 percent of LVMH's revenue, while France chips in 15 percent and the rest of Europe 20 percent; Japan accounts for 14 percent, other Asian countries 17 percent and the rest of the world 7 percent. Perfumes & Cosmetics recorded revenue growth of 12% in 2010 and an increase in profit from recurring operations of 14%. Parfums Christian Dior benefited from the continued popularity of its iconic perfumes such as J’adore, Poison and Eau Sauvage, while maintaining focus on innovation. Other product categories enjoyed strong growth thanks to the excellent performance. Demand for Louis Vuitton handbags and Givenchy perfumes helped LVMH, the French luxury goods conglomerate, beat sales estimates in the first half of the 2011. The group reported first-half net profit of €1.31bn, ($1.9bn) up 25 percent on the same period last year, on sales that were up 13 percent to €10.292bn. The results echo strong results from luxury groups such as Hermès and Burberry, which have seen growth in Asia and the US, indicating that the luxury sector is still proving a bright spot in spite of continuing woes in the global economy....