...report of: LVMH Hand-in date: 25.11.2010 Campus: BI Oslo Examination code and name: GRA 62123 Financial Reporting and Analysis Table of Contents EXECUTIVE SUMMARY 3 MARKET REVIEW: 4 COMPANY REVIEW 5 Management compensation 6 BUSINESS DESCRIPTION 7 Business Risk Analysis 8 FINANCIAL PERFORMANCE 9 Profitability 9 Activity Ratios 12 Financing and Liquidity 13 CASH FLOW ANALYSIS 15 VALUATION 16 CONCLUSION 17 References 19 Appendix 20 EXECUTIVE SUMMARY This paper analyzes LVMH group. Taking the recent developments and prospects in luxury goods industry as a starting point, the first part analyzed and compares LVMH with Hermes International and GUCCI, focusing in particular on performance which is analyzed through their activity, liquidity and financing and profitability position. The next part scrutinizes LVMH’s cash flow statement in order to evaluate its operating activities as well as the ability to cover its investments. The paper will conclude that LVMH presents a good investment alternative considering other companies in the same industry. Second, LVMH have a low risk given its solid financial structure and sufficient liquidity. Sales have grown at an average annual rate of 7.5% over the past five years driven by organic growth and acquisitions. MARKET REVIEW: APPAREL, ACCESSORIES & LUXURY GOODS INDUSTRIES Concetta Lanciaux, ex head of the Human Resources for LVMH states which...
Words: 5479 - Pages: 22
...Business presentation LVMH Good morning, everyone, The subject of today’s presentation is LVMH also know as Louis Vuitton Moët Hennessey. This is a holding company, a company that doesn’t produce goods or services but only owns shares of other companies. The presentation will last about 20 minutes and if you have any questions, we’ll be glad to answer them at the end of our presentation. Let’s begin by looking at our table of contents. As you can see we will start with business. This contains the competitors, projects, market position etc. Then we will discuss the 4 Ps and 4 Cs and finally we will look at the website. Well, that’s all I wanted to say about the table of contents moving on to our first subject of the presentation: the mission statement. Thank you for your attention, if there are any questions, we’ll be pleased to answer them. Core activities LVMH is the world's largest luxury goods conglomerate, they own around 60 sub-companies. We can say that LVMH has 5 core activities because these are the activities that are the most profitable. The group has a large variety of goods: Wines and spirits In this category you can find several kinds of alcohol. You have wine (Château d’Yquem), champagne (Moët & Chandon, Dom Pérignon and Veuve Clicquot), brandy (Hennessy), whiskey (Glenmorangie), vodka (Belvedere vodka) and rum (10 Cane). They have more than 20 different species of wines and spirits so it covers a big range of their products. Clothing...
Words: 1999 - Pages: 8
...LVMH Moët Hennessy Louis Vuitton in Luxury Goods - World October 2010 Downloaded from www.warc.com Scope of the Report Luxury Goods: LVMH © Euromonitor International Scope Disclaimer Much of the information in this briefing is of a statistical nature and, while every attempt has been made to ensure accuracy and reliability, Euromonitor International cannot be held responsible for omissions or errors Figures in tables and analyses are calculated from unrounded data and may not sum. Analyses found in the briefings may not totally reflect the companies’ opinions, reader discretion is advised Learn More To find out more about Euromonitor International's complete range of business intelligence on industries, countries and consumers please visit www.euromonitor.com or contact your local Euromonitor International office: London +44 (0)20 7251 8024 Dubai +971 4 372 4363 Chicago +1 312 922 1115 Cape Town +27 21 552 0037 Singapore +65 6429 0590 Santiago +56 2 915 7200 Shanghai +86 21 6372 6288 Sydney +61 2 9275 8869 Vilnius +370 5 243 1577 Downloaded from www.warc.com 2 Luxury Goods: LVMH © Euromonitor International Strategic Evaluation Market Assessment Designer Clothing and Footwear Luxury Accessories Fine Wines/Champagne and Spirits Super Premium Beauty and Personal Care Luxury Jewellery and Timepieces Brand Strategy/Operations Recommendations Downloaded from www.warc.com 3 Strategic Evaluation Luxury Goods: LVMH © Euromonitor International ...
Words: 7453 - Pages: 30
...interests in meetings with foreign government officials. Yves Carcelle, chairman of Louis Vuitton SA, recently explained, “Almost every month, we get a govern- ment somewhere in the world to destroy canvas, or finished products.” Another problem is a flourishing gray market. Givenchy and Christian Dior’s Dune fragrance are just two of the luxury perfume brands that are sometimes diverted from authorized channels for sale at mass-market retail outlets. LVMH and other luxury goods marketers recently found a new way to combat gray market imports into 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...
Words: 1694 - Pages: 7
...LVMH: Diversification Strategy into Luxury Goods Strategic Issues By 2002, Moet Hennessy Louis Vuitton was the world's largest luxury products company, enjoying annual sales of 12.2 billion euros. LVMH carries the most prestigious brand names in wine, champagne, fashion, jewelry, and perfume. Upon entrance of this luxury product industry, LVMH was aware that they produced products that nobody needed, but that were desired by millions across the world. This desire in some way fulfills a fantasy, making consumers feel as though they must buy it, or else they will not be in the moment, and thus will be left behind. The LVMH business portfolio began to take shape in 1987 with the merger between Louis Vuitton and Moet Hennessy which was a four billion dollar merger. Over the course of time, LVMH has acquired over 50 luxury brands, such as Donna Karen, Fendi, and Sephora. They called it, "a collection of star brands and rising stars." LVMH found this industry to be timeless and modern, highly profitable, and very rapid growing. Despite all of the above mentioned, LVMH did experience some bumpy times. Some of these times were induced through internal problems, while others were caused by externalities, like Sept. 11. With such a wide range of product offerings, LVMH was on top of the industry in certain aspects, but has room for growth in other areas. One instance in particular nearly caused a division in the company. Hennessy believed the company should focus on wine, spirits...
Words: 2062 - Pages: 9
...TABLE OF CONTENTS 1 4 6 7 8 9 10 11 12 13 14 16 17 19 21 Chairman’s Message Consolidated Highlights The LVMH Share Shareholder Relations Wines and Spirits Fashion and Leather Goods Perfumes and Cosmetics Watches and Jewelry Selective Retailing Other Activities Consolidated Balance Sheet Consolidated Statement of Income Activity Review Consolidated Statement of Cash Flows Consolidated Statement of Changes in Stockholders' Equity CHAIRMAN’S MESSAGE The slowdown of the world’s economies, the shock of the attacks of 11th September and their grave geopolitical consequences, very poor short-term visibility for economic and financial markets : these were all defining characteristics of 2001. The accomplishments of our teams in this exceptionally unstable environment were remarkable. Thanks to their talents, their efforts and their great ability to be reactive, our activities continued to grow, sustained by the entrepreneurial and innovative spirit which is at the very foundation of our position of leadership and which allows us to gain market share, even when times are difficult. Bernard Arnault Chairman and CEO EXCELLENT PROGRESS FOR OUR GREATEST BRANDS The performance of the great brands which are at the heart of our business was excellent. Louis Vuitton saw further growth and its new products, which accounted for 18% of the year’s sales, are objects of infatuation. Parfums Christian Dior saw numerous successes and Hennessy continued to gain ground in the United States...
Words: 9837 - Pages: 40
...LVMH 2012 — ANNUAL REPORT BUSINESS REVIEW CONTENT — Group’s profile 03 06 09 10 11 CHAIRMAN’S MESSAGE FINANCIAL HIGHLIGHTS INTERVIEW WITH THE GROUP MANAGING DIRECTOR GOVERNANCE EXECUTIVE AND SUPERVISORY BODIES A coherent universe of men and women passionate about their profession and driven by the desire to innovate and achieve. An unrivalled group of powerfully evocative brands and great names that are synonymous with the history of luxury. A natural alliance between art and craftsmanship, dominated by creativity, virtuosity and quality. A remarkable economic success story with more than 100,000 employees worldwide and global leadership in the manufacture and distribution of luxury goods. A global vision dedicated to serving the needs of every customer. The successful marriage of cultures grounded in tradition and elegance with the most advanced marketing, industrial organization and management techniques. A singular mix of talent, daring and thoroughness in the quest for excellence. A unique enterprise that stands out in its sector. Our philosophy can be summarized in two words: CREATIVE PASSION. 12 22 36 46 58 WINES & SPIRITS FASHION & LEATHER GOODS PERFUMES & COSMETICS WATCHES & JEWELRY SELECTIVE RETAILING — The values of LVMH Innovation and creativity Because our future success will come from the renewal of our product offering while respecting the roots of our Maisons. Excellence of products and service Because we embody what is most noble and accomplished...
Words: 48163 - Pages: 193
...things right and leaders are people who do the right thing” (Are Managers Leaders, 2011). In order for everyone to be an effective leader they have to be able to find the right balance between moral, social and business characteristics of leadership. According to Yukl (1989, p. 6) an effective leader is generally someone that leads by example and other people just tend to follow because they believe what they do is the right thing. A commonly used measure of leader effectiveness is how well the leader’s group fulfills its tasks and attains its goals. Another indicator is the attitude of followers toward the leader. A very important measurement of the leader’s effectiveness is his contribution to the quality of the group processes. The key characteristics which have to be taken in to consideration in order to be an effective leader are as follows: they are credible; that gives them greater pride in the organization and better cooperation and teamwork; they keep their promises; they have perfect idea of what others value and what they can do; they admit their mistakes knowing that trying to hide them ruins...
Words: 2639 - Pages: 11
...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...
Words: 54550 - Pages: 219
...Pioneer or Dreamer? -- Analysis of the “Shanghai Tang: The First Global Chinese Luxury Brand?” case 1. Introduction According to the case “Shanghai Tang: The First Global Chinese Luxury Brand?”, Shanghai Tang was struggling for more than 18 years to be the first global Chinese luxury brand, but unfortunately, until today, Mr. David Tang, the founder of this brand, still has to face a lot of problems: international brand awareness, costumer approval, operation & marketing strategies, relentless competitions, intercultural communication and multicultural integration, etc. It may be on the right track, maybe not. Is Mr. David Tang a pioneer? Or is he just a dreamer? In this analysis report, I will separate all these arguments into four parts: the company’s activities and current development; comparison of competitors’ strategies and tactics; intercultural issues and costumer behaviour in the luxury industry, especially Chinese market; recommendations and alternative solutions for Shanghai Tang’s future strategies. In this report, I will focus on the two most important factors: “inter Culture” and “luxury”, which will impact on the future strategies of Shanghai Tang, and I will defend my standpoints by analyzing the environment of luxury industry and cultural context in China. 2. Shanghai Tang’s current development and business situation Since 1995, the Swiss luxury company Financiere Richem SA (Richemont) became the main shareholder of Shanghai Tang, Tang’s company...
Words: 2971 - Pages: 12
...The Swiss Luxury Watchmaking Industry A general overview and a closer look at the celebrity endorsement and sponsorship communication strategy used by the leaders. Karine Gautschi January 2005 HEC Lausanne – Hautes Etudes Commerciales, MIM – Master of International Management Thesis Director, MIM: Professor Stéphane Garelli Expert, Omega: Jean-Pascal Perret Table of Contents 1 2 INTRODUCTION .............................................................................................................. 1 LUXURY WATCH INDUSTRY: A SHORT OVERVIEW .................................................. 3 2.1 2.2 3 DEFINITION AND PRICE SEGMENTATION ........................................................................ 3 LUXURY BRANDS AND THEIR POSITIONING ..................................................................... 5 ANALYSIS OF THE LUXURY WATCH INDUSTRY........................................................ 7 3.1 THREAT OF NEW ENTRANTS .......................................................................................... 9 Capital requirement ............................................................................................ 9 Brand recognition ............................................................................................... 9 Distribution........................................................................................................ 15 3.1.1 3.1.2 3.1.3 3.2 BARGAINING POWER OF BUYERS .........................................
Words: 34176 - Pages: 137
...The Swiss Luxury Watchmaking Industry A general overview and a closer look at the celebrity endorsement and sponsorship communication strategy used by the leaders. Karine Gautschi January 2005 HEC Lausanne – Hautes Etudes Commerciales, MIM – Master of International Management Thesis Director, MIM: Professor Stéphane Garelli Expert, Omega: Jean-Pascal Perret Table of Contents 1 2 INTRODUCTION .............................................................................................................. 1 LUXURY WATCH INDUSTRY: A SHORT OVERVIEW .................................................. 3 2.1 2.2 3 DEFINITION AND PRICE SEGMENTATION ........................................................................ 3 LUXURY BRANDS AND THEIR POSITIONING ..................................................................... 5 ANALYSIS OF THE LUXURY WATCH INDUSTRY........................................................ 7 3.1 THREAT OF NEW ENTRANTS .......................................................................................... 9 Capital requirement ............................................................................................ 9 Brand recognition ............................................................................................... 9 Distribution........................................................................................................ 15 3.1.1 3.1.2 3.1.3 3.2 BARGAINING POWER OF BUYERS .........................................
Words: 34004 - Pages: 137
...In Japan, whether you are in Tokyo, Osaka or Nagoya, just turn your head and Louis Vuitton is everywhere. The celebration of the 30th anniversary of the presence of the illustrious, glittering French multinational in Japan took place in Aoyama, one of Tokyo’s fashionable districts. A unique vision of luxury took shape when Louis Vuitton opened yet another new store inside Comme des Garçons on September 4, 2008, in the heart of Japan’s capital. The pop-up store situated on the prestigious Omotesando Street was an illustration of Louis Vuitton’s attachment to the Japanese luxury market. Yves Carcelle, chairman and CEO of Louis Vuitton, said, “This project not only brings a new meaning to luxury, but also speaks volumes about how the know-how and heritage of Louis Vuitton have always been perceived in Japan, including by its foremost designers. We are very proud to have been able to help Rei Kawakubo2 relive her memories in such an original and creative way.”3The Omotesando guerrilla marketing event reflected Louis Vuitton’s success in Japan. Louis Vuitton had been following an aggressive marketing strategy in the country, opening extravagant stores such as those in Ginza or Roppongi.Take a walk on Ginza’s main street, Chuo Dori, the centre of a paradise for shoppers, with longestablished department stores, such as Mitsukoshi, Takashimaya and Matsuzakaya. Continue through the high-end fashion street Namiki-dori. Stop. There it is. You have reached the massive flagship...
Words: 7967 - Pages: 32
...How Globalization Affects Luxury Goods Industry? Andy Warhol, a pioneer in the visual art movement once said: “Whenever people and civilizations get degenerate and materialistic, they always point at the outward beauty and riches and say that if what they were doing was bad, they wouldn’t being doing so well, being so rich and beautiful” (Warhol, 1975). Throughout history, luxury emerged as early as civilization did. For old Romans, the concept of luxury was a “disruptive power of desire”. They set up the first laws about luxury: “how much could be spent on banquets and adornment” (Ward, 2011). Since the rise of Christianity, luxury stared to changed its meaning to be related to lust and sexuality. Until 17th century, perspectives of luxury products again changed across the continent of Europe because of the frequent trade and business. At that time, luxury was considered as an advantage, which brings money and profit. The extreme luxury phenomenon swept across France during 17th century, especially on the architecture of chateaus—the excessive styles and appearances with resplendent furniture. Until the late modern period, luxury began to experience the process of moralization since people’s revaluation on desire. According to “The Spirit of Laws”, Montesquieu said that: “ luxury is therefore absolutely necessary in monarchies; as it is also in despotic states” (Carrithers & Nugent, 2001). In terms of luxury products companies, they try to find the balance between history...
Words: 4502 - Pages: 19
...written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Richard Ivey School of Business Foundation, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca. Copyright © 2013, Richard Ivey School of Business Foundation Version: 2013-04-04 SYNOPSIS Moët Hennessy Louis Vuitton (LVMH) enjoyed double digit growth and healthy profitability in 2010 and 2011. A large part of this growth had been driven by its flagship group Louis Vuitton (LV). In 2011, LVMH announced that long-time LV CEO Yves Carcelle would be replaced at the end of 2012 by Jordi Constans, an executive from the French food product multinational Danone SA. However, after serving less than a month, Constans was replaced in December 2012 by Michael Burke, an LVMH insider who had been with the company for nearly 30 years. While LV had enjoyed rapid growth over the last two years, the question was whether such a growth rate was sustainable. What were the challenges facing LV, and how should these challenges be addressed? HISTORY Louis Vuitton Malletier was born in 1821 in Anchay, France. At age 16 he moved to Paris and took up a job as an apprentice trunk maker, over time...
Words: 9810 - Pages: 40
