Louis Vuitton, Christian Dior, Tiffany, some of the most popular luxury brands in the world, all housed Under One Roof. Louis Vuitton Moët Hennessy, or LVMH, founded in 1854. Louis Vuitton is one of the most storied and iconic luxury Brands. The singular brand has since grown into a Powerhouse of 75 brands, or maisons as they are formally called. You can think long term like Louis Vuitton, for instance. I'm not that much interested by the number of the next six months. What I am interested in is that the desire for the brand will be the same in 10 years as it is today. The company is notorious for posting record year after record year, and 2022 was no different. It drew 86.3 billion in Revenue, which is up a healthy 23% from 2021. The company recorded revenue of 22.9 billion in the first quarter of 2023, up 177% compared to the same period in 2022, and reached a stock price of $91.99 on May 11th, 2023. Its store count

more than quintupled between 1999 and 2022, with stores across 81 countries and more than 196,000 employees worldwide, making it a true leader in luxury by multiple measures. I would argue the next to Apple, no other company on the planet dominates their industry as completely as LVMH. At the helm of the massive ship is the world's richest man, Bernard Arnault. Pre-pandemic, the luxury segment had already been outperforming other categories in the global apparel market, and the trend has only accelerated in 2021 and onwards. The luxury and premium segments delivered shareholder returns of 33.2% and 18% during the pandemic. Bernard Arnault has a very clear vision in terms of the overall strategy of what he sees as the purpose of the group, this idea of creating brands that can be eternal. LVMH's storied history begins in 1837. It was founded by a craftsman's apprentice, Louis Vuitton, who had a start in master trunk.

making at the time. The popular modes of transportation were horse-drawn carriages, boats, and trains, which made craftsmen invaluable to the working class. Eventually, Louis Vuitton founded his house in Paris in 1854. In 1886, J. Vuitton revolutionized luggage locks by developing a closing system that turned travel trunks into real treasure chests. In 1987, Louis Vuitton merged with Moët Hennessy, giving birth to its current moniker, LVMH. Louis Vuitton's CEO between 1988 and 1995, Vincent Bastian, brought a different strategy to the brand. My basic idea was if luxury is focused only on very rich people, you have no market. You need to become democratic, democratic but not vulgar. If you try to implement the usual business strategy you will learn in any business school to a luxury group, it's just a disaster. In collaboration with Bernardo Bastian, witnessed an early master in each time he bought a brand, he kept the team in place. He's extremely intelligent.

for this, he knows that each one has to have his own personality. Bern Arno has a real sense of allure. He understood fashion, he understands Arts. Each time I had a new line of product, I presented it to him and he found the right problems immediately. He has a very strong intuition and he's very courageous. He takes risks. LVMH's aggressive acquisition strategy and exceptionally wide portfolio lends itself to Arno's watchfulness as a businessman. He started looking for gems, for things that were undervalued, even outside of what his company had done previously. The Arno family's supremacy is internally well cemented. All five of Arno's children hold key management roles: an executive at Christian Dior, an EVP at Tiffany, a chairman and CEO of LVMH's holding company Christian Dior SE, among other roles, a CEO of Tag Heuer, and a director of marketing and development. A family business, especially in the luxury area, is key for success. Luxury, by definition, has heritage, it has legacy.

and that's what you find. The consistency of a family. Arno's leadership is described as ruthless. LVMH's growth was so rapid, net income surpassed the $1 billion mark in 2004. By comparison, Kering, then known as PPR and owner of brands such as Gucci, YSL, and Balenciaga, reached $1.1 billion the same year. Between 2009 and 2011, the company saw an enormous 75% increase in net income. Its international reach in Asia, a market it originally entered via Hong Kong in 1992, when its international presence was strengthening dramatically. Between 2003, the earliest available earnings report from LVMH's records, and 2022, the company has posted record revenue year after year. Anish Melwani, the LVMH North America chairman and CEO since 2016, says the company's focus on storytelling and brand building have been key to the company's success. Luxury is connected to the human emotion of accomplishment, and so people buy luxury.

whether it's handbags or jewelry or Prestige makeup because they have gotten to a place where they can afford the superior quality, and they want to participate in the storytelling that is behind those Brands. Over the years, LVMH has made several billion-dollar Acquisitions: Bulgari in 2011, 80% stake in Rua in 2016, Dior in 2017 for $13 billion, and its biggest and most recent, Tiffany for 15.8 billion in 2021. Arno is a brutal negotiator, grinds people down to the last penny. They had a deal right before the pandemic. After the pandemic started, he wanted a price cut. Tiffany said no. He took him to court. Even uglier negotiation. All in, he ended up buying it for $16 billion. This is a brand that many people thought looked Tiffany owns a color. They are everywhere. How could you improve Tiffany? Yet, three years after they bought Tiffany, they have doubled their profits. They are now earning over a

billion dollars a year, and that is the magic and the aggression of Bernard Arnault. While most associate LVMH with luxury handbags and fashion, LVMH's current portfolio spans across multiple categories, namely perfume and cosmetics, selective retailing, and Wine and Spirits. It owns Sephora, Starboard, Céru Services, and even Royal Van Lent, a high-quality yacht maker. Between 2005 and 2022, revenue jumped from $16.9 billion to $86 billion. That's about a 500% increase. And in 2023, its staggering growth and supremacy in luxury lives on. While hitting its stride as the largest in luxury, the hard part is keeping that status alive, and staying alive means staying relevant. For LVMH, that means creating desire even in challenging times. While many other companies struggled throughout the pandemic, LVMH's stock rose steadily from March 2020 onward after a sharp but brief decline. LVMH prides itself in what Arnault describes as a culture company, the savoir-faire, the know-how of

The Artisans who make our thing is is not what's priced in, but it's something that's uh incredibly valuable, and that needs to be maintained. So we have programs like met where we are investing in apprenticeships, uh at at high school students, to get them into our factories and and to be apprentices in in the trades, so that we can continue to make these product its focus in expanding its store footprint. Echoes its desire to be a vertically integrated company, where each brand controls everything between production and manufacturer to Consumer facing point of sale in its brick and mortar stores. Coming out of the pandemic, uh during which we saw extraordinary growth in e-commerce and our digital channels, we're now seeing a rebalancing back towards brick and mortar. Basically, people are out in the world and they want to come into a luxury Boutique and maybe have a glass of champagne and and touch the product for themselves. Stores for luxury goods are much like churches, almost churches to the brand and there experiences that are extremely important to the emotional experience, and also making the consumer forget.

about price even at the top of the chain hiring diverse Talent is Central to curating desirable collections to be brought to stores. LVMH nurtures its designers along with giving them autonomy in curating Collections and developing their Creative Visions. In an interview with Harvard Business Review in 2001, Aroha said he doesn't have alarm Bells when it comes to creativity. In former CEO Vincent Bastian eyes, LVMH's competitors are hardly competition. DTO has no competitors; they're just too small. It cannot Cy, and that's your beauty of the game. Plus, the fact that Bero controls group with his money and that he understood my strategy, it's a very big protection. Every competitor is trying to imitate. I think they're not successful full, but they Tred by comparison. Remo, the next largest luxury conglomerate who owns Ker Ben CLE and Arel and P among others, had a revenue of $2.8 billion in 2022. That's a whopping 16.5 billion less than LVMH.

LVMH's designers are, of course, some of the world's most laudable fashion icons and visionaries. Kim Jones, Mark Jacobs, the late Karl Lagerfeld, Raf Simons, the list goes on and on and on. Bernard Arnault is smart, agile, and in many ways, he's an asset manager in terms of acquiring brands and fostering brands, and also acquiring and fostering talent and creative talent. So what we've really seen is a keen attention to the long-term cultural relevance and reinventing brands. How do you think about a brand and a franchise for hundreds of years in terms of keeping to the history but also looking to the future? More recently, the late Virgil Abloh was Louis Vuitton's Men's Designer between 2017 and 2022 and introduced a new streetwear-focused audience to the brand. Virgil Abloh was a really important turning point in terms of the Louis Vuitton brand in terms of bringing in a new audience, approaching creativity differently, and also embracing streetwear. That's been a leadership move.

in terms of LVMH, making a big impact and also bringing in new generations into LVMH as well. Nobody ever expected Louis Vuitton to do a collaboration with Supreme. That's the kind of example of where an entire group of young people who never thought that a brand like Louis Vuitton paid attention to them, cared that they existed. All of a sudden, realized that they did. It was the launch of a series of things after that that transformed the brand in many ways. What drives luxury sales? It's what's cool, and what's cool is usually decided by youth and youth culture. And LVMH brands have this almost innate ability as part of LVMH to tap into the nuclear core of youth culture. How can the brand continue to be very exclusive yet so large and execute in new categories? Also, fashion is a very tough industry where you have to stay relevant at every moment. That means creative execution, creative partnerships, and working with the merchants and innovating new product.

that's exciting and captivates the customer. What our leaders use to create desirability is the incredible heritage that each of our maisons has. Um, and that heritage is really a, it's a competitive moat, right? It's a, it's a real source of competitive advantage because you cannot create heritage overnight. It can only be created over decades, if not centuries. So, remaining relevant is key to longevity and luxury, and paramount to LVMH's forward-looking business is innovation, which is at the heart of its long-term strategy. According to industry experts, much of the future of the luxury segment is in experiences. LVMH has invested handsomely in the categories which allow it to curate just that. It acquired Belmond in 2019, which includes the Chel Blon and Bulgari hotels. Luxury consumers have also leaned into sustainability, coupled with the long-term value of its products. The resale market for luxury goods has peaked shoppers' interest in recent years. Innovative companies in the resale and

Consignment spaces like The RealReal and Fashionphile have seen tremendous growth. Consumers now, more than ever, have visibility and more awareness of the value of their bag, you know, after purchase and how much they can resell that for. Resale values really indicate brand equity in a way, in terms of how much somebody wants to purchase this bag for. While the luxury market expands, its poignant desirability and exclusivity have opened a door to a rapidly growing problem: the counterfeit market. The trade is worth half a trillion dollars, according to the Organization of Economic Cooperation and Development. In response to bolster efforts in authenticity, LVMH partnered with Prada and Cartier to develop the A-Block Consortium, which is an RFID and blockchain-based technology that allows customers to trace a luxury product through its life cycle. In its 2022 earnings, LVMH noted its strategic priorities lie in store expansion and evolving its digital presence, which will be backed by selective investments and cost management, touting a legendary iconography intrinsic to the company's

overall business model is longevity, fueled by the concept of Legacy. The company doesn't just look forward to the next couple of years, but the next hundred. You know, I was walking down the Street in Manhattan the other day, on 57th and 5th, and right in front of me was the bulgy store on the corner. The new Tiffany headquarters and on the next Corner was the Louis Vuitton store with the kusama robot and the giant dots all over the building. And I looked up on this corner in the center of Manhattan's Premier retail district and realized it's Bernard arno's luxury world and we're just shopping at it.

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