Financial analysis: Case LVMH

Thèmes abordés

lvmh, finance, luxe

Résumé du document

LVMH is the world's leading brand in the luxury sector. It is based in Paris and possesses more than 60 sub companies which include Louis Vuitton, Fendi, Christian Dior perfumes, Guerlain. Each company functions more or less autonomously. These companies operate in five major activities that represent the five business units of the group:
Wines and Spirits
Fashion and Leather Goods
Cosmetics
Watches and Jewellery
Selective Retailing

With these activities, LVMH is present in 50 countries all over the world through 2423 shops and 77, 000 employees. The turnover of the firm in 2009 was €17,053 billion and its net result was €1,973 billion. According to estimates, LVMH draws 80% of its profits from Louis Vuitton.

Extraits

[...] Financial analysis: Case LVMH I. Table des matières 2 II. Introduction 3 III. LVMH's market: luxury products 4 A. Repartition of this market Geographic Segmentation 5 IV. LVMH among its market 6 A. Segments exploited by LVMH Fashion and leather goods Selective retailing Wine and spirits Perfumes and cosmetics Watches and Jewellery 10 B a sight of new growth 11 V. Financial analysis 12 A. Variation in the turnover 12 B. Variation in the net profit 12 C. [...]

[...] Group's sales increased particularly in USA Financial analysis In 2009, due to the global recession, the world luxury market was subjected to a slowdown by to a global value of 153 billion Euros. We can explain this by the fact that when there is a decrease in wages, luxury products are part of the first segment that is less bought by customers. In the same time, LVMH group knew a decrease of in its turnover. LVMH remained a strong leader by having three times the turnover of its first follower as we can see on the following scheme. [...]

[...] They are, at the moment, building 2 hotels: one in Oman and one in Egypt. In order to finance the construction, they increase their cash to reach an amount of 1400 million Euros This branch will open in 2012 with the end of the building in Assouan and Amoun Island. Conclusion As a conclusion, we invite you to take the seat of an investor. We can say that LVMH was and remains a strong leader in its market even after going through the financial crisis. [...]

[...] Its main competitors on this segment are Gucci Group, Valentino, Hermès and Armani Group. As we can see on the following scheme, the segment is constantly growing over the last years. (In blue the turnover, in red the annual growth). This is mainly due to the increasing number of sales point worldwide, from 566 in 2000 to 1164 in 2009. Most of the more recent openings were done in Asia (China and Korea). This is easily explainable by the growth this area is subjected to since the last years and the success of the brand in emerging countries Selective retailing Even if the global tourism was decreasing, DFS activities were growing up with the increasing Asian customers. [...]

[...] Moreover, LVMH is world leader is sales of Cognac with 44% of market shares with a strong position in USA and Asia. In order to boost up their sales in this segment, LVMH has decided to invest n communication and mainly in cinema. They support international events such as Oscars or Golden Globes. They also contract Scarlett Johansson in order to become the image of Moët et Chardon. With those measures, sales increased by 18% during the first trimester of 2010. Geographically speaking, the main sector for LVMH is USA with 26% of sales, followed by Europe (without France) with 25%. [...]