Chapeau! LVMH’s 23 percent profit jump proves that the global market for things nobody really needs knows no bounds
When it comes to luxury brands, you have to take your hat off to the French.
Even if the Italians have a different opinion, no other country has luxury brands like France.
Though it’s home to companies and brands like Hermès, Chanel, Cartier, and Saint Laurent, one company, Louis Vuitton Moët Hennessy (LVMH), strides like a colossus through the landscape of luxury goods and services.
The company’s results for 2022, released a few weeks ago, show that annual sales increased by 23 percent to 79 billion euros, while profit also increased by 23 percent to 21 billion euros. Gross margin for the year, meanwhile, was a staggering 68 percent.
The company is led by founder and CEO Bernard Arnault, a 74-year-old blue-blood who, depending on the whims of the stock market, is the richest man in the world with an estimated fortune of over €200 billion.
His patrician status in France has cast him as a political kingmaker, patron of the arts, philanthropist and most successful old-school European industrialist of the last century.
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Depending on the ebb and flow of the stock market, CEO Bernard Arnault is the richest man in the world with an estimated fortune of over 200 billion euros. Arnault, pictured (third from left) at Paris Fashion Week on March 2nd. Photo: Justin Shin/Getty Images
The group is structured around its individual luxury brands, or maisons, as it calls them. These 75 maisons are divided into six business areas, including fashion and leather goods, perfume and cosmetics, watches and jewelry, and wines and spirits.
Then there’s LVMH’s selective retail business, home of Sephora, and “other activities,” which include hospitality, yacht building, newspapers, and duty-free shopping.
With brands such as Louis Vuitton, Loewe, Fendi, Dior and Marc Jacobs, sales of fashion and leather goods make up the majority of LVMH’s revenue, rising 25 percent to 30.9 billion euros last year. Watches and jewelery sales, meanwhile, rose 18 percent to €8.9 billion as luxury shoppers around the world bought brands including Tag Heuer, Tiffany, Bulgari and Hurlot.
The same was true for the perfume and cosmetics business, which includes Guerlain, Acqua di Parma, Benefit Cosmetics, Givenchy and Fenty by Rhianna. Last year sales rose by 17 percent to 7.7 billion euros.
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Rihanna’s Fenty Beauty is part of the LVMH stable. Photo: Getty Images
And to toast this strong performance, how about a nice glass of Moët & Chandon, Veuve Clicquot or Dom Pérignon? If Premier Crus Champagne isn’t your choice, how about a bottle of Château d’Yquem or Château Cheval Blanc? With sales of just over €7 billion last year, LVMH’s wine and spirits division is the envy of the beverage industry.
LVMH understands the importance of marketing. Last year, the total marketing and sales costs increased by 26 percent to 28.2 billion euros, of which around 9.7 billion euros are attributable to advertising. That’s a lot of Louis Vuitton handbags.
But luxury brands don’t emerge overnight and LVMH proudly boasts that only six of its brands are less than five years old, while 35 of its brands are so-called “legacy maisons”, each with its own long and rich history, sometimes stretching back hundreds of years . For example, Louis Vuitton was founded in 1852 while Tiffany & Co was founded in 1837.
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Dior, Shanghai. Photo: Getty Images
That heritage aside, its brands are known for their craftsmanship while also emphasizing innovation and their ability to keep up with the latest trends.
It also invests heavily in research and development, leaving its creative directors free to experiment, fail, and start over.
Additionally, many of its brands are distinguished by their ability to create a sense of exclusivity and sophistication in consumers. This exclusivity is often reinforced by LVMH’s selective distribution strategy and one-off collections, giving them an air of scarcity.
The biggest trick of all, however, is making and selling products that, let’s face it, no one really needs. This is marketing gold dust.
DMX cards available
Tickets are still available for DMX Dublin, which takes place on Thursday at the Royal Convention Centre, Radisson Golden Lane in Dublin. Mediahuis sponsored DMX Dublin is organized by the Marketing Institute of Ireland and this year’s theme is digital transformation. The event will feature 10 different speakers throughout the day, including Michael Wu, one of the world’s leading authorities on artificial intelligence (AI). Tickets are available from www.mii.ie
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Colin Farrell, left, and Henry Tadeusz arrive at the Oscars. Photo: AP
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Launched by Dublin-based agency Boys+Girls, the campaign aims to support and highlight Screen Ireland’s Minding Creative Minds initiative, which provides support services for those working in the creative screen industry in Ireland, including advice, legal advice and careers advice.
https://www.independent.ie/business/irish/chapeau-lvmhs-23pc-profit-jump-proves-theres-no-limit-to-global-market-for-stuff-nobody-actually-needs-42393536.html Chapeau! LVMH’s 23 percent profit jump proves that the global market for things nobody really needs knows no bounds