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Presentation of my case study regarding Louis Vuitton Moet Hennessy.

Presentation of my case study regarding Louis Vuitton Moet Hennessy.

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  • hello

    i just wanted to correct a small information in your ppt if you don't mind. Although the company is LVMH, its real name is Moet Henessy Louis Vuitton. it is the agreement that has been settled down between the two companies when merging.
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  • ----- Meeting Notes (5/10/12 15:21) -----Revenue has increased the past 3 years to a total of 23Billion EurosNet Profit increased to 3B
  • ----- Meeting Notes (5/10/12 15:21) -----Expanded with an addtional 495 stores 19.5% Increase from 2010 to 2011
  • ----- Meeting Notes (5/10/12 15:21) -----8% Increase Approxiamtely 263,000,000 Euros
  • ----- Meeting Notes (5/10/12 15:21) -----1.13 Billion Euros15% increase
  • ----- Meeting Notes (5/10/12 15:21) -----119,000,000 Million EurosIncrease of 9%
  • ----- Meeting Notes (5/10/12 15:21) -----964,000,000M EurosIncrease of 98%
  • ----- Meeting Notes (5/10/12 15:21) -----964,000,000M EurosIncrease of 20%

Louis Vuttion Moet Hennessy Presentation Louis Vuttion Moet Hennessy Presentation Presentation Transcript

  • Alfred W. DangMBA 6114Strategy & Competitive Advantage5/10/2012
  • Agenda•Overview•Financial Analysis•SWOT Analysis•Porter’s 5 Forces•Recommendation•Conclusion
  • Overview • Luxury Brands & High-End Goods • 5 Business Groups • Wines & Spirits • Fashion & Leather Goods • Perfumes & Cosmetics • Watches & Jewelry • Selective RetailingSources: http://www.lvmh.com/the-group/lvmh-companies-and-brandsLVMH 2011 Annual Report Page 5 View slide
  • Financials • LVMH Key Overview: • 2.3B Cash • 6.9B Goodwill • 11.4B Brand & Intangible Assets • 7.2B Debt* • Market Cap = 61.23B • P/E = 20.52 vs. Industry Avg of 15.95 • EPS = 6.21 • ROI = 10.56 vs Industry Avg of 2.08 • ROE = 15.46 vs Industry Avg 2.37 • 23B = Revenue • 15B = Gross Margin • 3B = Net ProfitSources: http://www.lvmh.com/the-group/lvmh-companies-and-brandsLVMH 2011 Annual Report Page 5 View slide
  • FinancialsSources: http://www.lvmh.com/the-group/lvmh-companies-and-brandsLVMH 2011 Annual Report Page 6
  • Sources: http://www.lvmh.com/the-group/lvmh-companies-and-brandsLVMH 2011 Annual Report Page 7
  • Wines & SpiritsSources: http://www.lvmh.com/the-group/lvmh-companies-and-brandsLVMH 2011 Annual Report
  • Fashion & Leather GoodsSources: http://www.lvmh.com/the-group/lvmh-companies-and-brandsLVMH 2011 Annual Report
  • Perfumes & CosmeticsSources: http://www.lvmh.com/the-group/lvmh-companies-and-brandsLVMH 2011 Annual Report
  • Watches & JewelrySources: http://www.lvmh.com/the-group/lvmh-companies-and-brandsLVMH 2011 Annual Report Page
  • Selective RetailingSources: http://www.lvmh.com/the-group/lvmh-companies-and-brandsLVMH 2011 Annual Report Page
  • Pinault-Printempus-RedouteSources: http://uk.finance.yahoo.com/q/ks?s=PP.PA
  • RichemontSources: http://uk.finance.yahoo.com/q/ks?s=RITB.DE
  • Comparison 2011 Financial Comparison LVMH PPR Richemont Market Cap 60.99B 15.23 24.77B Profit Margin 12.96% 8.07% 14.69% Operating Margin 22.25% 13.11% 21.31% Revenue 23.66B 12.23B 7.85B Revenue Per Share 48.41 96.92 14.29 Total Cash 2.45B 1.29B 3.60B Total Debt 7.28B 4.68B 999M D/E 30.95 39.82B 13.05 OCF 3.91B 1.33B 1.49BSources: http://uk.finance.yahoo.com/
  • SWOT Analysis Strengths • Brand Recognition for Louis Vuitton is unparalleled in the luxury world • Hennessy is the best-selling cognac in the U.S. and the world • Extremely diversified brand portfolio • Geographically diversified revenueSources: http://www.lvmh.com/the-group/lvmh-companies-and-brandsLVMH 2011 Annual Report Page 9
  • SWOT Analysis Weaknesses• 80/20 - A few brands are disproportionately responsible for revenue• Less invested in jewelry brands versus competitors
  • SWOT Analysis Opportunities • Synergy between brands • Emerging markets with rapidly rising incomes • BRIC Nationshttp://us.fashionmag.com/news-158993-Bulgari-lifts-dividend-as-LVMH-synergies-loom
  • SWOT Analysis Threats• Economic slowdown can impact profit margin• Brand dilution due to over-saturation• Proliferation of counterfeit products lessens value of brand
  • Competitor #1 PPR • Gucci • Yves Saint-Lauren • Brioni • Puma • VolcomSource: http://www.ppr.com/en/group
  • Competitor #2 Richemont • Montblanc • Cartier • Officine PaneraiSource: http://www.richemont.com/our-businesses.html
  • The Competition • Company Revenue (2010) Profits (2010) • LVMH € 20.32B € 3.032B • PPR € 14.61 B € 964.5M • Richemont € 6.892B € 1.090BSource: Wikipedia
  • Barriers to Entry• Minimal geopolitical barriers• LVMH brand is recognized globally• Consumer loyalty
  • Switching Costs• Fashion is fickle• Lack of barriers to entry make this a very competitive market
  • Disruptive Technologies • None • Louis Vuitton luggage is currently made the same way since the 19th century.Source: Martin, Richard (1995). Contemporary fashion. London: St. James Press. p. 750.
  • Suppliers • LVMH requires all suppliers and subcontractors to follow strict environmental guidelines • Acquired a 51% stake in supplier of crocodile skin for € 92M in October 2011 • Acquired ArteCad, one of its main watch suppliers in November 2011 • Acquired leather company Les Tanneries Roux May 2012Sources: http://www.lvmh.com/the-group/lvmh-and-the-environment/design/involving-suppliers.http://www.lvmh.com/press/614
  • Economics and Demographics • Japanese demand has tapered off • China demand has skyrocketed • Demand elsewhere has stayed the same • During the first half of 2009, Chinese consumers worldwide accounted for 18% of all LVMH sales • LVMH management is using the economic slowdown to acquire subsidiaries at reduced pricesSources LVMH 2011 Annual Report Page 7http://www.economist.com/node/14447276
  • Economics and Demographics • Japanese Demand has tapered off • China demand has skyrocketed • Demand elsewhere has stayed the same • During the first half of 2009, Chinese people worldwide accounted for 18% of all LVMH sales • LVMH management is using the economic slowdown to acquire subsidiaries at reduced pricesSources LVMH 2011 Annual Report Page 7http://www.economist.com/node/14447276
  • Porter’s Five Factors Threat of Entry: Low • Longstanding commitment to quality • Extremely loyal customers • Investment required would be extremely largeSources: http://www.lvmh.com/the-group/lvmh-companies-and-brandsLVMH 2011 Annual Report Page 9
  • Porter’s Five Factors Power of Suppliers: Low• Suppliers and subcontractors are required to comply with strict environmental guidelines• Suppliers frequently acquired outright• Many suppliers but only one LVMH
  • Porter’s Five Factors Power of Buyers: Low • Customers are some of the most loyal of any brand • Louis Vuitton products are never on sale • Exclusivity – Older products are destroyed rather than sold at a discountSources: http://www.economist.com/node/14447276
  • Porter’s Five Factors Threat of Substitute: Low• High profile LVMH brands have high product differentiation• Once customers have made up their mind, there is no substitute
  • Porter’s Five FactorsRivalry Among Competitors: Moderate • Luxury marketing is always positive • Competitors do not sell exactly same range of products
  • Porter’s Five Factors Profit margins are 40-45% • Highest profit margin in luxury goods market • One of the highest profit margins in any industrySources: http://www.economist.com/node/14447276
  • Recommendations: • Aggressively expand into the Chinese Market to tap into exploding wealth / brand conscious culture • Open additional stores in BRIC countries • Aggressively fight counterfeitingSources: http://www.economist.com/node/14447276
  • Conclusion:• Despite being a notoriously fickle industry, LVMH dominates• Tremendous quality and masterful marketing are key• Only Apple has more loyal customers