China'S Strength Dominates Luxury Brand LV Under Undefeated Crisis

In February 14, 2009, the first Valentine's day after the financial tsunami, how many people bought LV bags as Valentine's Day gifts? The hedge funds' tycoons and oil tycoons began shunning luxury goods such as diamonds this year, instead of some low-key gifts. Phil Rist, executive vice president of BIGre-search, an American research firm, said: "this year, Valentine's Day is a little bit of love, rather than luxury and expensive goods." In the wake of the financial crisis, even the wealthiest consumers are cutting spending - the biggest economic crisis since the establishment of the Mo t Hennessy- Louis Vuitton group (LVMH), the world's largest luxury group, since its establishment in. However, in 2008, LVMH group still handed in a barely completed report card, operating profit of 3 billion 628 million euros, up 2.1% over the same period last year, which is better than analysts' previous average forecast of 3 billion 620 million euros. "The result is satisfactory enough." LVMH Group Chairman and CEO Bernard Arnault said. Zhu Mingxia, director of the Cheung Kei luxury Research Centre, told reporters that LVMH is not easy to maintain growth. The reason why such achievements can be achieved is the result of the diversification of product layout and the diversification of the target market. What can not be overlooked is that the Chinese factor has become a force that can not be ignored in the growth of LVMH. In 2008, China became the second largest market for liquor group of LVMH group, and the largest market of Hennessy (Hennssy, liquor brand). At the same time, the most famous LV brand in LVMH group was ranked second in the world market in China. 2.1% growth in February 5th. LVMH announced its earnings in December 31, 2008. The report shows that in 2008, LVMH group's sales revenue was 17 billion 193 million euros, up 4.3% over the same period last year, operating profit of 3 billion 628 million euros, up 2.1% compared to the same period last year, net profit of 2 billion 26 million euros, basically the same as last year. At the same time, LVMH also intends to maintain a dividend policy of 1.6 euro per share in 2008. Such figures can no longer compare with the LVMH group's 8% revenue growth in 2007 and 12% of its operating profit growth. However, taking into account the extremely difficult economic environment in 2008, Arnault expressed satisfaction and investors recognized it. On the second day of the earnings announcement, LVMH's shares on the Paris stock exchange rose 7.5% to 47.75 euros. "In the face of the low consumption power brought by the global financial crisis, it is indeed not easy for LVMH to maintain growth in the 2008 fiscal year." Zhu Mingxia, director of the luxury Research Center, told reporters. A survey released recently by Bain & Company, an American consultancy, shows that even the wealthiest consumers are cutting spending in the face of the global financial crisis. According to the survey, sales of global luxury goods dropped sharply in 2008, and the growth rate slowed to 3%, far below 6.5% in 2007 and 9% in 2006. In the market downturn, many luxury companies have encountered unprecedented difficulties. Paris spring group (PPR) sales in the three quarter of 2008 dropped by 12% compared with the same period last year. The sales of Richemond in Switzerland in the fourth quarter of 2008 dropped by 7% compared with the same period in the fourth quarter of 2008. In 2008, the famous Italy fashion group, ITHolding (Versace), and ITHolding group, a group of famous international fashion brands, issued a warning that the group might be forced to file for bankruptcy protection in early February. By contrast, the days of LVMH are indeed much better. If the exchange rate is deducted, the LVMH group's actual sales performance will be even better. In 2008, the US dollar and Japanese yen depreciated sharply against the euro, while the United States and Japan accounted for more than 30% of LVMH's sales revenue. LVMH said that if the exchange rate was deducted, the sales revenue and operating profit of the group will increase by 8% and 6% respectively in 2008. But the growth of LVMH group has been on the decline. Its sales revenue in the second half of the year has dropped from 5.2% in the first half to 3.6%, and the net profit of 1 billion 140 million euros has shrunk by 50 million euros compared with the same period last year. However, in the fourth quarter, LVMH's sales increased by 4% to 5 billion 200 million euros, much better than most of its competitors. According to Deutsche Bank analyst Jamie Isenwater, "LVMH is still doing better than other competitors in slowing down growth." (LVMH) the performance of the company proves that the size of the company is very important in the luxury industry, especially in the economic downturn. Luca Solca, a luxury analyst at Bernstein Research, a German investment company, said. At present, LVMH group, Swiss peak group and Paris spring group also call the world's three largest luxury group. The LVMH group's annual sales volume is about 3 times that of the peak group and 6 times that of the PPR group. LVMH took 15 years to build a huge luxury group. Mo t Hennessy and Louis Vuitton holding company (Louis Vuitton holding company) merged successfully in 1987, and then set up LVMH group. Subsequently, under the leadership of group CEO Bernard Arnault, LVMH began to make a big purchase in the luxury industry. The famous brands of luxury brands such as French clothing brand Givenchy, Italy leather trader Fendi (Fendi), Swiss high-end watch brand TAG Heuer, cosmetics retail store (Sephora) and so on have been included in the command of LVMH. Now, LVMH group has more than 50 brands of products, belonging to 5 main fields: wine and spirits, fashion and leather products, perfume and cosmetics, watches and jewellery, and boutique retail. Zhu Mingxia introduced such a rich product line to bring more space for management, so as to ensure the stability of sales revenue and profit. The annual report showed that in the 5 categories of LVMH group, the income of wine and liquor, which accounted for nearly 20% of the group's sales, fell by 3.1%, but the group's total sales continued to increase by 4.3% as the other 4 categories gained more than 5% sales growth. The same is true in the allocation of operating profits. Although the business profits of watches and jewellery and boutique retail business in 2008 decreased by 16.3% and 8.9% respectively, their proportion in the overall profit statement of the group was small, thus avoiding the overall profit decline of the two group. In the 5 business categories of LVMH group, fashion and leather products with LV, Fendi, Givenchy and other brands are the biggest highlights of 2008. According to the report, sales and business profits of fashion and leather products that occupy 1/3 group's sales in 2008 increased by 6.7% and 5.4% respectively. Among them, the sales growth of LVMH's most famous brand LV was even up to two figures. "We first put resources in the most profitable brands and markets." Antonio Belloni, managing director of LVMH group, said. In December 2008, LV abandoned the plan to open the global flagship store in Japan, while sales in Japan declined in LVMH2008. In January 2009, LVMH cut down 10% of the Swiss ZENITH watch factory because of the decline in the profits of the watch business in 2008. Claudia, Bain & Company, who writes luxury reports, wrote: "the financial crisis will cause some areas to fall into recession, and the most resilient ones will be those with strong international and diversified brands." In addition to having many brands, LVMH is also going farther and farther on the road of internationalization. By the end of 2008, LVMH group's 2314 brand shops were distributed in Europe, the United States, Asia and other regions. Among them, Europe, the United States and Asia are their traditional markets, and the three brand stores occupy 74% of the total number of stores. However, the traditional market was hit by the financial crisis. In 2008, the sales revenue of LVMH in the US and Japan decreased by 4.03% and 5.16% respectively. But in recent years, the development and training of emerging markets began to achieve results in LVMH. In 2008, the sales revenue of LVMH in Asia except Japan and other parts of the world except Europe, America and Asia increased by 9.81% and 17.36% respectively. Accordingly, the proportion of these areas in LVMH Group sales has also increased. Statistics show that from 2003, the sales revenue of other parts of Asia, except Japan, has increased from 15% to 20% of the total sales revenue of the group, and the proportion of sales in other parts of Europe, the United States and Asia has increased from 6% to 9%. The rapid development of emerging markets has made up for the slowdown in traditional markets. "It can be said that today's LVMH results are the result of its early layout in emerging countries and regions." Zhu Mingxia evaluated LVMH's achievements today. Antonio Belloni said, "we will continue to expand our brand and market, and the new store will be opened in the market with the best growth potential." China is undoubtedly the best representative of emerging markets. According to Ouyang Kun, the chief representative of the Beijing Representative Office of the World Luxury Association, according to the association, the total consumption of luxury goods in China will reach 200 billion yuan in 2010, and by 2015, China's luxury consumption will account for 32% of the global market share. Bain&Company's report also predicts that in the next 5 years, China's luxury goods market will reach an annual growth rate of 20% to 35%. LVMH is obviously sharing this growing feast. In 2008, China became the second largest wine group in the LVMH group. It became the largest market in the world for its flagship brand Hennessy (Hennssy) in the world. At the same time, the most famous LV brand in the LVMH group has ranked second in the world market in China. "The experience and accumulation of China's entry into the Chinese market for several years has made all the departments of LVMH enjoy a high reputation and reputation in China, especially the huge potential consumers in China will become loyal customers of LVMH in the future." Zhu Mingxia briefed reporters. In January 16, 2009, LV settled in Taiyuan, Shanxi. In February 1st, LV global president Jia Shijie unveiled the first LV brand store in Tianjin. In the global economic downturn, LVMH group is confident of the prospect of China's luxury market. At the same time, LVMH is not only satisfied with selling existing products in China, but also begins to focus on developing new products that conform to Chinese culture on the basis of China's national conditions. One example is Hennessy's acquisition of Wenjun liquor industry. In May 2007, Hennessy invested 96 million yuan, holding the takeover of Wenjun distillery under Jiannanchun, becoming the first step for LVMH to enter the traditional luxury industry in China. However, the prospect of LVMH is not bright. According to Ouyang Kun, the World Luxury Association has found that the era of LV leading China's luxury consumption has been completed. After more international brands continue to flow to China, the leading position of LV is likely to be gradually replaced. Globally, many analysts expect the global luxury market to drop by about 10 percentage points in 2009. LVMH will also be subject to this. In this regard, LVMH group CEO Bernard Arnault said: "I hope that sales can grow forever, but in this situation, it is difficult to estimate". Wang Xiaonan: editor in charge