For much of 2024, Bernard Arnault was positioned as the greatest fortune in the world, thanks to his majority stake in LVMH (Louis Vuitton Moët Hennessy), the fashion and luxury products empire he has built. Louis Vuitton is a strategic piece in that business network that brings together more than 80 brands from very varied sectors of the luxury sector: from beverages, jewelry, fashion and cosmetics to trips on the Orient Express.
However, during the second half of the year, the luxury sector appears to have suffered from the post-pandemic luxury euphoria, and its sales have declined. Louis Vuitton’s solution: diversify its business and look for new markets to maintain its profits.
A brand, within a segment, within a group
Group more than 75 brands (or Houses) from different luxury sectors under the same umbrella is not easy. Even more so when each of these brands has its own prestige and personality, such as Louis Vuitton, Dior, Tiffany & Co, Moët & Chandon, Tag Heuer or Sephora.
Therefore, to simplify its management, Bernard Arnault’s holding company classifies its brands into six categories based on their activity (although in reality they focus on the five main ones): wines and spirits, fashion and leather goods, perfumes and cosmetics. , watches and jewelry, selective retail sales and other activities.
Internally, each of the brands prepares its own balance of results, which is added to those of other brands in the group in the same category. In this way, LVMH presents its annual balance sheet segmented into these six sectors together, but does not make public the individualized results of the 75 brands.
This complicates the task of knowing exactly how much Louis Vuitton, Dior or Moët & Chandon invoices individually, but it gives a snapshot of the financial evolution of the group in each segment, and the weight of their income in the group as a whole. In fiscal year 2023, the fashion and leather pieces segment led by the maison Louis Vuitton represented 49% of LVMH’s total revenue, followed by the select sales group with 21% and watches and jewelry with 13%.
Distribution of income by segments. Source: LVMH
Taking into account the results of the last nine months made public by the brand, it can be seen that the fashion and leather goods sector led by Louis Vuitton has marked negative digits in the last quarter.
Worse results have been had by brands in the watches and jewelry segment, which have marked a progressive downward trend in their profits as the year has progressed; or wines and spirits with steeper profit cuts.
The categories of selective retail sales and perfumery and cosmetics register a positive balance of 6% and 5%, compared to the fiscal year 2023, but their trend is downwards towards the end of the year.
Even so, the annual profits of LVMH’s fashion and leather goods segment have been 29,922 million euros in the first nine months of 2024, while wines and spirits have profits of 4,193 million euros and watches and jewelry from 7,536 million euros.
Chart of profits in the different segments of LVMH. Source: LVMH
The downward trend forces us to take action: diversify
Just a look at LVMH data is enough to intuit that 2025 is going to be a complicated year for the luxury sector, beyond the value of its shares. For this reason, the group has begun a campaign to extend its market and bring luxury to sectors and audiences that it had not yet reached. LVMH is diversifying (even more) its business.
Once again, LVMH carries out its diversification actions and search for new audiences as a group strategy and focused on one (or several) of its segments, not individually for each maison…and it makes perfect sense.
As explained in ForbesLVMH has signed a sponsorship contract with Formula 1 for the next ten years. This contract is not limited to a single brand, but the group takes advantage of its diversity of brands to gain visibility in different areas: luxury and glamor in fashion, celebrities who walk around the paddock with Louis Vuitton; that of the celebration of great victories with Moët & Chandon pouring out on the podium; and the precision of the machines that compete there represented in a Tag Heuer watch.
This search for diversification is leading LVMH to promote segments that until now were a minority in the group, such as luxury hotels and exclusive travel experiences.
The brand already acquired the Belmond hotel chain in 2018 with an investment of 3,000 million euros. Included in the package is its luxury travel division that operates the legendary Orient Express. In July 2024, Bernard Arnault showed signs of reactivating this business avenue by making an offer of 309 million for the emblematic Bauer Hotel in Venice, according to Fortune.
As highlighted from the specialized portal Hostel doorthe group’s intention is to apply the style of the houses of the group so that the hotels are an extension of the luxury experience that its products exude. The first with this philosophy will open in Paris in 2026.
Sponsorships to reach new audiences
We mentioned LVMH’s new contract to sponsor Formula 1, but it is not the only area in which they have wanted to open new markets. The new strategy to try to stop the downward trend in its sales, seeks to get down from the aspirational pedestal (even if it is only one step) to its housesto turn them into near-luxury pieces for the wealthy public.
Again, LVMH’s strategy is not focused on a certain brand, but on having a global presence with elements of Louis Vuitton, Dior, Tag Heuer or any other brand in the group.
An example has been the brand’s approach to the sports sphere, where it has replaced traditional supermodels and artists, to set the trend by dressing the tennis player Carlos Alcaraz, accompanying Leo Messi on his trips with his line of suitcases or dressing the athletes during the past Olympic and Paralympic Games in Paris 2024, as published Fashion Network.
In this way, LVMH is turning big sports stars, like Mbappé, into influencers who wear products from Dior, Rimowa or Hublot, reinforcing the connection between big sports stars and luxury.
By opening its range of sponsorships to sports with mass audiences, Louis Vuitton has expanded its visibility which, until recently, was limited to “exclusive” sports such as sailing, for which Louis Vuitton has given its name to the Louis Vuitton Americas Cup. which was held in Barcelona.
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