LVMH Moët Hennessy Louis Vuitton
The world's largest luxury conglomerate — 75 iconic maisons including Louis Vuitton, Dior, Tiffany, and Hennessy. A century of heritage you cannot manufacture.
Business Overview
What does LVMH do, and why is it irreplaceable?
A trendy new startup can manufacture the latest handbag — but it will never manufacture a century of heritage. That is the LVMH advantage. The group houses 75 iconic maisons, each with its own history, craftsmanship, and cultural cachet — from Louis Vuitton (founded 1854) to Dior, Tiffany, Bulgari, Hennessy, Moët & Chandon, and Sephora.
Built by Bernard Arnault over four decades of strategic acquisitions, LVMH is the undisputed king of luxury. The company operates across six business groups: Fashion & Leather Goods, Wines & Spirits, Perfumes & Cosmetics, Watches & Jewelry, Selective Retailing (Sephora, DFS), and Other Activities.
The genius of LVMH is vertical integration. Louis Vuitton controls about 60% of its supply chain, from leather tanneries to final production. One tannery serves multiple brands, spreading fixed costs across the group. This creates a reinforcing cycle where scale leads to greater quality control and margin expansion.
LVMH's products are Veblen goods — their desirability increases as prices rise. When inflation drives up costs, LVMH raises prices accordingly, and customers pay gladly because the higher price reaffirms the product's exclusivity. Louis Vuitton raised prices during both the 2009 financial crisis and the 2020 pandemic.
Fashion & Leather Goods
Louis Vuitton, Dior, Fendi, Celine, Loewe, Givenchy. The crown jewel — 50% of revenue with ~37% operating margins.
Watches, Jewelry & Spirits
Tiffany, Bulgari, TAG Heuer, Hennessy, Moët, Dom Pérignon. Heritage brands with multi-generational loyalty and pricing power.
Selective Retailing & Beauty
Sephora (2,700+ stores), DFS, Le Bon Marché. Plus Dior Sauvage (world's best-selling fragrance) and Guërlain. The consumer touchpoints.
Financial Fundamentals
Three tests every quality business must pass
Moat Analysis
Five dimensions that determine competitive durability
Brand Loyalty & Pricing Power
10/10This is LVMH's ultimate moat. Louis Vuitton bags are Veblen goods — demand rises with price. LV raised prices during the 2009 crisis and 2020 pandemic. Fashion & Leather Goods posted 37.1% operating margins in 2024. 75 maisons, each with irreplaceable heritage spanning decades to centuries.
High Barriers to Entry
9/10You cannot create Louis Vuitton (1854), Hennessy (1765), or Tiffany (1837) from scratch. LVMH owns 6,307 stores in 80+ countries, operates its own tanneries and workshops, and holds centuries of artisan know-how. The capital, heritage, and cultural cachet required are impossible to replicate.
High Switching Costs
7/10Switching costs in luxury are emotional and social rather than technical. Customers build identity around their preferred luxury house. A Louis Vuitton collector does not casually switch to Gucci. However, unlike enterprise software, consumers can switch if a brand loses cultural relevance — hence not a 9 or 10.
Network Effect
5/10Luxury goods have a paradoxical relationship with network effects. Social signaling works — people want what others recognize as prestigious. But if a brand becomes too ubiquitous, it loses its exclusivity. LVMH carefully manages this tension, but network effects are limited compared to platform businesses.
Economies of Scale
9/10€84.7B in revenue, 213,000 employees, 6,307 stores. Vertical integration means shared tanneries, supply chains, and distribution networks across 75 brands. A single luxury house cannot justify owning a tannery — LVMH spreads that cost across dozens of maisons. 68% gross margins prove the scale advantage.
Bull & Bear Thesis
Both sides of the coin — so you can decide for yourself
Bull Case
Bear Case
Growth Drivers
Where the next wave of revenue comes from
China Recovery & Flagship Expansion
Multistory flagships planned for Louis Vuitton, Dior, Tiffany, and Loro Piana in Beijing's Taikoo Li. Shanghai's cruise-ship themed LV store already doubled host mall traffic. Positioning aggressively for China's stabilization in 2026.
High Jewelry & Tiffany Integration
Tiffany's reopened Fifth Avenue flagship and Bulgari's high jewelry collections are driving the Watches & Jewelry segment. High jewelry is the fastest-growing luxury category with margins approaching Fashion & Leather Goods levels.
Sephora & Experiential Retail
Sephora's 2,700+ stores and omnichannel strategy continue to gain share globally. Experiential retail concepts — immersive stores, brand exhibitions, luxury hospitality — cater to Gen Z who prioritize experiences over products.
US Market & Emerging Luxury Consumers
The US remains the main growth driver for 2026 with 5-6% expected sector growth. India, Middle East, and Southeast Asia represent an expanding base of first-time luxury consumers entering the LVMH funnel through entry-point products.
Investment Risks
Every investment has risks — here is what could go wrong
China Prolonged Slowdown
China domestic luxury sales crashed 18-20% in 2024. Property market weakness, youth unemployment, and shifting consumer values toward understated luxury threaten a structural (not cyclical) reset. CEO Arnault warned "2026 won't be simple."
High SeverityLuxury Fatigue & Price Ceiling
Years of double-digit price increases may be reaching a ceiling. Post-pandemic revenue nearly doubled but growth has flatlined. If aspirational consumers stop spending, the brands reliant on volume growth (Dior, LV entry products) will feel it first.
High SeveritySuccession & Key Person Risk
Bernard Arnault (76) has been the architect of LVMH's empire for 40 years. While his children hold key roles across the group, a leadership transition carries execution risk. The market may reprice the conglomerate discount if the family's stewardship is questioned.
Medium SeverityCurrency & Geopolitical Headwinds
LVMH reports in euros but earns globally. A strong euro erodes international revenues. Geopolitical tensions (US-China tariffs, EU luxury taxes, Middle East instability) could disrupt key markets. H1 2025 net profit already fell 14% partly due to FX.
Medium SeverityValuation & Intrinsic Value
What is this business actually worth?
As of 16 February 2026, LVMH (LVMUY) is trading at approximately 21% below its estimated intrinsic value based on our discounted cash flow model. At a trailing P/E of ~19x vs. its 10-year average of ~27x, the market is pricing in a permanent luxury downturn for the world's most diversified luxury conglomerate generating €17.8B in annual free cash flow.
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This research is for educational purposes only and does not constitute financial advice. The information presented is based on publicly available data and our independent analysis. Always do your own research and consult a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.