(AOF) – In Paris, LVMH (+ 2.43% to 690.20 euros) yesterday took center stage in the CAC 40 ahead of its competitors Hermès and Kering. The entire luxury sector, closely linked to the Chinese market, is therefore pulled upwards after the announcement of China which has decided to relax its measures to fight against Covid-19. What to restore confidence to investors. The Chinese authorities will lift from January 8, 2023 the mandatory anti-coronavirus quarantine for anyone entering its territory.
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Key points
– World leader in luxury born in 1987, bringing together 75 luxury houses, including 25 centenarians (Louis Vuitton, Moët Hennessy, Dior, Céline, Givenchy, Guerlain, Kenzo, Bulgari, TagHeuer, Tiffany, etc.);
– Solid geographical positions with revenues of €44.7 billion split between France for 8%, the rest of Europe for 16%, the United States for 24%, Japan for 7% and the rest of Asia for 34%;
– Balanced distribution of activities between the two historical businesses -fashion & leather goods for 47%, wines & spirits for 11%- and selective distribution for 23%, perfumes and cosmetics for 12% and watches & jewelry;
– Operational model based on 6 pillars: decentralized organization, vertical integration of supply to distribution channels (DFS in Asia, Miami Cruise, Sephora and Le Bon Marché), sustainability of know-how, balance of activities and locations, synergies and internal growth;
– Capital locked by the Arnault family group (47.3% of the capital, directly and indirectly and 2/3 of the voting rights), Bernard Arnault being Chairman and CEO of the 15-member board of directors.
Challenges
– Innovation strategy serving 3 challenges: attracting talent: Institute for Fashion Excellence Professions, “inside LVMH” program for students, DARE program for in-house innovations, hosting 50 start-ups in the “the LVMH Luxury Lab” incubator / R&D in cosmetics (200 patents and “research centers) / digitalization of distribution networks and customer experience;
– “LIFE 360” environmental strategy: creative circularity: 100% eco-design of products and zero fossil plastic packaging in 2030 / transparency with traceability of all supply chains in 2030 / climate commitment (15° trajectory and 100% renewable energy for retail sites in 2030) / biodiversity: certification of the preservation of ecosystems ((2026) and regeneration of flora and fauna on 5 Mha in 2030;
– Ability to increase prices in jewelery and watches, very competitive sectors.
Learn more about the luxury sector
Market boom for several more years
According to Bain & Company, the global luxury market (fashion, cars, hotels, wines and spirits, cruises, etc.) will have recorded a 21% jump in sales in 2022, to 1,384 billion euros. The luxury personal products segment (jewellery, clothing, watches, leather goods, etc.) should grow by 22% and again grow by 3% to 8% in 2023 despite the expected economic slowdown. Growth should continue in the following years, with an increase that should reach 60% by 2030! According to Bain, spending by Americans in Europe has more than doubled between 2019 and 2022. This development is largely explained by a strong dollar. The Chinese market, on the other hand, is at half mast due to the “zero Covid” policy and strict confinements.