Lvmh financial analysis

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LVMH – A strong leader
Financial Analysis

Table des matières
I. Table des matières 2
II. Introduction 3
III. LVMH’s market: luxury products 4
A. Repartition of this market 4
1. Geographic 4
2. Segmentation 5
IV. LVMH among its market 6
A. Segments exploited by LVMH 6
1. Fashion and leather goods 6
2. Selective retailing 7
3. Wine and spirits 8
4. Perfumesand cosmetics 9
5. Watches and Jewellery 10
B. 2010, a sight of new growth 11
V. Financial analysis 12
A. Variation in the turnover 12
B. Variation in the net profit 12
C. Working capital management 13
D. Investments 13
VI. Conclusion 14


LVMH is world number 1 of the luxury sector, is based in Paris and possess more than 60 sub companies among which LouisVuitton, Fendi, Christian Dior perfumes, Guerlain... Each company is more or less running 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 theworld through 2423 shops and 77 000 employees. The turnover of the firm in 2009 was €17,053 billion and its net result €1,973 billion. According to estimations, LVMH draw 80% of its profits from Louis Vuitton.

LVMH’s market: luxury products
In 2009, the luxury market represented 153 billions Euros. It declined from 2008 by 7,8% due to the last financial crisis. Luxury products are the firstcategory of products that suffer from decrease in purchasing power. This market reached its lowest level since 2005 as we can see on the next schema.

For 2010, specialists expect a growth in sales for luxury products. In fact, a lot of products from this market are sold in duty free area in airport or during flights. Combining the growth of international and the occupation rate in luxuryhotels, LVMH’s market is expected to grow by 4%. Moreover, some areas in the world are developing themselves constantly. We can quote the example of Asia that has a global growing by 6,6% (more purchasing power) and South America with the lead of Brazil that counts more and more millionaires (+34% between 2004 and 2008) and more potential consumers for luxury products.
Repartition of this marketGeographic
As we said before, the luxury market knew a downsizing during the year 2009 and particularly in Europe that is the most important segmentation for luxury products. In the following scheme, you will see the repartition of the world turnover (by % of sales) of our targeted market.

As we can see, Europe and America are the main segmentations of the world repartition of luxury products. Butsince few years, Asian share is constantly growing and now represents 25% of the global sales.
The luxury market is split into 5 main segmentations: clothes (pink), perfumes and cosmetics (yellow), accessories (green), jewels (orange) and table accessories (purple). The following scheme shows you the proportion between each segment (in % of sales):

LVMH among its market
LVMH isthe world leader for luxury products ad has a consolidated turnover of 17053 millions Euros, which represents 11% of the whole market turnover. Its main competitors, all segments mixed up, are:
* Richemont (5,5 billions euros)
* Estée Lauder (5,4 billions euros)
* Shiseido (4,9 billions euros)
* L’Oreal luxury products (4 billions euros)
* Ralph Lauren (3,5 billions euros)We have to mention that the top ten of companies on this market is the same since 2008.
Segments exploited by LVMH
Fashion and leather goods
Value | 6,3 billions Euros |
Share of LVMH’s turnover | 37% |
Retail stores among the world | 1164 |
Main brands in the group | Louis Vuitton, Céline, Fendi, Loewe, Bertuli, Marc Jacobs… |

This sector is the main activity of LVMH. The company is...
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