LVMH's Soaring Profits Prove Luxury's Back and Nice Guys Want to Finish First
Talk about fast fashion. Though the luxury market lagged through 2009 and ended slightly up last year, the French house of haute brands LVMH Mo?t Hennessy Louis Vuitton posted record sales and profits. Executives at upscale and aspirational brands should take note: logo-lusting shoppers and luxury loyalists are ready, willing, and able to buy your high-end goods if you've got the right mix of merchandise and marketing.
Net profit at LVMH climbed 73 percent -- let that sink in a minute -- to ?3.03 billion on a 19 percent increase in revenues. Its namesake brand Louis Vuitton led the charge with sales of its fashion and leather-goods vaulting 20 percent to ?2.12 billion in the fourth quarter. That's one regulation sh*t ton of signature monogrammed minauderie and luggage.
Yet while the company clearly relies on sales of its most recognizable staples, LVMH diversified early in order to combat any economic dips. The company was a trailblazer, the first European brand to stage serious expansion in China. Now the country's newly affluent purchasing a variety of LVMH must-haves at different price points certainly helped fuel the explosive growth.
Careful merchandising in China
Also contributing to those sales was the careful merchandising of highly-coveted LVMH brands such as Fendi and Marc Jacobs. Keeping such high-end goods in specialty boutiques catered to the Chinese appetite to wield their yuan in exclusive environments, while glamorous fragrances such as Guerlain stocked at less haute shops ensured a more democratic distribution of the drool-worthy. No doubt LVMH's chairman Bernard Arnault plans to use this strategy for the company's conquests: Mexico and Malaysia.
LVMH did pull the plug on its e-commerce site early last year. That was despite findings from research firm Bain & Company luxury sales online are over-performing overall web sales, and were projected to grow at 20 percent by the end of last year. Instead the company chose to trot out a new site Nowness.com that pushed culture above commerce with daily clips of music, film and art.
Alongside LVMH's stellar news, Herm?s, the 173-year old French company also known for its fine leather goods posted a 29 percent increase in profit from recurring operations to ?4.32 billion. This is big news for Arnault, who grabbed nearly 20 percent of the company's shares last year and can now gloat over his earnings.
Though he was accused of potentially angling for a hostile takeover, Arnault seems positively tame in the face of such a windfall. He restated how LVMH plans to support the families that control the majority of shares and of the current management of Herm?s and expressed his hope that relations between the two companies would improve, allowing them to cooperate in a way "that is constructive and beneficial to the company."
Nothing like cash in your coffers to turn you into a model of civility.
Image via Flickr user Andy
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