The luxury goods conglomerate LVMH recently disclosed its financial results for 2024, marking a significant downturn for the company, as well as expressing optimism about the upcoming year. Bernard Arnault, the CEO of LVMH, stated at the presentation, "Once is not customary, we have not posted record results for 2024 [...] but they have been solid enough and we are confident, even very confident, for the coming year." This declaration sets the tone for LVMH's outlook amid global economic challenges.
During the report, LVMH revealed its net profit dropped by 17%, falling to €12.6 billion, coupled with a 2% decrease in sales, which totaled €84.7 billion. The company's operating margin also fell, decreasing from 26.5% to 23.1% compared to the previous fiscal year. Jean-Jacques Guiony, LVMH's Chief Financial Officer (CFO), acknowledged these figures, noting the economic slowdown faced primarily due to decreased activity levels in Asia.
Arnault highlighted Asia's impact, particularly within the Chinese market, which saw sales decline by 11%. "Business remained difficult throughout the year," Guiony mentioned, underscoring the challenges the luxury sector has been facing. All eyes are on LVMH as the global luxury market is expected to shrink by 2% this year, according to forecasts by Bain & Company.
Transitioning from the financial performance, Arnault expressed discontent with the French government's proposal to raise corporate taxes, which he described as "the taxation of made in France." He voiced his concerns on January 29, stating, "To push for delocalization, it's ideal!" This tax increase is projected to raise taxes on large corporations by as much as 40%, aiming to raise approximately €8 billion for the state. Arnault argued this would unavoidably lead companies to relocate to countries with more favorable tax regimes.
Reflecting on his recent visit to the USA, he shared, "I just returned from the US and I sensed the wind of optimism there. Returning to France, it feels like stepping under cold water." His comments draw a stark comparison between the buoyant economic atmosphere of the US and the anticipated tax burdens facing businesses in France. He expressed concerns about France’s competitiveness, particularly when juxtaposed with the US, where corporate taxes are set to decrease to 15%.
Arnault's sentiments echoed those of fellow business leaders, yearning for policies conducive to local manufacturing. He lamented the lack of supportive measures for French businesses compared to the substantial incentives offered by the US government. He noted, "We are strongly solicited by American authorities to continue our installations [of workshops]," highlighting the growing interest and potential for LVMH’s expansion beyond French borders.
This combination of declining financial performance and rising political discontent sets a precarious stage for LVMH as it navigates 2025. Despite the figures indicating challenges, Arnault remains resolute. He concluded the results presentation with hopes for revitalizing the company’s brands amid the shifting global marketplace, particularly noting the importance of brands like Dior and Tiffany & Co.
Arnault has maintained his position as one of the most influential figures within the luxury industry, receiving accolades from various quarters, including Joëlle Dago-Serry, who stated, "Bernard Arnault is the greatest patriot of this country," praising his contributions to the French economy. Yet, with the prospects of heightened taxes looming, the luxury mogul’s stance is poised for both domestic and international impacts.
Looking forward, LVMH will need to strategize not just around its product offerings but also navigate the complex socio-economic environments both at home and abroad. Arnault’s comments reflect the urgent need for dialogue between business leaders and the government to address these pressing taxation issues and support the manufacturing sector.
Financial analysts gathered at LVMH's headquarters left with mixed feelings after the presentation. They were eager to understand how LVMH plans to overcome its current difficulties and capitalize on potential growth avenues, especially within its diverse luxury portfolio.
Arnault's reflections during this challenging moment highlight the broader narrative of businesses adapting within economies burdened by rising taxes and shifting consumer behaviors. The coming months are sure to be pivotal as LVMH seeks to reclaim its previous heights amid these challenges.
On the horizon, the company also needs to focus on strengthening its position internationally, as competition continues to grow, particularly from brands supported by favorable fiscal policies abroad. With all eyes now firmly set on 2025, the luxury giant is tasked with rejuvenation and resiliency.