LVMH’s Chairman and CEO, Bernard Arnault, recently provided a comprehensive overview of his insights during the announcement of the company’s record-breaking 2021 results. While discussing the state of the economy in 2022, Arnault expressed his optimism, despite the concerns surrounding inflation. He believes that the current price increases in raw materials and energy are temporary and expects markets to stabilize once the post-pandemic recovery is complete. Arnault emphasized that LVMH has the flexibility to navigate inflationary pressures and remains confident in the strong demand for their luxury products.
One of the key factors contributing to LVMH’s strength is its solid financial position. In 2021, the company generated an operating cash-flow of €13.5 billion, double the amount of the previous two years. This abundance of financial resources positions LVMH well for exploring new opportunities in the attractive post-pandemic luxury market. While Arnault did not disclose specific acquisition plans for the year, he highlighted the importance of being patient and opportunistic when considering acquisitions.
In addition to acquisitions, Arnault discussed the topic of divestments. He clarified that LVMH only considers selling companies when they are too small or not suitable for the group. This approach emphasizes the importance of careful consideration and finding the right fit for LVMH.
The passing of designer Virgil Abloh, who led Louis Vuitton’s menswear division, was a significant loss for the fashion house. Arnault expressed his sadness and described Abloh as an extraordinary designer and a man of culture. As for Abloh’s succession, Arnault mentioned that the matter will be addressed after the mourning period.
Another topic highlighted by Arnault was the issue of duty-free retail. He expressed concerns about the negative impact on brand image caused by some groups who sell products through distributors in China at discounted prices. Arnault emphasized that LVMH and Chanel refuse to adopt this practice and prioritize preserving their brands’ long-term image.
In the context of technology, Arnault shared his thoughts on the metaverse. While acknowledging its potential interest and entertainment value, he emphasized that LVMH’s focus remains on selling real products in the real world. Arnault mentioned that the company is exploring the possibilities of the metaverse and its practical applications for their brands.
Finally, Arnault discussed LVMH’s pricing policies, emphasizing the importance of maintaining a balance between suitable margins and economic reality. The company aims to be responsible towards customers and avoid giving the impression of inconsistent pricing.
Overall, Arnault’s insights provide valuable perspectives on various factors that impact the luxury market. With LVMH’s strong financial position and ability to adapt to changing economic conditions, the company is well-positioned for continued success in the future.
Useful Links:
1. LVMH Official Website
2. Business of Fashion
