About the LVMH Company:
LVMH, originally known under the name Louis Vuitton, is a group specialised in luxury products in which sector it is currently the leader.Its activities include fashion, leather goods, wines and spirits as well as perfumes, cosmetics, watches and jewellery.
These products are distributed worldwide but mainly in France and Europe, through large international distribution chains.More precisely we can examine the activities of this group in different categories according to the turnover they generate and how they do so.
- Fashion and leather goods represent 39.3% of this company’s turnover through the brands Louis Vuitton, Kenzo, Celine, Fendi, Marc Jacobs and Givenchy.
- The wines and spirits division represents 10.9% of the LVMH Company’s turnover with the champagne brands Moët & Chandon, Mercier, Veuve Cliquot Ponsardin, and Dom Perignon of which the company is the world leader.It also produces wine through the brands Cap Mentelle and Chateau D’Yquem, cognacs under the brand name Hennessy and the whisky brand Glenmorangie in this division.
- The group also produces perfumes and cosmetics which account for 10.7% of its turnover with brands such as Christian Dior, Guerlain, Loewe, Kenzo, Make Up For Ever, Acqua di Parma and others.
- Watches and jewellery generate around 8.6% of the group’s turnover through the following brands: Bulgari, TAG Heuer, Zenith, Hublot, Chaumet and Fred.
- Finally, the rest of the group’s turnover is derived from other selective distribution activities through chains such as Sephora and DFS and stores such as Le Bon Marche and La Samaritaine.
This group currently owns over 4,590 boutiques around the world and achieves 9.6% of its turnover in France, 18.6% in Europe, 7.2% in Japan, 29.3% in Asia, 29.3% in the United States and 11.4% in other countries around the world.
In total, the LVMH Company has achieved a turnover of around 3.5 billion Euros each year with a total share market capital of 20.3 billion Euros.It should also be noted that not all the turnover of this company is achieved in Europe.
The major competitors of LVMH:
Due to these brands that have experienced continual growth such as Louis Vuitton, and the diversification of its activities the LVMH Group is still at the head of the luxury goods sector worldwide.However it does face increasing competition from large international groups.It is extremely important to be able to recognise these competitive companies in order to complete pertinent analyses of this asset price.We therefore offer you the opportunity to learn about the major competitors of the LVMH Group here:
- Compagnie Financiere Richemont AG
- Signet Group plc
- Tiffany & Co.
- PPR SA
- Burberry Group plc
- The Estee Lauder Companies Inc.
- PVH Corp.
- Asprey Holdings Ltd.
- Giorgio Armani S.p.A.
- Pernod Ricard SA
- Ralph Lauren Corporation
These companies mainly exercise their activities in the luxury products sector including wines and spirits that are competitive to certain specific activities of LVMH.At this time no particular competitor on a global level incorporates all this company’s activities.
Analysis of the LVMH share price:
The LVMH Company share price is quoted on the Euronext Paris stock market in the Compartment A section.Since their original IPO this share price has risen just about continuously and even managed to mostly resist the crisis, as with most luxury sector goods.A drop can however be noted during 2008 followed by a fast recovery upwards.
When we closely examine the historical charts of LVMH shares we note an overall consistent growth since 2009 with a continually increasing turnover.
As far as the coming years are concerned, analysts' forecasts remain relatively optimistic, but you must systematically carry out your own analyses before taking a position.
Important stock market data about LVMH shares:
To ensure you implement an effective analysis it is important to know all the information cited above, as well as some more basic stock market information on the LVMH Company and shares such as the following:
- In 2017, the total stock market capital of the LVMH Company was around 103,469.65 million Euros.
- The number of shares issued by LVMH and currently in circulation on the stock markets is 507,079,864.
- The share price of the LVMH Group is currently quoted on the Compartment A of the Euronext Paris stock market in France.
- The LVMH Group is also included in the French national stock market, the CAC 40 so this company has one of the forty largest stock market capitals in France.
- The majority shareholder of the LVMH Group is the Arnault Group with 46.74%, the remaining 53.26% of shares are held by individual and institutional investors.
Of course, the stock market information that we have supplied here is susceptible to change over time and should therefore be verified.
The strengths and advantages of the LVMH share as a stock market asset :
The first undeniable asset of the LVMH group is of course its positioning on the international market.Even today, LVMH is still the world leader in the luxury sector and stands out in particular in certain very specific areas such as champagne, cognac and leather goods.In the fields of fashion, perfumes and cosmetics, it is also one of the largest international groups.Finally, it should also be noted that LVMH is ranked third in the world in the fields of jewellery and watches.
As far as the competition to which the group is exposed, it remains relatively weak in view of the very solid positioning of LVMH.Indeed it should be remembered that this company owns no fewer than 70 houses in the luxury sector with in particular the brands Louis Vuitton, which is the world number one in this field and which is showing significant growth and a remarkable level of profitability, but also Moët Hennessy for champagne, Dior, Céline, Givenchy, Guerlain, Kenzo, Bulgari, TagHeuer and Hublot.Thanks to these different houses, LVMH benefits from a very strong presence in the luxury market worldwide and is present in all segments.
We also appreciate the very good geographical distribution of the group's revenues, with a strong presence just about everywhere in the world.The group thus generates as much revenue in Asia, Europe and the United States, which gives it less exposure to economic risks and greater stability.
The distribution of LVMH between its different businesses also shows strong stability.This applies in particular to the fashion and leather goods activities and the wines and spirits activities, which represent the group's two core businesses, as well as to the watch distribution and jewellery sector.
As part of its overall strategy, the LVMH group exercises excellent control over its distribution channels.It is at the head of a global network consisting of the DFS banners for the Asian market, Miami Cruise, Sephora and Le Bon Marché in Europe.
LVMH is also a particularly profitable company, with a stable operating margin, which is maintained at around 20% regardless of the economic context in the luxury market.
Finally and in general, LVMH's financial situation has many assets to attract investors with a cash flow of more than 3.7 billion euros, a debt ratio of 16% and several record years in terms of operating profitability in general and sales achieved.
Weaknesses and disadvantages of the LVMH share as a stock market asset :
As we have just seen together, the LVMH share as an asset on the stock market is attractive to shareholders looking for a promising and stable share.However, this attractiveness must be tempered by the few shortcomings of this stock, which of course has a few weak points.This is why we are now offering you the opportunity to discover the drawbacks of this company and the dangers that threaten it.
The LVMH Group's greatest weakness concerns first of all its strong exposure to the currency market and its hazards.Indeed, the group's action is directly sensitive to the euro-dollar and euro-yen parity because it is in these currencies that most of its sales are made, as the group is very present on the international scene.Unfavorable exchange rates can thus lead LVMH to adopt a strategy of increasing its sales prices in local currency in order to compensate for a high euro exchange rate.
There is also another latent threat to the group with the rise in strength of the grey market, which is based on price differences between Europe and Asia and which is causing LVMH to record increasing losses.
Recently, the group has also recorded a significant drop in the level of its sales on the Japanese market, particularly for the year 2016, and has therefore had to reposition its Mark Jacobs brand.This decline in sales has of course led to a drop in the group's profitability on the Asian market.
Finally, while the volume represented by the different activities shows, as we saw earlier, a form of balance with a good distribution between the different branches, the profitability of these activities in relation to each other is much less balanced.Indeed, we note that the vast majority of the group's profits are generated by leather goods, which also achieves an operating margin of 45%.The group is therefore highly exposed to the economic health and demand of this market alone.