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Capri 5,566 Tapestry 5,409

Table 2.7 LVMH: Sales and Results, 2009 and 2019

      Source: LVMH annual reports.

	2019 Sales (€ million)	2009 Sales (€ million)	2019 Operating Profit (€ million)	Profit On Sales (%)
Wines and spirits	5,576	2,740	1,729	31.0
Fashion and leather goods	22,240	6,302	7,344	33.0
Perfumes and cosmetics	6,835	2,741	683	10.0
Watches and jewelry	4,405	764	736	16.7
Selective distribution	14,711	4,533	1,395	9.5
Miscellaneous	(67)	(27)	(383)
Total	53,700	17,053	11,504	21.4

      As we can see, LVMH is a very impressive group, with more than half of its luxury brand business done in the fashion and leather division. It is also striking to note that this fashion business provides 64% of the group's total operating profits.

      2019 was clearly a very good year for the group. From 2009 to 2019, the growth was spectacular. This is a result of operational growth, but also company purchases, and the list is long: Celine, Fendi, Loro Piana, Bulgari, and recently.

Table 2.8 Scorecard of LVMH Results (€ million)

      Source: LVMH annual reports.

	2019		2014		2009
Sales	53,700	100%	30,638	100%	17,053	100%
Operating profit	11,504	21.4%	5,718	18.7%	3,352	19,6%
Net profit	7,171	13,3%	5,648	18,4%	1,973	11.6%

LVMH's overall performance for 2009, 2014, and 2019 is summarized in Table 2.8.

The net profit of 13.3% of sales is not bad in 2019, but the operating profit of the fashion division (33% of sales) and of wines and spirits (31% of sales) is very impressive and probably one of the highest in the industry. But this percentage is interesting for another reason: Table 2.7 shows that for the perfume business, there were recorded sales of €6,835 billion, with an operating profit of €683 million. We can estimate a net profit of €137 million.¹In other words, the perfumes and cosmetics division is providing a much lower profitability than other business sections and less than is generally expected in the perfume business.

      In the luxury sectors, two segments are doing extremely well: the fashion and leather goods division, and the wines and spirits division (with its brands including Krug, Dom Pérignon, Moët and Chandon, Veuve Clicquot, and Hennessy). In the fashion and luxury division, LVMH also has many brands, including Louis Vuitton, Dior, Fendi, and Loro Piana. The question here is to determine which of these should be given priority. It seems that, based on size and potential, Celine is given major resources and development money. But Berluti, the only exclusively masculine fashion brand, seems to have an impressive business plan with the opening of many self-standing monobrand stores. The question still remains: What is the future of the other brands, if they are not profitable or only marginally contributing to the group profit?

In geographical terms, the group is well balanced, as can be seen in Table 2.9.

Table 2.9 LVMH Geographical Split, 2019

      Source: LVMH annual reports. Of course, this geographical split varies across divisions and brands.

France	9%
Rest of Europe	19%
America	24%
Japan	7%
Rest of Asia	30%
Other markets	11%
Total	100%

Kering. This group was created in 1999 by the purchase by PPR of a minority interest in Gucci and the immediate purchase of the YSL fashion and YSL beauty group. Since then, the group has purchased many other brands, including Bottega Veneta, Boucheron, and Balenciaga, and is one of the few groups that has grown by purchasing existing brands and by developing its own from scratch. This latter category includes, for example, Alexander McQueen.

The company name was changed to Kering in 2013. Table 2.10 summarizes the existing sales and operating profit data.

Gucci and Saint Laurent have outstanding performances for the past five years. The case of Bottega Veneta is quite interesting: it was at the same sales

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