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Executive Summary
LVMH Mot Hennessy Louis Vuitton S.A. is a luxury goods conglomerate worth investing in.
Founded in 1987 with a merger between Louis Vuitton and Mot Hennessy, the company has
sustained several years of high growth and profitability. As of 2011, the company had a store
network of 2,423 stores across the US, Europe, Asia and other markets. The company employs
more than 75,000 people and is headquartered in Paris, France.
Its portfolio boasts over 60 prestigious brands in the following categories: fashion and leather
goods, watches and jewelry, wines and spirits, publishing and media, perfumes and cosmetics,
and selective retailing. Some of the brands include: Donna Karan and Marc Jacobs, Louis
Vuitton, Bvlgari, Mot and Chandon, Veuve Cliquot, Hennessy, Parfums Christian Dior, and
Sephora. All of the products sold under the LVMH brand are high quality goods that represent
status, elegance, and wealth. Therefore, the target audience is comprised of well to do individuals
with high disposable incomes. Demographics of this target audience have some variability based
on cultural differences in different geographical locations. The target audience is relatively
focused because certain individuals can afford and are attracted to the premium priced items.
LVMH is differentiated from the competition for several reasons. Some of these include strong
leadership, a well-developed and strong brand, and a focus on both tradition and innovation. The
companys goals are to continue to diversify its source of revenue and to ensure each individual
brand falls in line with the overriding corporate brand personality. These are ongoing goals that
have been designed by CEO and Chairman Bernard Arnault. The broad nature of the goals gives
the company much leeway in how it achieves them.
LVMHs sales have continued to increase. The brands show resilience to the economic climate
of the world, as sales and profit have not faltered. In 2011, the brands value was 18.4 billion
and had increased by 23 percent from 2010. Half-year reports and forecasts from analysts
indicate LVMH will surpass projections for the 2012 fiscal year.
Investment in LVMH is highly recommended. The company proves to be sustainable and highly
profitable over extended periods of time, is the global leader in its industry, maintains stability in
the wake of constant innovation, and has secured a loyal customer base that continues to grow.
Qualitative
Analysis
Porters Five Forces of Competition
Corporate and Business Level Strategy
Vision and Leadership
Culture and Brand Position
Potential Threats
4
5
6
6
7
8
8
8
9
9
Recommendations
Appendices
12
Works Cited
19
10
11
12
Figure
3
13
14
2011
2010
COMMENTS
2009
TOTAL ASSETS
7,060,000,000
6,048,000,000
NON-CURRENT LIABILITIES
TOTAL LIABILITIES
TOTAL EQUITY
23,512,000,000 18,204,000,000 14,785,000,000
CASH FLOW
NET OPERATIONS CASH FLOW
3,907,000,000
4,049,000,000
2,934,000,000
INCOME STATEMENT
TOTAL SALES/ REVENUES
GROSS INCOME
2,094,000,000
SG&A EXPENSE
10,304,000,000 8,815,000,000
NET INCOME
3,065,000,000
3,032,000,000
6.27
6.36
EPS
15
3.71
5,073,000,000
4,172,000,000
ASSESSMENT
Financial
Component
Guideline
CURRENT PRICE
Company
Competition
GUCG
Sector
Comments
137.50
140.00
MOVING AVERAGE
200 DAYS
123.81
128.00
QUICK RATIO
>1:1
0.5
.50
CURRENT RATIO
>2:1
1.4
2.63
INVENTORY TURNS
Higher is usually
better compared
with Industry
1.2
1.21
Probably because
this is a luxury good
company, inventory
turnover is very low.
There is a lot in
stock, purchases do
not occur that
quickly however, the
high price makes
this okay and it
seems in line with
the industry.
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Guideline
Company
Competition
GUCG
ACCOUNT PAYABLE
Lower is usually
better
9.01
9.19
ROE
13-15%
considered
healthy
16.97
4.14
ROA
>5%
7.57
1.31
PROFITABILITY
At least 5%,
supermarkets are
usually 1-2%
13.05
6.73
GROSS MARGIN
Higher is better,
vary widely by
industry
65.14%
67.07
OPERATING MARGIN
Same
22.25
20.02
DEBT/EQUITY
<2:1
34.1
51.9
EPS
50 better than 20
6.27
1.32
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Sector
Comments
Compared to the
competitor, LVMHs
accounts payable is
lower, showing
LVMH may have
more favorable
payment terms with
its suppliers.
11.7
5.89
Interesting, while
LVMHs ROA is not
good, the profitability
is very high relative
to the industry.
138.06
EPS shows LVMH is
profitable.
Guideline
Company
Competition
GUCG
Sector
Comments
PE RATIO
19.11
18.25
20.31]
PEG RATIO
<1:2
1.5647
n/a
P/S
<3:1
2.46
4.23
BETA
.7:1.0
1.06
1.2
INSTITUTIONAL
SHAREHOLDERS (LOOK FOR
RECENT OR SIGNIFICANT
CHANGES)
40-80%
n/a
n/a
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LVMH Mot Hennessy Louis Vuitton SA SWOT Analysis. Datamonitor (2010): 1-10.
Arnault, Bernard. "The Perfect Paradox of Star Brands: An Interview with Bernard Arnault of
LVMH." Interview by Suzy Wetlaufer. Harvard Business Review.
Harvard Business Publishing, Oct. 2001. Web. 5 Dec. 2012.
<http://hbr.org/2001/10/the-perfect-paradox-of-star-brands-an-interview-with-bernardarnault-of-lvmh/ar/1>.
Cook, Joel. "Strategic Implementation and Formulation." George Washington University School
of Business, Washington, DC. Fall 2012. Lecture.
Faulisi, Shauna. "LVMH: Brief History of LVMH." LVMH. N.p.,
1 Sept. 2011. Web. 5 Dec. 2012.
<http://sliclvmh.blogspot.com/2011/09/brief-history-of-lvmh.html>.
Mau, Dhani. "Antoine Arnault: Talking to John Galliano Was Impossible." Fashionista.
Breaking Media, Inc., 29 Oct. 2012. Web. 05 Dec. 2012.
<http://fashionista.com/2012/10/antoine-arnault-talking-to-john-galliano-wasimpossible/>.
Mergent, Inc. Mergent Online. Clemson University Library, 4 Dec. 2009. Web. 4 Dec. 2009.
<http://www.mergentonline.com/>
Okonkwo, Uch. Luxury Fashion Branding: Trends, Tactics, Techniques. Basingstoke: Palgrave
Macmillan, 2007. Print.
Phelan, Hayley. "Is John Galliano Suing Dior for 15 Million?" Fashionista.
Breaking Media, Inc., 28 Aug. 2012. Web. 05 Dec. 2012.
Roberts, Andrew. "LVMH's Vuitton Gains, Gucci Declines in Brand Value, Research Group
Says." Bloomberg. BLOOMBERG L.P., 9 May 2011. Web. 05 Dec. 2012.
<http://www.bloomberg.com/news/2011-05-08/louis-vuitton-rises-gucci-falls-in-2011brand-valuation-study.html>.
Sage, Alexandria. "LVMH Reveals Secrets of Its Luxury Brands." Fox Business.
FOX News Network, LLC., 17 Sept. 2011. Web. 5 Dec. 2012.
<http://www.foxbusiness.com/personal-finance/2011/10/17/lvmh-reveals-secrets-itsluxury-brands/>.
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