Chapeau! LVMH’s 23pc profit jump proves there’s no limit to global market for stuff nobody actually needs
When it comes to luxury brands, you have to take your hat off to the French.
hile the Italians may disagree, no other country does luxury brands like France does.
Although it is home to companies and brands such as Hermès, Chanel, Cartier, and Saint Laurent, one company, Louis Vuitton Moët Hennessy (LVMH), strides the luxury goods and services landscape like a colossus.
Results for the company in 2022, which were published a few weeks ago, show that annual sales rocketed by 23pc to €79bn while profits also jumped by 23pc to €21bn. The gross margin for the year, meanwhile, was an eye-popping 68pc.
The company is headed by founder and CEO Bernard Arnault, a blue blooded 74-year old who, depending on the vagaries of the stock market, is the wealthiest man in the world with an estimated fortune in excess of €200bn.
His patrician-like status in France has him cast as a political kingmaker, a patron of the arts, a philanthropist and the most successful old-school European industrialist of the last century.
The group structures itself around its individual luxury brands, or maisons as it calls them. These 75 maisons are spread across six business units including fashion and leather goods, perfume and cosmetics, watches and jewellery and wines and spirits.
Then there’s LVMH’s selective retailing business, home to Sephora, and “other activities” that include hospitality, yacht building, newspapers and duty free stores.
With brands such as Louis Vuitton, Loewe, Fendi, Dior and Marc Jacobs, sales of fashion and leather goods make up the largest chunk of LVMH’s revenues, jumping 25pc last year to €30.9bn. Sales of watches and jewellery, meanwhile, were up by 18pc to €8.9bn as luxury shoppers around the world snapped up brands like Tag Heuer, Tiffany, Bulgari and Hurlot products.
The same was true of its perfume and cosmetics business which includes Guerlain, Acqua di Parma, Benefit Cosmetics, Givenchy and Fenty by Rhianna. Last year, sales were up by 17pc to €7.7bn.
And to toast this strong performance, what about a nice glass of Moët & Chandon, Veuve Clicquot or Dom Pérignon? If premier crus champagne is not your tipple of choice, what about a bottle of Château d’Yquem or Château Cheval Blanc? With sales of just over €7bn last year, LVMH’s wines and spirits division is the envy of the drinks industry.
LVMH understands the importance of marketing. Last year, total marketing and sales costs jumped 26pc to €28.2bn, of which around €9.7bn is attributable to advertising, That’s a lot of Louis Vuitton handbags.
But luxury brands are not created overnight and LVMH proudly boasts that only six of its brands are less than five years old while 35 of its brands are what it calls “legacy maisons”, each with its own long and rich history, sometimes dating back hundreds of years. Louis Vuitton, for example, was founded in 1852 while Tiffany & Co was founded in 1837.
Apart from this heritage, its brands are renowned for their craftsmanship while it also places a lot of emphasis on innovation and its ability to stay on top of the latest trends.
It also invests heavily in research and development and allows its creative directors the freedom to experiment, fail and start all over again.
In addition, many of its brands stand out because of their ability to create a sense of exclusivity and aspiration among consumers. This exclusivity is often reinforced by LVMH’s selective distribution strategy and one-off collections, which creates an air of scarcity about them.
It’s biggest trick of all, however, is making and selling products that, let’s face it, nobody really needs. That’s marketing gold dust.
DMX tickets available
Tickets are still available for DMX Dublin, which will take place on Thursday in The Royal Convention Centre, Radisson Golden Lane in Dublin. Sponsored by Mediahuis, DMX Dublin is organised by the Marketing Institute of Ireland and the theme this year is digital transformation. The event will feature 10 different speakers throughout the day including Michael Wu, one of the leading global authorities on artificial intelligence (AI). Tickets are available at www.mii.ie
Farrell fronts new ad
He may not have picked up anything at the Oscars but actor Colin Farrell is the voice behind a new campaign for Screen Ireland called ‘Story Maker Storyboards’.
Created by the Dublin-based agency Boys+Girls, the campaign is to support and highlight Screen Ireland’s Minding Creative Minds initiative which provides support services for those working in the creative screen industry in Ireland, including counselling, legal advice and career guidance.
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