Company Trend Analysis - LVMH In Strongest Financial Position Among Luxury Peers - DEC 2017

BMI View: LVMH has emerged from the global luxury slowdown over 2015 and early 2016 as the most successful company in the space, with strong revenue growth over 2017. It also has the healthiest operating margins of its peers, due to its prestigious brand portfolio . The company did not cut back on investment significantly during the slowdown period, leaving it potentially ahead of the curve in terms of innovation.

Total revenues for LVMH amounted to EUR37.60bn in its financial year ending December 31 2016, an increase of 5.4% from EUR35.66bn in 2015. This makes it the largest luxury consumer goods company in the world, with sales nearly three times higher than its nearest competitors including companies such as Compagnie Financiere Richemont, Estee Lauder Companies, Luxottica Group and Kering. LVMH looks set to surpass this in 2017, with revenue for the first three quarters of 2017 coming in at EUR30.1bn, an improvement over EUR26.3bn in the same period for 2016.

After a slowdown in the global luxury industry over 2014 and 2015 due to reduced Chinese consumer spending and declining tourism in Europe, which led to a drop-off in revenue growth for LVMH, there has been a notable recovery over the last six months of 2016 and the first three quarters of 2017, ending September 30. During 2016 the company saw organic growth of 6% overall, the same as in 2015; however, H216 recorded growth of 7% while H116 came in at just 4%. This organic growth has accelerated further in H117 to 12%, with Q317 also seeing growth of 12%. With returns to double-digit organic growth, the outlook for LVMH is strong.

Revenue Recovery In 2016 & H117
LVMH Revenues (EURbn) & Organic Growth (%)
Source: LVMH

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