In 2024, LVMH CEO Bernard Arnault established himself as the world’s wealthiest individual, largely due to his majority stake in LVMH, the luxury goods empire he has built. The company’s business network encompasses more than 80 brands across various luxury sectors, including beverages, jewelry, fashion, cosmetics, and even Orient Express trains, ships, and hotels. Among these brands, luxury fashion house Louis Vuitton is a key component.
However, in the second half of the year, the luxury sector began to experience a slowdown following the post-pandemic surge in luxury spending. In response, Louis Vuitton aims to diversify its business and explore new markets to sustain its profits.
One Brand, Within One Segment, Within One Group
Grouping more than 75 brands from various luxury sectors under one umbrella is challenging. This is especially difficult when each brand possesses its own distinct prestige and personality. Examples include Louis Vuitton, Dior, Tiffany & Co., Moët & Chandon, TAG Heuer, and Sephora.
LVMH has categorized its brands into six groups based on their activities to streamline management. However, there are effectively five primary categories: wines and spirits, fashion and leather goods, perfumes and cosmetics, watches and jewelry, and selective retailing.
Each brand within the organization prepares its own balance sheet, which is then aggregated with the balance sheets of other brands in the same category. As a result, LVMH presents its annual balance sheet segmented into the main six sectors but doesn’t disclose the individual financial results of the 75 brands.
LVMH’s approach makes it difficult to ascertain the specific revenue generated by brands such as Louis Vuitton, Dior, and Moët & Chandon. However, it provides a clear overview of the group’s financial performance in each segment and the revenue contributions of each sector to the overall group. In the 2023 financial year, the fashion and leather goods segment, led by Louis Vuitton, accounted for 49% of LVMH’s total revenues. This was followed by the selective retailing segment (21%) and watches and jewelry (13%).
LVMH's revenue distribution by segment. | Image: LVMH
According to the company’s results for the past nine months, the fashion and leather goods sector declined in the third quarter.
The watches and jewelry segment performed even worse, showing a consistent downward trend in profits as the year progressed. Similarly, the wines and spirits category saw more significant profit reductions.
On a brighter note, the selective retailing and perfumes and cosmetics categories reported positive growth rates of 6% and 5%, respectively, compared to the financial year of 2023. However, their profit is also declining as the year comes to a close.
Despite these challenges, the annual profit for LVMH’s fashion and leather goods segment reached $32.6 billion in the first nine months of 2024. In contrast, the wines and spirits division generated a profit of $4.4 billion, while the watches and jewelry segment reported $8 billion in profit.
LVMH’s profit by segment. | Image: LVMH
The Downward Trend Forces Louis Vuitton to Take Action and Diversify
A quick look at LVMH’s data reveals that 2025 is shaping up to be a challenging year for the luxury sector beyond just the value of its shares. This is why the company has initiated a campaign to expand its market and reach audiences that have previously been untapped by luxury brands. As such, LVMH is diversifying its business even further.
Once again, LVMH is implementing diversification strategies as a group rather than focusing on individual brands. This approach makes perfect sense given its overall objectives.
Forbes recently reported that LVMH had secured a ten-year sponsorship deal with Formula 1 racing. The agreement encompasses the entire group rather than being limited to a single brand. LVMH is leveraging its diverse portfolio to gain visibility across various areas. This means celebrities in the paddock will wear Louis Vuitton, while drivers will celebrate their victories on the podium with Moët & Chanton. Meanwhile, the Grand Prix races will also be sponsored by TAG Heuer.
Additionally, LVMH is actively seeking diversification by expanding into areas that were previously minor segments within the group, such as luxury hotels and exclusive travel experiences.
In 2018, the company made a significant move by acquiring the Belmond hotel chain for $3.2 billion. The acquisition included its luxury travel division, which operates the legendary Orient Express. In July 2024, Arnault signaled a renewed interest in this business sector by making a $336 million bid for the iconic Hotel Bauer in Venice in Italy, according to Fortune.
Experts say LVMH’s goal is to infuse the style of its fashionable houses into these hotels, making them an extension of the luxury experience associated with its products. The first hotel embodying this philosophy is set to open in Paris in France in 2026.
Sponsorships to Reach New Audiences
LVMH’s recent contract to sponsor Formula 1 is part of a broader strategy aimed at opening new markets. The initiative seeks to address the declining sales trend by slightly lowering the aspirational pedestal associated with its maisons and making them more accessible to affluent consumers.
Rather than focusing on a single brand, LVMH is aiming for a global presence that incorporates elements from all its brands, including Louis Vuitton, Dior, TAG Heuer, and others.
One notable aspect of this strategy is the brand’s approach to the sports arena. LVMH has shifted away from traditional supermodels and artists by embracing athletes as trendsetters. For example, they’ve dressed Spanish tennis star Carlos Alcaraz, accompanied soccer icon Leo Messi on his travels with its line of luggage, and provided custom-made clothes for athletes during the Olympic and Paralympic Games in Paris 2024.
Through this strategy, LVMH is transforming prominent sports figures into influencers for its Dior, Rimowa, and Hublot products. This way, the company is reinforcing the connection between luxury and elite athletes.
By expanding its sponsorships to sports with mass appeal, Louis Vuitton has significantly increased its visibility, which was previously confined to more “exclusive” sports such as sailing.
Image | Christian Wiediger
View 0 comments