...LVMH: King of the Luxury Jungle SEPTEMBER 2009 Profit from temporary W&S woes to bag the stock at discount prices LVMH is the strongest player in the luxury goods industry, a giant in an industry where fixed costs make scale paramount; the only "two-legged" balanced player, leading with mega-brands in both Leather Goods and Wines & Spirits; enjoying stable group EBIT margins as a consequence Champagne consumer demand weakness, de-stocking and oversupply in 2010 are well understood; W&S concerns have depressed the stock close to 20-year trough multiples and in the same range of smaller and more volatile hard luxury players and other peers; an opportunity in our view On top of LVMH's unrivaled industry position, markets seem to under-appreciate cost-saving opportunities, brand-portfolio rationalization, higher FCF from lower W&S inventory investment, above-average mega-brands' results or support from first-mover EM inroads In a medium-term growth environment, LVMH has the chance to be a key consolidator in the luxury goods industry: a mega-merger with CFR would be a strategic master stroke, placing it ahead of any M&A counter move by competitors SEE DISCLOSURE APPENDIX OF THIS REPORT FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS LVMH: KING OF THE LUXURY JUNGLE 1 Portfolio Manager's Summary We have few doubts about the opportunity of investing in LVMH for the medium to long term. We expect "winners will continue to win" in the luxury industry...
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...Increase in new product introductions Very poor forecasting of demand Rapid pace of new product introductions leading to 20% avg growth in 3 years Unprecdictability of customers inspite of market research Opportunity cost of stores being out of products customers wanted had to be very high 20% operating margin 10% net margin 1987-2005 the annual growth rate of 12% operating profit45 % above industry average 25% Estimate COGS 15% of goods sold Logistics 13 % margin 14 % Countries raw materials were purchased – France and neighbouring European countries 1200 SKU – Stock Keeping Units 8 Facilities – 6 – France, 1 – Spain, 1 – US 3600 labour force 6-8 weeks supply to be delivered 2.5 month of raw material inventory Made to order trunks - 110 hours each -12,000 euro /each 24 people – 120 bags / day Avg cycle time for bags – 6 days In France the products remained in the storage for a month at cergy-pontoise 2% of all fashion related ,short life cycle products had to disposed every year Senior manager view – Anticipate Demand Should have less hurry to stack stores up 5 back up warehouses across the world Distribution: 230 stores in 1998 / 340 stores in 2005 Each store size – 450-500 square feet 1600 sq feet store in paris champs elysees 6th most visited monument in france Every month the store manager draws an estimate of their replenishment of of requirement. Ship and Arifreight to avid long delivery...
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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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...the United States. In March 1995, the U.S. Supreme Court let stand an appeals court ruling prohibiting a discount drugstore chain from selling Givenchy perfume without permission. Parfums Givenchy USA had claimed that its distinctive packaging should be protected under U.S. copyright law. The ruling means that Costco, Walmart, and other discounters cannot sell some imported fragrances without authorization. Opportunities and Challenges in Asia Asia—particularly Japan—is a key region for LVMH and its competi- tors. The financial turmoil of the late 1990s and the subsequent currency devaluations and weakening of the yen translated into lower demand for luxury goods. Because price perceptions are a critical component of luxury goods’ appeal, LMVH executives made a number of adjustments in response to changing business conditions. For example, Patrick Choel, president of the perfume and cosmetics division, raised wholesale prices in individual Asian markets. The goal was to discourage discount...
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...Case, Gucci Group N.V. (A) 1. Map competitive positioning of different players in the luxury goods arena and state who is best positioned and why? The luxury goods arena is a highly competitive industry in which companies must position themselves with both objective and subjective differentiating factors. Although humans are usually rational buyers when it comes to commodities and the necessities of life, much of this logic is thrown out when purchasing high-end luxury goods. While high quality is a necessary component of luxury goods, it is the brand’s image that a customer is really purchasing. Taking this into consideration, the true competition in this industry lies not in the technical differences in products offered, but in the perceived extent of luxury status the purchaser will receive upon buying said luxury item. There are several players in the luxury goods arena that have all become household names across the world through their strategic positioning. Currently, Hermes is considered as the “top of the line” luxury goods brand, with Chanel in a close second. Ferragamo is considered to be at the lower-end. For the sake of this case, we will focus on the middle tier, which consists of Prada, Louis Vuitton (LVMH), and Gucci. Firstly, Prada is much smaller relative to many of the big players in this industry, but it has been actively acquiring and growing throughout the last two decades. What started as a high-end luggage company has expanded to a producer of all things...
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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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...[pic] |ANNEE SCOLAIRE |2011/2012 | |Programme / Cursus / Groupe |MIM 1 | |Intitulé du MODULE |Analyse stratégique | |Nom des étudiants |Chioderoli Christophe | | |Clavel Antoine | | |Curot Maxime | | |Hyvrier Sylvain | | |Russo Arnaud | | |Streiff Pauline | |Date |09.12.2011 | CAS DE BEERS [pic] Sommaire 1. Identifiez les influences structurelles dans l’environnement de De Beers. 2. À l’aide du modèle des 5(+1) forces de Porter, identifiez les facteurs clés de succès dans l’industrie du diamant. Lesquelles de ces forces ont connu les plus fortes variations ? 3. Considérez-vous...
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...LOUIS VUITTON MOËT HENNESSY U POTRAZI ZA SINERGIJOM U SVJETSKOJ INDUSTRIJI LUKSUZA Gospodin Bernard Arno (Bernard Arnault), kojeg su istaknuti modni stručnjaci proglasili „Kraljem luksuza“ ili „Papom Mode“ ili „Vladarem logoa“, svoje kancelarije je smjestio u moderni luksuzni apartman na vrhu elegantnog sjedišta Luj Viton Moet Ensi (Louis Vuitton Moët Hennessy – LVMH). Posjetioci, koji žele da vide unutrašnjost ovog luksuznog centra, moraju najprije biti pretreseni od strane ličnih tjelohranitelja gospodina Arnoa, a onda se vrata od neprobojnog stakla nečujno otvaraju kako bi posjetioci ušli u svjetilište svjetskog modnog carstva. Okružen svijetom raskoši i lusuza, gospodin Arno je bio možda najvjerniji ambasador proizvoda svoje kompanije. To je čovjek koji je, od strane nekoliko vodećih poslovnih časopisa, godinama proglašavan za najbolje odjevenog glavnog izvršnog direktora (Best Dressed CEO). Međutim, došao je trenutak kada je bilo potrebno procijeniti situaciju, ponovo osmisliti ili čak redizajnirati strategije koje će voditi njegovu kompaniju na ulasku u veoma izazovan period njenog kratkog postojanja. Da li će LVMH biti sposoban da ispuni svoja obećanja i udvostruči prodaju svojih proizvoda i profit tokom narednih pet godina? Godina 2001. je bila turbulentna godina za LVMH. Pod vođstvom gospodina Arnoa, LVMH je bio uveliko na putu sprovođenja strategije koja je pozivala na povećanje raznovrsnosti ponude kada je riječ o luksuznim brendovima i istovremenu ekspaniziju u više...
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...SWISS WATCHES - Industry Analysis - Student: Calin Mihai - Daniel Master: MBAE AIA E Course Title: Strategic Management Course Instructor: Popescu Cristian Introduction Country Economic Overview Switzerland is a standout amongst the most well off, macroeconomically steady and exceedingly aggressive nations on the planet. The nation has accomplished its aggressiveness in spite of a landlocked area, absence of normal assets and a little residential business sector. Stable political establishments, gradualist strategy changes and financial mix with the EU27 are at the center of Swiss macroeconomic aggressiveness. Swiss microeconomic intensity is driven by an exceptionally solid national business environment over the jewel, and 4 very creative, send out orientated, co-found bunches: Financial Services, Precision Engineering (counting watchmaking), Biopharmaceuticals, and Medical Technology. These bunches have however created notwithstanding a nonattendance of deliberate government group arrangements. To support and update its national intensity, we prescribe the Swiss government execute an incorporated bunch procedure, facilitate its scattered monetary policymakers around an arrangement of national financial destinations, lessen non-duty boundaries to exchange, establish changes to make beginning up and slowing down organizations less demanding, and fit business, assessment and speculator insurance direction...
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...RIASSUNTO ECONOMIA E GESTIONE DELLE IMPRESE – LIBRO DI TESTO: L’ANALISI STRATEGICA PER LE DECISIONI AZIENDALI R. GRANT EDIZIONE 2011 CAPITOLO 1 IL CONCETTO DI STRATEGIA Diverse definizioni di strategia 1. La strategia è lo strumento usato dagli individui e organizzazioni per raggiungere i propri obiettivi; 2. Si definisce strategia la determinazione delle finalità e degli obiettivi di lungo periodo di un’ impresa e attuazione delle linee di condotta e allocazione delle risorse necessarie alla realizzazione di tali obiettivi. 3. La strategia è il piano complessivo per lo spiegamento di risorse necessarie a conseguire una posizione di vantaggio sulle altre imprese. 4. Strategia competitiva vuol dire differenziarsi. Vuol dire scegliere deliberatamente un diverso insieme di attività per generare un esclusiva combinazione di valore ( M.Porter) L’essenza della strategia, dunque, consiste nell’effettuare scelte. Affinché una strategia sia di successo è necessario: ▪ Obiettivi siano semplici, coerenti e a lungo termine; ▪ Profonda comprensione dell’ambiente competitivo; ▪ Valutazione obiettiva delle risorse; ▪ Implementazione efficace La strategia ha il ruolo di collegare l’impresa (obiettivi e valori, Risorse e competenze, Struttura e sistemi organizzativi) con l’ambiente settoriale (Concorrenti, Clienti, Fornitori) in cui opera. Le scelte strategiche possono essere ridotte a due questioni fondamentali: Dove competere? Come competere...
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...This page intentionally left blank Managerial Economics Managerial economics, meaning the application of economic methods in the managerial decision-making process, is a fundamental part of any business or management course. This textbook covers all the main aspects of managerial economics: the theory of the firm; demand theory and estimation; production and cost theory and estimation; market structure and pricing; game theory; investment analysis and government policy. It includes numerous and extensive case studies, as well as review questions and problem-solving sections at the end of each chapter. Nick Wilkinson adopts a user-friendly problem-solving approach which takes the reader in gradual steps from simple problems through increasingly difficult material to complex case studies, providing an understanding of how the relevant principles can be applied to real-life situations involving managerial decision-making. This book will be invaluable to business and economics students at both undergraduate and graduate levels who have a basic training in calculus and quantitative methods. N I C K W I L K I N S O N is Associate Professor in Economics at Richmond, The American International University in London. He has taught business and economics in various international institutions in the UK and USA, as well as working in business management in both countries. Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo Cambridge...
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