The luxury industry has consistently achieved exceptional results, but this success has created a challenge when it comes to financial communication. LVMH, a leading luxury conglomerate, is faced with the task of satisfying three different audiences with conflicting interests: the financial markets, shareholders, and opinion leaders.
The financial markets have set high expectations for LVMH, considering its record-breaking results. With sales of 79.2 billion euros and an operating profit of 21.1 billion euros, both growing by 23%, LVMH has experienced significant success. Additionally, its market value has multiplied by 69 since 1988. To exceed these expectations, LVMH has taken a unique approach to financial communication that may be difficult for its competitors to challenge.
When it comes to communicating its financial performance, LVMH prefers to adopt a subtle approach. Rather than explicitly mentioning its figures, the company focuses on the concept of “Performance of Engagement.” This approach aligns with the famous principle from Sun Tzu’s “The Art of War”: “The art of war is to subdue the enemy without fighting.” LVMH believes that openly discussing figures that everyone already knows could spark debates and potentially generate negative perceptions.
Instead of emphasizing growth and profits, LVMH highlights its investments for the common good. In a national daily press campaign, the company showcases its commitment to various social and environmental initiatives. For example, LVMH aims to become the largest private recruiter in France by 2023, with plans to hire 15,000 individuals, including 39,000 young people under 30. The company also intends to allocate 215 million euros for employee training in France. Furthermore, LVMH emphasizes its tax contributions, paying 5 billion euros worldwide in 2022, with nearly half of that amount being paid in France. Despite generating only 8% of its sales in France, LVMH pays 50% of its taxes there. Over the past decade, the company has paid almost 13 billion euros in corporate taxes in France. LVMH also highlights its leadership in transparency and performance regarding climate, forest, and water protection. It is one of the rare twelve companies in the world to receive a triple A rating out of over 15,000 rated companies.
The “Performance of Engagement” concept exemplifies LVMH’s commitment to being a unique and exceptional player in the luxury industry. By focusing on its positive contributions to society and the environment, the company stands out in terms of financial communication.
Useful Links:
1. LVMH Official Website
2. Nasdaq – Stock Market Information
