Arnold Became The Richest Man In The World, Not By Selling Lv

According to the Forbes official website world rich list, Bernard Arnault, President of MH group of French luxury giant LV (with a demand area of 1000-2000 square meters, 23 shopping centers and 1 planned to open this year) has a net wealth of 116.5 billion US dollars, surpassing Amazon boss Bezos (115.6 billion US dollars).

Arnault's first fortune exceeded $100 billion in June last year, and at the same time, he took off the titles of "the first 100 billion dollar rich man in Europe" and "one of the only three 100 billion rich people in the world".

In November, LVMH finally took Tiffany, an American jewelry brand, for $16.2 billion, making it the largest acquisition record in the luxury industry. This sensational business boosted the market value of LVMH to break through 200 billion euro.

Also look at the whole of 2019, LVMH shares rose more than 60%, the market value soared by more than 80 billion euro. As of Friday's close, LVMH had a market value of 221 billion euros, compared with 77.1 billion euros of Kaiyun group, another French luxury goods giant. In this way, LVMH has risen a cloud in a year.

Arnold has become the richest man in the world. Of course, it is impossible to sell bags alone. Behind the excess profits is the super moat, where the development story of LVMH for decades is deposited.

With the capital model as the bottom support, the rapid development of M & A, and traveling around the world, can we have today's luxury empire.

16.2 billion dollars to buy Tiffany from soft luxury to hard luxury

The great history of M & A is the development of luxury goods.

In the late 1980s, LVMH (1987), Lifeng group (1988) and Kaiyun group (1988) were listed one after another. At this time, the return on investment of luxury companies has become an important indicator of their development.

LVMH's M & a development path is from clothing, boutique retail, cosmetics to watches and jewelry, from soft luxury to hard luxury. The hard luxury brand lineup represented by Tiffany is an important thrust for Arnold to become the richest man.

In order to strengthen the traditional business such as fashion and leather goods and enhance the company's operation ability, LVMH entered the field of jewelry and watches by acquiring TAG Heuer at the end of the 20th century, and strengthened the Department after the financial crisis to realize the layout from soft luxury to hard luxury.

Jewelry and watches are hard luxury goods, and customers are concentrated in high net worth people. They have different cyclical characteristics from soft luxury goods (mainly fashion and leather goods, weak periodicity, strong seasonality, limited quantity of each item and fast turnover of inventory). The diversified business layout is conducive to LVMH's business risk elimination.

After two rounds of integration, LVMH's jewelry and watch business has gradually become the third largest in the industry. The biggest boost behind this came from the acquisition of Bvlgari in 2011.

Bvlgari consolidated the statement on June 30, 2011, which directly promoted the sales revenue of LVMH jewelry department to increase by 97.8%, and the proportion of revenue increased from 4.9% in 2010 to 10%.

Since then, LVMH has become one of the world's top jewelry and watch groups, and its growth momentum continues to this day. According to the data, except for the impact of China's market demand decline in 2014, the revenue and profit of LVMH jewelry division increased rapidly in other periods.

The gold Lord behind the small CK and temple library extends to Asia

In addition to traditional European hard luxury brands such as Bvlgari and Tiffany, LVMH's investment map has already gone deep into Asia, including Singapore's online brand Charles & Keith, luxury e-commerce Siku, shazhichuan outlets, Shanghai Shangjia center, etc.

These investments are mainly completed by LVMH's private equity funds.

In 2001, LVMH established l capital, a private equity fund and real estate investment institution. In 2016, LVMH merged with catterton, a US private equity firm, to become the world's largest consumer centric private equity firm. At present, it invests in the world through six platforms.

The following expressions are referred to as LV group funds.

LV funds in Asia to China, India, Southeast Asia and other emerging economies as the target market, mainly involved in fashion, beauty and health care, home accessories, boutique hotels, entertainment media and personal education and other fields.

In addition to hinga, Muchang, Maru Mei, Charles & Keith, India's largest international luxury goods distribution group, YG entertainment, Singapore Jade Restaurant, etc. In China, it also invested in royal jewelry, Heji group, sand boat, Siku, Welsh fitness, etc.

Most of the investment projects of LV fund in Asia are relatively mature, and they are the leading enterprises in various subdivisions. They mainly have the following commonalities: multi brand portfolio, especially in the field of fashion; certain retail network and channel foundation; clear equity structure and core competence.

For these enterprises, LV fund is relatively direct, relying on LVMH department store resources to help them expand channels.

Secondly, it plays a role in overseas M & A of the invested brands, such as the acquisition of Miss Sixty by Heji and the joint venture with superdry.

In addition, we will give help to the design and supply chain management personnel.

Taking Charles & Keith as an example, we can clearly understand the investment logic of LV funds. In 2011, LV fund acquired 20% shares of Charles & Keith, and then helped the brand enter China.

As for the direct location of shopping centers in Shanghai, it can pay for the rapid expansion. At the same time, pay attention to brand building, positioning young, fashionable, direct marketing instead of franchise, shop design simple.

The products have also expanded from handbags to accessories such as shoes, belts, sunglasses, etc., and they are combined differently in different markets. For example, there are many seasonal products in Europe and the United States, and the proportion of shoes and bags in China is generally 50%.

So far, according to the official website of Charles & Keith, it has 286 stores in the mainland, occupying the gold business areas of major cities, known as "Zara of shoe industry", and is deeply sought after by young people.

Big Mac group emerged in the whole industry chain

LVMH, through its private equity funds, not only has opened up the brand end and the place side, but also formed a giant group which covers all aspects of fashion consumption horizontally and creates a complete value chain of "raw material design production retail".

Through the merger and acquisition of upstream suppliers and the integration of various brand production systems, LVMH can not only reduce production costs, ensure product quality, but also curb the source of raw materials of competitors.

Recently, LVMH acquired a minority stake in Italian Tanner masoni industria concaria spa through its LVMH m é tier d'art (process) division. This department is responsible for investing and supporting the group's supply chain to ensure that its brands have access to the best quality raw materials.

For the control of downstream sales channels, terminal control can be achieved, and the core competitiveness of high-end consumer goods - good sales service and customer experience can be improved.

Here are some of the channels owned by LVMH group:

DFS: the largest duty-free shop operator in the world;

Sephora: cosmetics chain store, which gathers LVMH's major cosmetics brands, and also cooperates with cosmetics giants such as L'Oreal, Gauss and Procter & Gamble;

Sand boat: LV fund, jointly invested with Warburg Pincus investment group in 2015, is one of the largest outlets developers and operators in China. Xinhe, GXG and other ships were stationed in the sand;

At the beginning of 2007, the only luxury real estate company under sun yat-a, which invested $500 million with MHL real estate group, was the only luxury real estate company to invest in. After LVMH sold the shares, Angie Leung became the sole holder of Shangjia center;

Siku: a well-known luxury e-commerce in China, LV fund jointly invested US $175 million with JD in 2018.

The LVMH industry chain is supported by multi-level capital operation.

Within LVMH group, the function of industrial fund is to help the group achieve brand incubation, new model test, regional expansion and obtain financial benefits through financial investment and strategic investment. This is also the ultimate goal of LV fund.

But it is not limited to this. Taking sand boat as an example, we can further observe the capital operation ability of LVMH. In March 2018, as the first outlets real estate investment trust in Asia, REITs was officially listed on the Singapore Stock Exchange.

The total area of its in Chongqing and Hefei is about RMB 0.4 billion, with a total area of about RMB 0.4 billion. The project adopts two modes of international placing and public offering in Singapore. The issuing currency is SGD, with a total market value of about S $1 billion.

Above, it is not difficult to see that LVMH group is a strong whole industry chain company in project, brand and finance. After all, only relying on the big logo bag, is not a world's richest man.