Louis Vuitton 2009 Annual Report Download

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LVMH
Passionate about creativity
ANNUAL REPORT

Table of contents

  • Page 1
    LVMH Passionate about creativity ANNUAL REPORT

  • Page 2
    ... expectations for luxury 10 Corporate Governance 12 The LVMH Share 14 Review of operations 16 Wines & Spirits 24 Fashion & Leather Goods 32 Perfumes & Cosmetics 40 Watches & Jewelry 46 Selective Retailing 16 24 52 Sustainable development 54 Our Code of Conduct 55 Human resources Contributing to...

  • Page 3
    4 32 40 46 PASSIONATE ABOUT CREATIVITY 01

  • Page 4
    ... by the Group's brands. The future holds excellent potential, in historic markets as well as in emerging markets, for brands which know how to continually inspire their contemporaries, regardless of where they are in the world, and are committed to quality, beauty and authenticity. PASSIONATE ABOUT...

  • Page 5
    ... to expand in different regions of the world. Thanks to the success of its innovation strategy (Hennessy Black and Hennessy VS 44 in honour of Barack Obama...) and through intense ground work, Hennessy returned to growth in the United States during the year and strengthened its position in a market...

  • Page 6
    ... innovation and the expansion of our presence worldwide. Louis Vuitton, in particular, will launch some powerful products which will enrich its major lines such as Monogram and Damier. It will also develop its product offering in leather and open in some new countries. The situation at distributors...

  • Page 7
    ...circa 1653 Musée du Louvre, Paris RMN our faith in liberty" A cultural mission Bernard Arnault LVMH and Picasso Warhol celebrates Believing that it has a mission to support culture, LVMH works to offer the general public, and young people in particular, the opportunity to rediscover the great...

  • Page 8
    ...053 Profit from recurring operations EUR million 2009 2008 2007 3,352 3,628 3,555 Profit from recurring operations by business group EUR million 2007 WINES AND SPIRITS FASHION AND LEATHER GOODS PERFUMES AND COSMETICS WATCHES AND JEWELRY SELECTIVE RETAILING OTHERS ACTIVITIES AND ELIMINATIONS TOTAL...

  • Page 9
    ...2007 Revenue by geographic region of delivery in % 1,973 2,318 2,331 UNITED STATES EUROPE (EXCL. FRANCE) Revenue by currency in % 21% 23% EURO 30% 27% 28% 10% 5% US DOLLAR Group share of net profit EUR million 2009 2008 2007 ASIA (EXCL. JAPAN) FRANCE 1,755 2,026 2,025 OTHER MARKETS JAPAN 23...

  • Page 10
    ...market is supported by the growth in new customers who, as their purchasing power increases, have access to a better quality of life and can begin to satisfy those aspirations. Even though they are currently affected by the economic conditions, Russia and the Middle East are promising markets. China...

  • Page 11
    08 / 09

  • Page 12
    ..., the strategic body of LVMH, are to increase the value of the Company and defend its social interest. Its principal missions are to adopt the major strategies of the company and the Group, monitor the implementation of those strategies, verify the fair and accurate presentation of information about...

  • Page 13
    ... 31, 2009 EXECUTIVE COMMITTEE Bernard Arnault Chairman & Chief Executive Officer Antonio Belloni Group Managing Director Pierre Godé Vice Chairman Nicolas Bazire Development & Acquisitions Ed Brennan Travel retail Yves Carcelle Fashion & Leather Goods Chantal Gaemperle Human Resources Jean-Jacques...

  • Page 14
    ... during the downward phase of the stock markets and a stronger rebound over the second half of the year, the LVMH share price performed significantly better than the major indices and ended 2009 up 64%. In comparison, the European CAC 40 and Eurostoxx 50 indices recorded increases of 22% and 21...

  • Page 15
    ... show a special interest in the life of the Group, the LVMH Shareholders' Club gives its members a better understanding of the Group, its businesses and its brands, and the ties they maintain with art and cultural life. Foreign institutional investors 26.8% including : United States United Kingdom...

  • Page 16
    WINES & SPIRITS FASHION & LEATHER GOODS PERFUMES & COSMETICS WATCHES & JEWELRY SELECTIVE RETAILING

  • Page 17
    16 24 32 40 46 14 / 15

  • Page 18
    Wines Spirits PASSIONATE ABOUT CREATIVITY

  • Page 19
    ... LVMH wines and spirits brands sell exceptional products perfectly in harmony with a consumption trend offering good long-term potential. These brands make our Group the world leader in presigious wines and spirits. Highlights of 2009 Moët & Chandon launched an international promotional campaign...

  • Page 20
    ... OPERATIONS EUR million REVENUE BY GEOGRAPHIC REGION OF DELIVERY in % 2009 2008 2007 2,740 3,126 3,226 2009 2008 2007 760 1,060 1,058 FRANCE REST OF EUROPE UNITED STATES 9% 25% 26% 6% 22% 12% SALES VOLUMES million of bottles CHAMPAGNE INVESTMENTS EUR million JAPAN REST OF ASIA OTHER MARKETS...

  • Page 21
    ... world leader in cognac with Hennessy, the Group is developing its presence in the luxury spirits segment in addition to its historical business. The portfolio of wines and spirits brands, composed of products positioned in the high-end segments of their market, is served by a powerful international...

  • Page 22
    ... the new boxes and label of the brand's Vintages. In order to support sales in its strategic markets, throughout the year Krug increased the number of tasting offers for Grande Cuvée, the emblem of the brand and the vehicle for its values of expertise, authenticity and excellence. PASSIONATE ABOUT...

  • Page 23
    ...! The young Dutch artist Maarten Baas, named "Designer of the year 2009" in Miami, again devoted his talent to the service of Ruinart: after the extraordinary Bouquet de Champagne produced in 2008 to celebrate the 50th anniversary of the Dom Ruinart Cuvée, he created a new original work inspired by...

  • Page 24
    ... of 2009, was extremely successful. The brand itself was named "World Whisky of the Year" for the second consecutive year. Belvedere vodka had a good year with stable revenue in the United States, where it increased market share, and strong growth in Canada, Europe and Asia. Sales were revitalized...

  • Page 25
    ... backed by a zero tolerance image policy, a strong capacity for innovation, strong reactivity, and the contribution of expanded resources in the field. All these assets will allow the brands to seize every opportunity for short-term growth and to continue to build and strengthen their leadership in...

  • Page 26
    FASHION & LEATHER GOODS In the fashion and leather goods sector, LVMH holds a unique group of brands spearheaded by Louis Vuitton, the world's leading luxury brand. A unique family of bran PASSIONATE ABOUT CREATIVITY

  • Page 27
    ... innovation of Louis Vuitton: highlights of the year included the launch of a transversal product line in tribute to the American artist Stephen Sprouse and the creation of the prestigious "L'Ame du Voyage" high-end jewelry collection. â- Fendi successfully expanded its leather goods lines. Along...

  • Page 28
    ...and creative positioning of each of the brands in this business group, LVMH supports their development by providing shared resources. The Fashion and Leather Goods companies continue to expand their distribution network, which totaled 1 164 stores around the world at year-end 2009. PASSIONATE ABOUT...

  • Page 29
    ... operations EUR million 2009 2008 2007 Revenue by geographic region of delivery in % 1,986 1,927 2009 2008 2007 8% France 21% Rest of Europe 1,829 18% United States Number of stores 2009 2008 2007 18% Japan Investments EUR million 1,164 1,090 989 28% Rest of Asia 7% Other markets 2009...

  • Page 30
    ... OF LOUIS VUITTON'S STYLE OVER THE YEARS. THIS LUXURY EDITION OF "LOUIS VUITTON: ART, FASHION AND ARCHITECTURE" IS PRESENTED IN A CLEAR PLEXIGLAS BOX DECORATED WITH THE FAMOUS CHECKERED PATTERN. A CONTINUALLY ENHANCED PRODUCT OFFER All the businesses, from leather goods to ready-to-wear to footwear...

  • Page 31
    ... also used the year to conduct an in-depth reorganization of its logistics chain, which improved product availability for customers and optimized working capital requirements. Revenue reflected the impact of weak demand at department stores in the United States and Japan, but was stronger in Europe...

  • Page 32
    ... for growth. The Nightingale line of leather goods continued its success and the new Pandora line had a promising start. The store concept inaugurated in Paris in 2008 is progressively being established in all countries. Givenchy continued to expand its distribution, with a focus on China, a market...

  • Page 33
    ...footwear collections, boot designs and new models in its Démesures line, and the expansion of its leather goods and travel products. Outlook In 2010, Louis Vuitton will implement a dynamic program of new store openings. Future developments include new countries and the company will expand in China...

  • Page 34
    PAR FU MS & U F R M E P S CO PASSIONATE ABOUT CREATIVITY ET ME IC S S & ÉM S O C

  • Page 35
    ...new, limited edition products, and opened a make-up school for the general public in the Sephora store on the Champs-Elysées. / In order to reduce the use of incineration, the Perfumes and Cosmetics companies established a recycling center on a joint platform. This initiative, a first in the luxury...

  • Page 36
    .... THE GROUP ALSO SUPPORTS THE DEVELOPMENT OF HIGH-POTENTIAL "NICHE" BRANDS BENEFIT COSMETICS AND FRESH, TWO RAPIDLY GROWING AMERICAN BRANDS; ACQUA DI PARMA, A BRAND THAT SYMBOLIZES ITALIAN ELEGANCE; PARFUMS LOEWE, ONE OF THE LEADERS IN THE SPANISH MARKET; AND MAKE UP FOR EVER, A STRONG FAVORITE OF...

  • Page 37
    ... Cosmetics business group in 2009 recorded an increase in its profit from recurring operations. REVENUE EUR million REVENUE BY GEOGRAPHIC REGION OF DELIVERY in % 2009 2008 2007 2,741 2,868 2,731 17% 39% 8% 7% 16% 13% FRANCE REST OF EUROPE UNITED STATES JAPAN REST OF ASIA OTHER MARKETS PROFIT...

  • Page 38
    ... & COSMETICS In the skincare segment, Capture Totale recorded strong growth in Europe, Asia and the United States. The line was particularly enhanced by the brand new and extremely innovative Instant Rescue Eye Treatment. Another successful launch was that of XP Nuit, a skincare product that uses...

  • Page 39
    ... selective retailing network by opening its twelfth boutique in the Marais district in Paris, thereby allowing it to attract and win over new customers. TRENDS FOR THE OTHER BRANDS OF THE BUSINESS GROUP Parfums Givenchy increased its sales to end customers in its key markets (France, United States...

  • Page 40
    ... to record exceptional growth and improve profitability. Its momentum was particularly outstanding in the United States and France, as well as in China where it resumed direct sales in 2008. The year 2009 confirmed the enormous consumer success of the HD foundation line, originally created to meet...

  • Page 41
    ... its position in a skincare segment, that of the high-growth new generation serums. Guerlain will continue its expansion, primarily in France and China. The House will continue to assert its luxury-brand status through its creations, exclusive boutiques and Institutes. It will support its strategic...

  • Page 42
    PASSIONATE ABOUT CREATIVITY W at ch es & Je w el ry

  • Page 43
    ... designed the Lotus collection, while Fred built on the success of its Force 10 line. /// While focusing on improving the productivity of the existing stores, the Watches and Jewelry group expanded its presence very selectively in key markets with high potential. /// TAG Heuer and its new ambassador...

  • Page 44
    ... INVESTMENTS EUR million REVENUE BY GEOGRAPHIC REGION OF DELIVERY in % FRANCE 2009 REVENUE EUR million 9% 27% 18% 12% 17% 17% 2009 2008 2007 764 879 833 2009 2008 2007 63 118 141 23 REST OF EUROPE 2008 2007 39 28 UNITED STATES JAPAN REST OF ASIA OTHER MARKETS 40 years apart-two TAG Heuer...

  • Page 45
    ...to expand in China. By concentrating on its iconic lines and implementing programs to stimulate demand in retailers, the brand increased its market share in all countries in the segment of watches and chronographs sold between 1,000 to 5,000 euros. A trend toward renewed growth in sales to end users...

  • Page 46
    ... the original model. In order to build on its strong points and its watchmaking values, Zenith began to refocus its collections and marketing campaigns on its traditional models and its El Primero movement, which was once again placed at the center of its product offer. Two boutiques were opened in...

  • Page 47
    ... Dandy Arty model introduced during the year also performed well. Fred posted a very good year in France. The growth achieved in this market is due to the success of the recent re-issue of its legendary Force 10 line, inspired by the world of sailing and enhanced with jewelry versions in 2009. Fred...

  • Page 48
    ... c orne rs w e o h t r l d f , the t o eam s developing theLV MH Se l are ecti v a an , to d se Selective retailing PASSIONATE ABOUT CREATIVITY won g and reate eve r ry rec abil y ity to ea m ork, each in their own w s e s ines rs a unique product s u g b ustome n i l i rc Their talents have...

  • Page 49
    ... location in Macao and progressively opened a second site at this high-potential travel destination. It recorded promising initial results in Abu Dhabi. â- Sephora accelerated its gains in market share worldwide. The brand became the leader in perfume and cosmetics selective retailing in France...

  • Page 50
    ... 388 388 426 NUMBER OF STORES INVESTMENTS EUR million 2009* 2008 2007 1,075 1,053 909 2009 2008 2007 183 228 236 * Change of method for counting DFS stores in 2009 REVENUE BY GEOGRAPHIC REGION OF DELIVERY en % FRANCE REST OF EUROPE UNITED STATES JAPAN REST OF ASIA OTHER MARKETS 24% 10% 37...

  • Page 51
    The LVMH Selective Retailing companies operate in Europe, North America, Asia and the Middle East. Their businesses are conducted in two segments: retailing designed for customers who are international travelers ("travel retail"), the business of DFS and Miami Cruiseline, leaders in their market ...

  • Page 52
    ...the United States and 20 in Canada), Asia 76 and the Middle East 17. Given the economic context in 2009, the rate of new stores opened slowed from the previous year, but reflected steady expansion. Sephora continued to give priority to the most promising markets in terms of revenue and profitability...

  • Page 53
    ... in partnership with selective brands, the development of Sephora product lines), the rollout of new merchandising and service initiatives and the expansion of customer loyalty programs etc. are all efforts that will contribute to a new year of growth and win new gains in market share. In 2010, Le...

  • Page 54
    SUSTAINABLE DEVELOPMENT Luxury is born from invention and the hand of man. It works to exalt nature in its purest and most beautiful form. Sustainable development is inseparable from LVMH's strategy. It is therefore presented in the annual report. GUERLAIN'S ORCHIDARIUM: A UNIQUE MULTI-DISCIPLINARY...

  • Page 55
    ... creative passion to a genuine art de vivre to which our customers aspire. To strengthen our position as a global leader, and to be the benchmark in the management and development of luxury brands. ENVIRONMENT To work together to preserve the resources of the planet, to design and develop products...

  • Page 56
    ... our shared commitment and guide all LVMH employees every day. THE VALUES OF LVMH INNOVATION AND CREATIVITY EXCELLENCE OF PRODUCTS AND SERVICE BRAND IMAGE ENHANCEMENT ENTREPRENEURSHIP LEADERSHIP - BE THE BEST Because our future success will come from the renewal of our product offering while...

  • Page 57
    ... TRADES OR CRAFTS, ON AN INTERNATIONAL SCALE. TOTALLY DEDICATED TO LUXURY, ITS WORKING ENVIRONMENT STIMULATES AND MOTIVATES ENTREPRENEURIAL, CREATIVE AND PASSIONATE PEOPLE TO INVEST IN THE ADVENTURE THAT THESE BRANDS REPRESENT. IT'S AN ECOSYSTEM THAT BRINGS TOGETHER MORE THAN 77,000 STAFF AND OFFERS...

  • Page 58
    ... regions where the Group operates that its brands are unequalled in the luxury goods world and their diversity makes LVMH a truly unique professional environment. LVMH offers unrivaled career opportunities within a rich Group of over 60 prestigious Houses. This commitment to providing the resources...

  • Page 59
    ...Europe (INSEAD, MBA HEC, IESE), the United States (Stanford, Columbia Business School, Northwestern, Wharton), Japan (Waseda Keio, Tokyo University) and the Asia-Pacific region. Louis Vuitton and the Parsons New School for Design in New York City: an exceptional new program In September 2009, Louis...

  • Page 60
    ..., to develop their management skills. Thus, in 2009, more than 1,800 managers took part in in-house training sessions and seminars offered by the Group's four main training centers in France, Asia, Japan and the United States. In 2009, LVMH gave a new boost to its High Potentials program, called...

  • Page 61
    ... products, passion for their brands and an ambition to excel. They also acutely feel a social responsibility - an integral part of their brand values and are conscious that underperformance affects potential. The Human Resources Department underpins all these approaches. Its mission is to develop...

  • Page 62
    ... the Group's recruitment site, and in the career management documents of its companies. A working group has been set up to help the Houses incorporate these changes and a training module is now being established to educate Human Resources Directors in the new systems and running "mid-career" support...

  • Page 63
    ... lives. At Louis Vuitton, annual interviews are held with staff to discuss their working conditions and their commitment to the company. By launching the LVMH Mind Extranet in April 2009, accessible to all the Group's employees, LVMH has enabled Social Responsibility to become a shared policy among...

  • Page 64
    ... of Europe United States Japan Rest of Asia Other markets 24% 23% 25% 37% 40 65% 20 27% 0 Wines Fashion & Perfumes & Spirits Leather Goods & Cosmetics Watches & Jewelry Selective retailing Other activities 18% 53% 43% 20% Men â,¬53.7 million invested in training â- Training investment totaled 53...

  • Page 65
    ... Foundation for Creation, which will open in late 2012, is the natural consequence of the cultural and artistic support provided by LVMH and the close ties between Louis Vuitton and the world of art and artists. In the spring of 2009, the exhibit "Louis Vuitton: a passion for creation", organized...

  • Page 66
    ... human and material resources to this goal. DESIGN LUXURY PRODUCTS BY INTEGRATING ENVIRONMENTAL INNOVATION AND CREATIVITY Guided by its overriding concern for high quality, LVMH is working to improve control and better anticipate the environmental aspects related to the life cycle of its products...

  • Page 67
    ...its production shops. Expanded awareness programs Over the years, most of the Group's employees have received awareness training. In 2009, Guerlain conducted a large-scale operation for all personnel, both at the production sites and at its corporate offices. Five conferences were organized, during...

  • Page 68
    ... in order to achieve a carbon neutral building. In the United States, Sephora USA completed its first "LEED" store in Stonestown, California. This "Leadership in Energy and Environmental Design" certification is awarded by the Green Building Council for voluntary eco-construction operations. From...

  • Page 69
    ..., is in line with the social and environmental commitments made by the Group when it signed the "Eco-Responsible Cosmetic Valley" Charter in October 2009. Biodiversity increasingly a top priority For most of the Group's brands, the living world is a vital resource for product development. LVMH is...

  • Page 70
    ...Week. At the same time, Louis Vuitton, which developed its own Guide to Good Practices and is extending environmental clauses to its contracts with suppliers, service providers and subcontractors, in 2009 conducted supplier surveys and preliminary audits on social responsibility standard SA 8000 and...

  • Page 71
    ... to limit ink use, with the printed product information inside the box. PROGRAMS EXTENDED TO CIVIL SOCIETY The Global Pact, which was launched in 1999 by Kofi Annan, commits major corporations to compliance with ten principles relating to human rights and labor and environmental standards in order...

  • Page 72
    ...in the "Environmental Expertise" work group, which published a methodology for conducting an open and free debate on expertise. Along with other luxury brands, LVMH also worked in the Business for Social Responsibility (BSR) group, a work group launched in 2009 to promote the sharing and exchange of...

  • Page 73
    LVMH Consolidated financial statements 2009 The consolidated financial statements presented in the following pages are abbreviated. 70 / 71

  • Page 74
    ...292 Brands and other intangible assets - net Goodwill - net Property, plant and equipment - net Investments in associates Non-current available for sale financial assets Other non-current assets Deferred tax NON-CURRENT ASSETS Inventories and work in progress Trade accounts receivable Income taxes...

  • Page 75
    ... reserves Cumulative translation adjustment Net profit, Group share Equity, Group share Minority interests TOTAL EQUITY Long term borrowings Provisions Deferred tax Other non-current liabilities NON-CURRENT LIABILITIES Short term borrowings Trade accounts payable Income taxes(2) Provisions Other...

  • Page 76
    ...recognized in relation to purchase commitments for minority interests. Property, plant and equipment increased slightly to 6.1 billion euros. This growth is chiefly attributable to the levels of the Group's operating investments made by Louis Vuitton, Sephora and DFS in their retail networks as well...

  • Page 77
    ... operating income and expenses OPERATING PROFIT Cost of net financial debt Other financial income and expenses NET FINANCIAL INCOME (EXPENSE) Income taxes Income (loss) from investments in associates NET PROFIT BEFORE MINORITY INTERESTS Minority interests NET PROFIT, GROUP SHARE BASIC GROUP SHARE...

  • Page 78
    ... markets, including the United States and Japan. Selective Retailing posted organic revenue growth of 1%, and 4% based on published figures. This growth was driven by Sephora, whose sales increased strongly due to the expansion of its retail network in Europe, North America, and Asia, particularly...

  • Page 79
    ... control of costs and the careful targeting of advertising and promotional expenditure were not able to offset the impact of lower sales volumes. Operating margin as a percentage of revenue for this business group decreased by 6 points to 28%. Fashion and Leather Goods posted profit from recurring...

  • Page 80
    ... non-current available for sale financial assets Impact of purchase and sale of consolidated investments NET CASH FROM (USED IN) FINANCIAL INVESTMENTS (93) 49 (278) (322) (155) 184 (642) (613) (45) 33 (329) (341) III. TRANSACTIONS RELATING TO EQUITY Capital increases of LVMH Capital increases of...

  • Page 81
    ... reflects the Group's growth strategy and that of its flagship brands such as Louis Vuitton, Sephora and Parfums Christian Dior. Net cash from operating activities and operating investments thus amounted to 2,205 million euros. Acquisitions of non-current available for sale financial assets, net of...

  • Page 82
    ...) Number of shares Share Share capital premium account Treasury shares and LVMH-share settled derivatives Translation and revaluation reserves Cumulative translation adjustment Available for sale financial assets Hedges of future foreign currency cash flows Vineyard land Net profit Total...

  • Page 83
    ... Beauregard, Fondation Louis Vuitton pour la création / Nicolas Borel, Alain Hatat, Stéphane Muratet / Louis Vuitton Collection 2009 © Nathalie Decoster, Louis Vuitton Collection 2008 © Joana Vasconcelos, DR, photo archives LVMH and Group Companies. Design and production Phénix Telephone...

  • Page 84