LVMH, the renowned French luxury conglomerate, has announced its plans for Christian Dior and Louis Vuitton to “slow down their growth” in the year 2024. During the presentation of LVMH’s annual results, chairman Bernard Arnault applauded the remarkable performance of the Fashion & Leather Goods division, which witnessed a 9% increase in revenue compared to the previous year, with a noteworthy organic growth of 14%. Arnault highlighted Christian Dior and Louis Vuitton as two of the largest brands in the soft luxury sector, alongside prestigious names such as Chanel, Hermès, Tiffany & Co., and Bulgari. He also acknowledged Cartier and Van Cleef & Arpels as competitors in the hard luxury segment.

Though LVMH did not disclose the individual performance of each house, it did indicate that Christian Dior Couture’s growth falls within the average of what is publicly disclosed. This suggests that the brand is aligning itself with the upward trajectory of the Fashion & Leather Goods industry, much like Louis Vuitton. Jean-Jacques Guiony, the group’s chief financial officer, underscored that LVMH’s historical organic growth rate over the past three decades has consistently been 9.1%, representing the desired level of growth.

At the annual results conference, the leaders of LVMH emphasized the importance of maintaining a reasonable growth rate of approximately 8 to 10%. This shift in perspective is in line with the current phase of normalization within the luxury market, following three years of post-Covid prosperity. In fact, Guiony had already emphasized the need for growth to stabilize in October of the previous year, stating that Dior cannot sustain a growth rate of 30% per annum indefinitely and that it must eventually stabilize. During the conference, Arnault further expressed that a maximum growth rate of 8-10% is “perfectly sufficient” and contributes to sustaining the brand’s desirability. This change in strategy prepares the groundwork for potentially less financially rewarding years ahead.

Arnault’s primary focus now lies in maintaining the allure of the brands, which he believes can be achieved through a well-balanced product mix rather than mere sales volume. LVMH’s growth strategy primarily relies on selling at a higher price point while marginally increasing volume. To support this shift, the conglomerate underwent significant reorganization at the beginning of this year. Delphine Arnault was appointed CEO of Christian Dior, Pietro Beccari assumed leadership at Louis Vuitton, and Michaël Burke became CEO of the LVMH Fashion Group, overseeing other prominent fashion houses under the conglomerate’s umbrella.

Arnault particularly commended the success of Dior collections by Maria Grazia Chiuri and the exquisite high jewelry created by Victoire de Castellane. Regarding Louis Vuitton, he described the brand as a unique business that places utmost importance on creating high-quality products, such as watches and perfumes, which have experienced significant growth despite being exclusively sold through the Vuitton retail network. The brand’s success has also been attributed to its steadfast dedication to refraining from offering discounts.

Looking ahead, LVMH’s flagship brand, Louis Vuitton, is expected to continue its development through new diversifications, although specific details have not been disclosed. Arnault hinted that any potential new categories they explore will remain on a small scale and will be kept confidential.

In summary, LVMH’s chairman Bernard Arnault has called for a slowdown in the growth of Christian Dior and Louis Vuitton in 2024. The conglomerate aims to maintain a reasonable growth rate of around 8 to 10%, with a strong emphasis on sustaining the desirability of their brands through a well-balanced product mix. With the recent appointments of new CEOs and a renewed focus on crafting high-quality products, LVMH is preparing for a potentially less fruitful period while striving to uphold the remarkable success of its iconic brands.

Useful links:
1. Forbes – Is LVMH’s Call for Slowing its Growth a Warning About the Fragility of the Luxury Market?
2. Vogue Business – LVMH Makes Changes to Its Executive Leadership Roles