More dry goods revealed at LVMH Group’s annual analyst meeting

LVMH Group recently announced its 2022 financial performance report, and provided analysts from global financial institutions with detailed insight into the company’s current situation and strategic thinking at an online meeting.

In the 2022 fiscal year, the sales revenue of the LVMH Group has achieved significant growth, exceeding 79.2 billion euros, a year-on-year increase of 23%. Operating profit reached EUR 21 billion and free cash flow from operations exceeded EUR 10 billion. Flagship brand Louis Vuitton surpassed 20 billion euros in sales for the first time.

Bernard Arnault, chairman and CEO of LVMH Group, and Jean-Jacques Guiony, chief financial officer, gave a comprehensive summary of the company’s performance in a meeting of about an hour. Representatives from Morgan Stanley and Goldman Sachs, among others, quizzed the executives on personnel changes, departmental and market-related matters.

One topic of discussion was how to maintain brand appeal and exclusivity as the group expanded. When asked how the group maintains its brand appeal and uniqueness after its scale has expanded, Bernard Arnault emphasized that “improving attractiveness is a key criterion for the development of the group.” He said that the attractiveness comes from the performance of the group’s products every quarter, independent of firm size. He further mentioned that the key is to maintain product quality and cater to individual customer preferences by building more stores of different sizes. Therefore, he is not worried about the impact of the group’s expansion on the brand’s attractiveness.

Bernard Arnault also shared an anecdote about the conflict between brand size and scarcity. When he was appointed chief executive of LVMH, a friend in the Belgian financial industry questioned him taking over the business, saying that Louis Vuitton’s products were too rich and its revenue at the time was less than 500 million euros. He stressed that size should not be overemphasized and that quality is the most important factor.

He mentioned that Louis Vuitton’s products are currently selling very well, citing for example the yellow pumpkin handbag recently launched in collaboration with Japanese artist Yayoi Kusama, which has become a hot item and has sold out of stock.

The management also revealed that the annual sales of the Celine brand have exceeded 2 billion euros.

When it comes to the watch and jewelry sector, Bernard Arnault said that all watch businesses are currently profitable and full of innovation. He proudly wears a watch from LVMH-owned Tag Heuer, noting that his son, Frédéric Arnault, is the brand’s chief executive.

Bernard Arnault praised the outstanding performance of the brand designers, mentioning the outstanding individuals of Louis Vuitton, Dior, Celine, Loewe and other brands. He underscored the goal of making the brands more and more popular, saying they were steadily gaining traction relative to competitors.

During the meeting, Sephora, a subsidiary of the Group’s Selective Retailing Division, received extensive attention. Bernard Arnault said that since taking over Sephora in June, Chris de Lapuente has achieved extraordinary success. Sephora has grown significantly since its acquisition in 1997.

Bernard Arnault also denied the threat of e-commerce to Sephora’s offline stores, saying that consumers are returning to physical stores because the experience they provide is always extraordinary. He believes that the service and experience offered in brick-and-mortar stores (such as Sephora) cannot be compared with online shopping.