The Business Of
LVMH | What Do They Do?
Morning All!
Welcome to Week 5 of The Business Of newsletter. We hope you had a lovely weekend and are ready to get stuck into another business model! This week we’re diving into the Luxury Goods industry and oh boy, we have a fascinating business model to explore this week.
I'm pretty sure everyone reading this has seen or heard of some of the following brands…
… but did you know they are all owned by one company?! Well you do now! LVMH owns all those brands plus an incredible 70 other brands too. Let’s briefly look at how LVMH amassed such a stellar portfolio…
Life Hack: How to Turn €15 million into €195 billion…
Back in 1977, a young man named Bernard Arnault took over as CEO of his dad’s successful real estate company. A few years on, a company called Boussac (a famous but struggling French retail company) had filed for bankruptcy and the French government was looking for someone to buy the company. Bernard Arnault took €15m on his family’s money (and €65m from an investment firm) and bought Boussac. But you may be thinking why would this real estate entrepreneur buy a bankrupt retail company?
Well, it was because Boussac owned the luxury brand, Christian Dior. And Bernard desperately wanted to own Christian Dior! After selling off most of Boussac, Bernard used the cash from these sales to buy a couple of other famous brands. By 1987 Louis Vuitton and Moet Hennessy were added to Christian Dior and Bernard’s luxury collection was up and running! The table below shows you some of the most high profile acquisitions he has made since then.
Over the last 40 years, LVMH has amassed 75 brands across 6 main categories. These are Wines & Spirits, Fashion & Leather Goods, Perfumes & Cosmetics, Watches & Jewelry, Selective Retailing, and Other Activities! We’ll be diving into how LVMH makes money from these segments tomorrow!
: Bernaud Arnault is the richest person in the world (his 50% stake in LVMH is worth a meagre £195bn). To put that figure into context, if you made £100k a day for the last 2023 years, you would have £74bn…
A Luxurious Week Ahead…
So this week, we’re going to have a lot of fun diving into…
how LVMH makes money (Tuesday),
what their costs are (Wednesday),
what they do with their profits (Thursday) and,
finally touching on the outlook for LVMH and the luxury industry (Friday).
In addition, this Friday we have another Career Talk, this time exploring Audit/Finance. And we’ll be hearing from my friend, Lottie Kingdon, ACA, currently an MBA student @ London Business School (https://www.linkedin.com/in/lottie-kingdon/).
After graduating from the Queen Mary University of London in 2014, Lottie completed her ACA qualifications whilst in the Consumer Markets Audit team at KPMG, before moving to Belmond (one of the 75 brands owned by LVMH) and working her way up to becoming Group Finance Manager. This Friday she’ll be talking about…
how she got into and out of audit,
what audit and finance teams actually do,
advice she’d give to students who are interested in audit/finance, and,
the kind of work she had to do when Belmond was acquired by LVMH!
Alright, that’s a wrap for today. Can’t wait to get stuck into how LVMH makes money tomorrow.
Have a lovely day!
The Business Of Team