LVMH Moët Hennessy Louis Vuitton, commonly known as LVMH, is a European conglomerate specializing in luxury goods consisting of wine, clothing, cosmetics, jewelry and more. Some of LVMH’s representative brands include Louis Vuitton, Christian Dior, Celine, Fendi, Tiffany & Co. and Bulgari. LVMH is headquartered in Paris and its shares are listed on the Euronext Paris Eurolist. French businessman Bernard Arnault is the founder, chairman and CEO of LVMH.
Regarding LVMH’s latest annual report, the fiscal year ended on December 31, 2022. The company reported 79.184 billion euros in revenue in 2022, steadily increasing from that of previous years, specifically 64.215 billion euros in 2021 and 44.651 billion euros in 2020. Revenue is one of the most important figures when looking at a company’s financial performance as it is the “top line” or “gross income” figure calculated by multiplying the price at which goods or services are sold by the number of units or amount sold. Within LVMH, the Wines & Spirits business group recorded revenue growth of 19 percent, the Fashion & Leather Goods business group recorded revenue growth of 25 percent, the Perfumes & Cosmetics business group recorded revenue growth of 17 percent, the Watches & Jewelry business group recorded revenue growth of 18 percent while Selective Retailing revenue was up 26 percent in 2022. LVMH’s net income, also known as net profit or the literal “bottom line”, was reported to be 14.751 billion euros in 2022, which also increased compared to 12.698 billion euros in 2021 and 4.955 billion euros in 2020. Net income shows how much money a company, in this case LVMH, made after subtracting both operating and non-operating expenses such as interest and taxes, and is again a critical figure in assessing any company’s financial performance. The conglomerate actually reported less money in revenue and profit than what I had expected. LVMH is the unanimous leader in luxury goods and I expected its revenue to surpass 100 billion euros the past fiscal year as 2022 was the first year everything was bouncing back after the COVID-19 pandemic and the overall demand for luxury goods boomed massively all over the world. Overall, LVMH did perform well considering the growth in both revenue and profit among all business categories but it was a tad underwhelming for LVMH’s status on the global scale.
As briefly mentioned above, according to the LVMH’s income statement, its revenue and net income in 2022, 79.184 billion euros and 14.751 billion euros respectively, both increased from what was reported in 2021, 64.215 billion euros and 12.698 billion euros respectively. Although the difference in net profit was not as stark as the jump between 2020 and 2021, specifically 2.053 billion euros from 2021 to 2022 compared to 7.743 billion euros from 2020 to 2021, I would be quite satisfied with this performance if I were a financial stakeholder in the company because the increases represent an overall very steady financial performance.
LVMH’s reported basic annual earnings per share (EPS) was 28.05 euros per share and diluted annual earnings per share was 28.03 euros per share in 2022. According to Yahoo! Finance, LVMH Moët Hennessy Louis Vuitton’s stock price opened at 820.20 euros on Feb. 6, 2022. The price-earnings ratio (P/E ratio) can be calculated as Market Value per share divided by Earnings per share. Thus, LVMH’s P/E ratio is 29.24. The P/E ratio indicates the dollar amount an investor can expect to invest in a company in order to receive one dollar of that company’s earnings. If LVMH were currently trading at a P/E of 29.24, the interpretation is that an investor is willing to pay $29.24 for $1 of current earnings. In general, a high P/E suggests investors are expecting higher earnings growth in the future compared to companies with a lower P/E. A low P/E can indicate either that a company may currently be undervalued or that it is doing exceptionally well relative to past trends. Because the long/term P/E ratio of the stock market is 16, I would not choose to invest in LVMH’s stock at the moment as LVMH’s stock is overvalued by the market and a P/E of 29.24 is much higher than the median P/E ratio of the market of 16. With that being said, however, stocks selling at higher P/E ratios generally have higher growth potentials than those selling at lower P/E ratios so LVMH’s high P/E ratio does not make its stock a bad buy, it just means that I’m essentially paying more for every dollar of earnings I can receive from the stocks compared to those with low P/E ratios.
In the news release titled “New record year for LVMH in 2022” provided by LVMH about its recent annual earnings report of the fiscal year 2022, Bernard Arnault, Chairman and CEO of LVMH, commented: “Our performance in 2022 illustrates the exceptional appeal of our Maisons and their ability to create desire during a year affected by economic and geopolitical challenges. The Group once again recorded significant growth in revenue and earnings. Our growth strategy, based on the complementary nature of our activities, as well as their geographic diversity, encourages innovation and the quality of our creations, the excellence of their distribution, and adds a cultural and historical dimension thanks to the heritage of our Maisons. This was showcased during our hugely successful LVMH Journées Particulières, when we opened our doors to all in fifteen countries in 2022 and saw a record number of visitors come to learn about the know-how of our artisans. We approach 2023 with confidence but remain vigilant due to current uncertainties. We count on the desirability of our Maisons and the agility of our teams to further strengthen our lead in the global luxury market and support France’s prestige throughout the world.” The use of language in this comment from CEO Bernard Arnault exhibits a sense of poise and humility that I found to be powerful and reassuring. The information provided by LVMH in both its annual report and press release about the results is incredibly straightforward and helpful in understanding how the company performed financially in 2022 across different divisions including wines and spirits, fashion and leather goods, perfumes and cosmetics, watches and jewelry, selective distribution, and other activities. The press release comprehensively summarizes the annual report with bullet points of statistical highlights and tables of key achivements, all of which contribute to paint a clear picture of how LVMH did financially in 2022. Similar to the comment from CEO Bernard Arnault, the company also briefly discusses its goals for 2023 in the release with professional and confident use of language but at the same time displays a sense of humility and caution as it says “driven by the agility of its teams, their entrepreneurial spirit and its well diversified presence across businesses and geographic areas in which its customers are located, LVMH enters 2023 with confidence and once again, sets an objective of reinforcing its global leadership position in luxury goods.” It is clear from the numerical results and use of language that LVMH Moët Hennessy Louis Vuitton is well in its maturity phase as the company remains one of the world’s leading multinational conglomerates.
Among news articles discussing LVMH’s annual earnings report of 2022, the content of coverage is surprisingly diverse. Business journalists highlighted different information in their stories about the company on different platforms. For example, in an article featured on Dow Jones Newswires, journalist Joshua Kirby emphasized on the important statistics in LVMH’s 2022 earnings report such as sales, revenue, operating profit, net profit, operating margin while highlighting numbers of the two mega brands Louis Vuitton and Dior. This coverage also included CEO Bernard Arnault’s comment about LVMH’s goals in 2023. In another article on the Financial Times, journalist Leila Abboud chose to highlight the fact that LVMH decided to raise its annual dividend by 20 percent as mentioned in the press release while also discussing how China opening up its market is going to affect LVMH’s sales and profits in the foreseeable future. Abboud also included quotes from CEO Bernard Arnault and finance director Jean Jacques Guiony. Similar to the Dow Jones Newswires article mentioned above, the third article, written by journalist Liz Moyer on Investing.com, featured mainly numerical statistics such as revenue, profit and stock prices, accompanied with a quote from CEO Bernard Arnault taken from the official press release. As it can be observed, even though some of the articles do include other information such as predictions by analysts and discussions of related topics including the reopening of the Chinese market, most of the information in these news articles is essentially derived from LVMH’s press release. The official press release includes a lot more details about statistics and achievements that were not mentioned in the articles covering LVMH’s 2022 earnings. All in all, the tone, use of language and information the company and its PR team choose to highlight is very important when it comes to getting the type of press desired, especially for a company operating on such a massive scale as LVMH. LVMH as a mature multinational conglomerate naturally would want to paint a picture of a steady financial performance in order to reassure existing investors, shareholders and customers while attracting potential ones. I now have a more in depth understanding of why it is deemed critical for PR professionals, especially those working in big corporations, to possess not just polished communication skills but also proficient economic literacy.
Overall, LVMH Moët Hennessy Louis Vuitton is performing extremely well after some optimistic 2022 results as the company heads into the new year. Recent leadership changes at its major brands Louis Vuitton and Dior saw Pietro Beccari now at the helm at Louis Vuitton and Delphine Arnault, daughter of CEO Bernard Arnault, chosen to run Christian Dior. There is much to look forward to as investors, analysts and the public continue to have high expectations for Europe’s largest and most valuable corporation.
Days Like This 