LVMH’s 2024 Goal: Encouraging the ‘Slow Growth’ of Dior and Louis Vuitton

During LVMH’s annual results announcement on Thursday, January 25, French conglomerate chairman Bernard Arnault once again emphasized the “excellent performance of the Fashion & Leather Goods division.” Over the past year, this division has achieved total revenue of €42.16 billion, marking a 9% increase from the previous year and notable organic growth of 14%.

In particular, Arnault reserved praise for two jewels in the conglomerate’s crown: fashion houses Christian Dior and Louis Vuitton. Bernard Arnault commented, “These are two of the biggest brands in the world in the soft luxury segment (including categories such as bags, clothing, and accessories), with Chanel and Hermès as their main competitors.”

Bernard Arnault Tightens Family Control Over LVMH Bernard Arnault during LVMH’s annual results announcement The French entrepreneur also added Tiffany & Co. and Bulgari to the list in the hard luxury segment (dedicated to watches and jewelry). The formidable competitors these two brands face are Cartier and Van Cleef & Arpels of the Richemont Group.

In his continued remarks, Arnault stated, “Among the strongest brands in the world, we own half of them, which is quite commendable. We will continue to explore whether we can expand this cooperation or strengthen our other brands.”

Although the conglomerate did not disclose the business results of each company separately, they made it clear that “the growth of Christian Dior Couture is in line with what was announced.” Furthermore, Chief Financial Officer Jean-Jacques Guiony emphasized that “the organic growth rate over the past 30 years has remained at 9.1%, corresponding to the desired growth rate.”

The luxury world leaders emphasized the need to maintain reasonable growth of 8 to 10% during the annual results conference. This figure aligns with the current phase in the high-end market after three years of “post-Covid” recovery.

WOMEN’S CRUISE 2024 COLLECTION – Dior Couture UAE A tote bag designed for the 2024 Lunar New Year by Dior Jean-Jacques Guiony highlighted this in a meeting last October regarding the group’s third-quarter results. “Do not expect Dior to continue growing at a rate of 30% per year. That won’t happen. Dior has tripled in size over the past seven years. This cannot continue indefinitely. At a certain point, the growth rate must slow down for stability. We cannot sustain 30% growth per year anymore.”

During the conference, Bernard Arnault explained that a maximum growth rate of 8-10% is sufficient and even contributes to the “desirability of the brand.” This shift in strategy seems to foreshadow a slowdown in the conglomerate’s profits in the coming years. He said, “We have had extremely high growth rates, even too high. We need to slow down a bit. The issue is not growth but rather the ‘craving’ of customers.”

Additionally, he suggested that his leading brands should produce less and invest less in marketing. “We have reached a point where such high growth rates are no longer necessary. And I would be very happy if the growth rate could decrease.”

To maintain scarcity and customer desire, the strategy they need to rely more on is product strategy rather than sales volume. Jean-Jacques Guiony summarized: “Our philosophy will remain unchanged. Sell less but at a higher level, and the quantity will only be slightly higher. The group’s growth primarily relies on the combination of products.”

To adapt to this shift towards that goal, LVMH underwent a reorganization at the beginning of the year. Delphine Arnault, Bernard Arnault’s daughter, was appointed CEO of Christian Dior. Meanwhile, Pietro Beccari, who previously held this position at Dior, still maintains a leadership role but has been transferred to Louis Vuitton.

Delphine Arnault appointed by father Bernard Arnault to run Dior | CNN Delphine Arnault – the new CEO of Dior Furthermore, after serving as CEO of Louis Vuitton for a decade, Michaël Burke has been appointed CEO of the LVMH Fashion Group, overseeing the company’s other fashion brands. He succeeds Sidney Toledano, who was appointed advisor to Bernard Arnault and left the group’s executive committee.

The LVMH CEO particularly praised the “extraordinary success” of Dior’s collections designed by Maria Grazia Chiuri for the Ready-to-wear and Haute Couture segments for women, describing it as “a small but growing market.”

The must-see looks from Haute Couture Week SS24 Dior’s Couture SS24 collection by Maria Grazia Chiuri He continued, “The highest-end products are the most in-demand, to the point where we struggle to keep up. Not to mention the success of the high-end jewelry line created by Victoire de Castellane.”

For Louis Vuitton, the ready-to-wear products for women, led for a decade by Nicolas Ghesquière, have had their contract extended for another 5 years, and men’s fashion is overseen by American pop music star Pharrell Williams since February, Bernard Arnault described this brand as “a very unique business endeavor.”

Hong Kong Bound—Pharrell Williams Unpacks His First Pre-Fall Show for Louis Vuitton | Vogue Although Pharrell Williams has received mixed reviews, he successfully launched Louis Vuitton’s first Menswear collection He noted, “It’s not really a fashion business activity, we called it a business activity with a bit of fashion in 1996, but the core is high-quality products, contributing to the success of this French brand.” Especially the watch and perfume categories, “have experienced remarkable growth despite being sold exclusively through Louis Vuitton’s non-discount retail network.”

Therefore, it is likely that the conglomerate’s leading brands will continue to develop through new diversification activities, although nothing has been revealed on that front. Bernard Arnault hinted, “Other categories we are planning will still be kept secret.”