Moët Hennessy Louis Vuitton (LVMH) is a French MNC specializing in luxury goods, headquartered in Paris, France, being home to over 70 luxury brands such as Dior, Louis Vuitton, Givenchy, Marc Jacobs, Sephora, Tag Heuer, Fendi, Hermès, and recently acquired Tiffany & Co.
LVMH was hit hard in 2020 by the closure of stores in its main markets, such as China and Europe. Yet, Bernard Arnault, the chairman and chief executive of the corporation, quite recently became the world’s richest person according to a Forbes report proving that it pays to be in the luxury goods business even in a global pandemic. This made me wonder how luxury brands earned enough money during the pandemic while having a limited target audience without marketing themselves.
@businessinsider
Luxury brands are known for their haute couture collections donned by the most wealthy members of society. They have high price points, which are justified by their quality. Despite that, they charge a huge profit margin, explaining where they earn their money and how they cover their costs.
Like every industry, LVMH suffered due to the pandemic and had a 28% profit fall in 2020 due to a decline in the purchasing power of people. However, even at these times, Bernard managed to stay afloat and acquired new brands like Tiffany for $15.8 billion, down from $16.2 billion, which was believed to be the most prominent luxury brand acquisition. Despite this, he still managed to become the wealthiest person in the world. This was all possible due to the company’s stock price and Arnault’s several other investments.
References -
LVMH & Tiffany make up, seal the deal for $15.8 bn. (2021, January 2). The Economic Times. Retrieved April 16, 2021, from https://economictimes.indiatimes.com/magazines/panache/lvmh-tiffany-make-up-seal-the-deal-for-15-8-bn/articleshow/80070630.cms
LVMH showed good resilience against the pandemic crisis in 2020. (2021, January 26). LVMH. https://www.lvmh.com/news-documents/press-releases/lvmh-showed-good-resilience-against-the-pandemic-crisis-in-2020/
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