Financial analysis: Case LVMH

LVMH is the world’s leading brand in the luxury sector. It is based in Paris and possesses more than 60 sub companies which include Louis Vuitton, Fendi, Christian Dior perfumes, Guerlain. Each company functions more or less 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 the world through 2423 shops and 77, 000 employees. The turnover of the firm in 2009 was €17,053 billion and its net result was €1,973 billion. According to estimates, LVMH draws 80% of its profits from Louis Vuitton.

[...] The following scheme shows you the proportion between each segment (in % of sales): LVMH among its market LVMH is the world leader for luxury products and has a consolidated turnover of 17053 million Euros, which represents 11% of the whole market turnover. Its main competitors, in all segments include: Richemont billion euros) Estée Lauder billion euros) Shiseido billion euros) L’Oreal luxury products billion euros) Ralph Lauren billion euros) We have to mention that the top ten companies on this market are the same, since Segments exploited by LVMH 1 Fashion and leather goods Value 6.3 billion 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. [...]

[...] In this geographical context, LVMH occupied the second rank just after Richemond. Those investments led to a 10% increase in the financial debt Working capital management During the year 2009, we saw an improvement of the working capital of LVMH. They set up some rules and new directives to better manage it. The first result we can see is the management of stock that generated a resource in treasury of 69 million Euros instead of -826 million in the previous year. [...]