Louis Vuitton 2005 Annual Report Download - page 7

LVMH 2005 CHAIRMAN’SMESSAGE
PASSIONATE ABOUT CREATIVITY
5
LVMH, the
world’s leading
luxury products
group in a
growing market,
continues
to widen its
competitive
margin.
The Group
achieved record
revenues in 2005,
improved
operating margin
and increased
net profit by
21%. The LVMH
share price rose
by more than
33% over the last
year - a strong
vote of confidence
from the financial
markets
in our strong
and consistent
strategy.
CHAIRMAN’SMESSAGE BERNARD ARNAULT
CULTIVATING EXCELLENCE
AND DARING TO BE EXCEPTIONAL
A further year of strong growth
When we announced our first half results, we were
optimistic about the second half of the year. In
fact, LVMH’s performance in 2005 has fulfilled
our expectations. Our revenues increased in all
geographic markets. If the United States and Asia
were the main drivers of growth, Europe, in spite
of less than robust environment, equally
contributed. Similarly, all our business groups
increased profit from recurring operations and
Group cash flow from operations was further
strengthened.
Star brands increase market share
This year has once again demonstrated the strength
of our star brands - our key profit drivers and
corner-stones of our success. These star brands
have continued to gain market share, largely due to
their proven ability for continual innovation.
In 2005, Louis Vuitton launched three new leather
goods lines, whose success exceeded all expecta-
tions. In addition, the brand expanded its ranges of
watches and jewelry, and ventured into new terri-
tory with its first ever collection of sunglasses.
Miss Dior Chérie and Dior Homme, two perfumes
arising from creative talent of the Dior Couture
designers, whose ambition is to be well placed
among the brand’s best-sellers, also surpassed their
objectives. These are aiming to be among the
Brand’s best-sellers. TAG Heuer illustrated its
legendary capacity for innovation when it
presented some revolutionary movements at the
Salon de l’Horlogerie (watch-making exhibition).
The birth of Dom Pérignon Vintage 1998 was
universally greeted as an historic vintage. Group
savoir-faire in the business of wines and spirits has
enabled them to become pioneers in the United
States with the launch of 10 Cane, the first luxury
rum on the market. This has opened up opportu-
nities for a whole new category of very high-end
products. Sephora strengthened its position as an
expert in beauty on both sides of the Atlantic by
continuing to develop an ever more innovative,
exclusive and daring product and service offering.
Emerging brands advance down
the road to excellence
2005 also demonstrated our capacity to gradually
bring the brands in which we have placed our
longer-term ambitions closer to achieving “star
brand” status. With the support of the Group,
these brands are following their intended route
step by step as they confirm their true potential.
Fendi, the Italian star is one of the most advanced.
Our high expectations and investments in Fendi
were fully justified as the brand gained in popu-
larity, its revenue grew substantially and its results
showed a marked improvement. All the elements
are now in place for the brand to flourish.
Exceptional locations
2005 was a year packed with new developments
and events. Starting with the most spectacular was
Louis Vuitton, a brand of unparalleled global
success, whose influence reached new heights. In
October, the curtain rose on “Maison” on the
Champs-Élysées after a long period hidden behind
event-driven billboards which helped keep the
mystery of its refurbishment. The new “Maison”
was a commercial and media sensation. The success
of the event and the discovery of the enormous
accomplishment placed our brand even further
under the spotlight. The Louis Vuitton “Maison”,
a complete revolution in more ways than one, has
succeeded in bringing together craft, fashion, art
and culture. Much more than just an unusual build-
ing, it is a place of exception which expresses the
essence of a brand born in 1854 whose creations
have become an extraordinary incarnation of
contemporary energy and desire, not by renounc-
ing its heritage but by reveling in it.