LVMH Moet Hennessy Louis Vuitton (LVMH) is engaged in the business of production and retailing of luxury goods such as wines and spirits, fashion and leather goods, perfumes and cosmetics, watches, and jewelry.The group operates on a global scale and has offices in 57 countries worldwide. LVMH is headquartered in Paris, France and employs approximately 56,200 people. The group recorded revenues of E15,306 million during the fiscal year ended December 2006, an increase of 10% over 2005. The operating profit of the group was E3,052 million during fiscal year 2006, an increase of 21% over 2005.The net profit was E2,160 million in fiscal year 2006, an increase of 29.5% over 2005.
Head Office LVMH Moet Hennessy Louis Vuitton SA
22, avenue Montaigne
Phone 33 1 44 13 22 22
Fax 33 1 44 13 21 19
Web Address www.lvmh.com
Revenue / turnover 15,306.0
Financial Year End December
Paris Ticker LVMH
LVMH Moet Hennessy Louis Vuitton SA Page 4
LVMH Moet Hennessy Louis Vuitton SA
LVMH Moet Hennessy Louis Vuitton (LVMH) is an international group of companies principally engaged in the production and sale of luxury goods under various brand names. The group is active in a number of global markets including: wines and spirits, fashion and leather goods, fragrances and cosmetics, jewelry and selective retailing sectors. The group enjoys a strong brand image in all markets, which ensures customer loyalty resulting in repeat purchase and greater acceptability for new product introductions. However, proliferation of counterfeit goods and accessories could adversely affect the sales of the group.
Strong brand image Low returns
Distribution capabilities Sluggish revenue growth
Broad product portfolio
Opportunities Threats Opportunities in emerging economies Vulnerable Japanese market Growth in men's toiletries and fragrances market Counterfeit goods Capital structure
Increasing wine consumption
Strong brand image
The group’s brand focus is a key foundation of LVMH's strategy. LVMH has built one of the strongest brand portfolios in the luxury brands sector.The group started to pursue a strategy of organic growth of 'star' brands in 2001 at the time of economic slowdown. These 'star' brands include Louis Vuitton, Hennessy, Moet & Chandon and Parfums Christian Dior. In the female fashion clothing business, the group is backed by popular brands such as Donna Karan and Fendi. Furthermore, the group is the only player which has three of its brands featuring in the Top 100 brands list (Louis Vuitton-17; Hennessy-83; and Moet & Chandon-87) published by Business Week in 2006. These brands represent the key profit drivers of the group. LVMH's strategy also aims to develop new 'stars' within its brand portfolio, which could feature stronger growth potential and the potential to become future profit drivers such as Zenith, Ebel, De Beers, Fendi, Fresh and Acqua di Parma. The presence of these strong brands ensures customer loyalty resulting in repeat purchases. Also, the group can leverage its brand strength to easily expand into new lines.
One of the group’s strengths lies in its global distribution network, which comprises approximately 1,859 stores. This has more than doubled from 828 stores in 1998. LVMH opened approximately 136 new stores in 2006 and is further planning to open more stores in 2007. In terms of distribution channels, LVMH's fashion and leather goods sales are split between: 85% retail, 13% wholesale and 2% licenses compared with an average ratios of 54%, 45%, and 1%, respectively for its peers which is clearly margin positive. The key distinction is that...