As a brand on the cutting edge, LVMH was always looking to create or incorporate the next big thing into their product line. In 2022, with sustainable materials becoming a focal point of consumer demand, LVMH launched an initiative to partner with Fendi, Imperial College London, and Central Saint Martins, UAL, to develop a prototype for new regenerative bio-textiles. The research initiative aims to create textiles capable of recreating types of animal wear, including fur, in an effort to better protect the planet. "The LVMH Life 360 environmental strategy integrates a research and innovation program dedicated to sustainable luxury: inventing new materials, new regenerative practices, and new technologies will enable our Maisons to achieve their climate and biodiversity ambitions," said Helene Valade, Environmental Development Director of LVMH.1

The initiative came on the heels of a big merger for LVMH. Late in 2020, LVMH finally closed a deal to acquire Tiffany & Company, the American jeweler famed for its duck egg blue boxes and diamond engagement rings.2 The decision to acquire Tiffany had first been announced in November 2019, but the French luxury giant grew increasingly nervous about the transaction, as the pandemic devasted sales of luxury goods. LVMH threatened to abandon the takeover, but finally agreed to complete the purchase at a price slightly lower than the $16 million originally settled upon.

Bernard Arnault, CEO of LVMH, has long been considered the most aggressive and acquisitive deal maker in the luxury business. By 2018, he had swept through much of Europe snapping up brands in the soft luxury sector such as Givenchy, Kenzo, Christian Dior, and Loro Piana. At the same time, he was building up his extensive portfolio of fine wines and spirits such as Don Perignon, Moet Chandon, and Veuve Cliquot.

Through the addition of Tiffany to its portfolio, LVMH would gain a bigger foothold in the United States, according to LVMH executives, as well as expose Tiffany to more consumers in Europe and Asia. Tiffany had experienced some difficulties in recent years, as it struggled to turn around falling sales. But under the stewardship of its current chief executive, Alessandro Bogliolo, and artistic director Reed Krakoff, it had turned its fortunes around, fueled by revamped product offerings and savvy marketing campaigns targeting younger consumers. The company had also invested in a face-lift for its landmark Fifth Avenue flagship store in New York.

The acquisition of Tiffany, which Arnault had coveted for years, would consolidate LVMH's position as a major player in the hard luxury sector, an industry label given to watches and jewelry. It would double the size and profitability of its portfolio in this category, which includes brands like Bulgari, Chaumet, Hublot, and Tag Heuer and accounts for roughly 8.25 percent of LVMH sales. Arnault declared that under LVMH, Tiffany would thrive for centuries to come.

Assembling a Luxury Portfolio LVMH was created in 1987 in Paris, France, through the merger of Louis Vuitton, the upscale luggage company and Moet Hennessy, a leading producer of champagne and cognac. The merger created what the French press called a dashing kind of corporate animal: the first real world-scale multinational in top-of-the-line luxury goods. Determinedly French in both product offerings and management style, LVMH with one bold move redefined a bunch of small and fragmented industries into a coherent and growing sector.

Over the next fifteen years, LVMH expanded into new areas and continued to add luxury brands. It moved into fashion with Givenchy, perfumes with Guerlain, jewelry with Fred, shoes with Berluti, and watches with Tag Heuer. It eventually moved into selective retailing with the acquisition of Sephora. By 2020, LVMH had amassed 75 prestige brands that were managed independently under the umbrella of five different houses (see Exhibit 1).

EXHIBIT 1 Selected LVMH Houses Wines and Spirits Dom Perignon, Moet & Chandon, Hennessy, Veuve Clicquot Fashion & Leather Louis Vuitton, Fendi, Givenchy, Christian Dior, Kenzo Perfumes & Cosmetics Guerlain, Acqua Di Parma, Christian Dior, Givenchy, Kenzo Watches & Jewelry Tag Heuer, Bulgari, Hublot, Chaumet, Tiffany and Co. Selective Retailing Sephora, Rive Gauche, Le Bon MarchEXHIBIT 2 Income Statement (in millions EUR except for per share) A table summarizes the revenue, gross margin, profit from recurring operations, operating profit, net financial income or expense, net profit before minority interests, net profit in group share, basic group share of net earnings per share, and diluted group share of net earnings per share, of LVMH, during the years, 2019, 2020, and 2021, respectively. 2021 2020 2019 Revenue 64,215 44,651 53,670 Cost of sales (20,355) (15,871) (18,123) Gross margin 43,860 28,780 35,547 Marketing and selling expenses (22,308) (16,792) (20,207) General and administrative expenses (4,414) (3,641) (3,864) Income/(loss) from joint ventures and associates 13 (42) Profit from recurring operations 17,151 8,305 11,504 Other operating income and expenses 4 (333) (231) Operating profit 17,155 7,972 11,273 Cost of net financial debt 41 (35) (107) Interest on lease liabilities (242) (281) (290) Other financial income and expenses 254 (292) (162) Net financial income/(expense) 53 (608) (559) Income taxes (4,510) (2,409) (2,932) Net profit before minority interests 12,698 4,955 7,782 Minority interests (662) (253) (611) Net profit, Group share 12,036 4,702 7,171 Basic Group share of net earnings per share (EUR) 23.90 9.33 14.25 Number of shares on which the calculation is based 503,627,708 503,679,272 503,218,851 Diluted Group share of net earnings per share (EUR) 23.89 9.32 14.23 Number of shares on which the calculation is based 503,895,592 504,210,133 503,839,542EXHIBIT 3 Balance Sheet (in billions EUROS) 2021 2020 2019 ASSETS (EUR millions) Brands and other intangible assets 24,551 17,012 17,212 Goodwill 25,904 16,042 16,034 Property, plant and equipment 20,193 18,224 18,533 Right-of-use assets 13,705 12,521 12,409 Investments in joint ventures and associates 1,084 990 1,074 Non-current available for sale financial assets 1,363 739 915 Other non-current assets 1,054 845 1,546 Deferred tax 3,156 2,325 2,274 Non-current assets 91,010 68,698 69,997 Inventories and work in progress 16,549 13,016 13,717 Trade accounts receivable 3,787 2,756 3,450 Income taxes 338 392 406 Other current assets 5,606 3,846 3,264 Cash and cash equivalents 8,021 19,963 5,673 Current assets 34,301 39,973 26,510 Total assets 125,311 108,671 96,507 LIABILITIES AND EQUITY (EUR millions) Equity, Group share 47,119 37,412 36,586 Minority interests 1,790 1,417 1,779Equity 48,909 38,829 38,365 Long-term borrowings 12,165 14,065 5,101 Non-current lease liabilities 11,887 10,665 10,373 Non-current provisions and other liabilities 3,980 3,322 3,812 Deferred tax 6,704 5.481 5,498 Purchase commitments for minority interests' shares 13,677 10,991 10,735 Non-current liabilities 48,413 44,524 35,519 Short-term borrowings 8,075 10,638 7,610 Current lease liabilities 2,387 2,163 2,172 Trade accounts payable 7,086 5,098 5,814 Income taxes 1,267 721 722 Current provisions and other liabilities 9.174 6,698 6,305 Current liabilities 27,989 25,318 22,623 Total liabilities and equity 125,311 108,671 96,507EXHIBIT 4 Revenue Breakdown by Branches {in millions EUR} 1021 2020 2019 Wines and Spirits Revenues Operating Income Fashion and Leather Goods Revenues Operating Income Perfumes and Cosmetics Revenues Operating Prot Watches and Jewelry Revenues Operating Profit Selective Retailing Revenues Operating Prot