LVMH MOËT HENNESSY LOUIS VUITTON — EXECUTIVE MEMO
"Navigating Luxury's Uncertain Future: The Arnault Succession Challenge"
To: Board of Directors From: Office of the Chief Executive Date: June 2030
LVMH faces a strategic inflection point. The AI disruption has proven less destructive to luxury consumption than feared, but it has accelerated structural challenges in consumer demographics and brand positioning that threaten our historical growth trajectory.
Key Decision: Should we aggressively pursue ultra-luxury premiumization (Option B) or invest heavily in digital transformation to capture younger consumers (Option C)? These strategies are fundamentally incompatible.
CURRENT STATE
Revenue: €105B (3.2% CAGR since 2025) Operating margin: 29% (down from 32% in 2025) EBITDA: €37B Free cash flow: €8-9B annually Debt-to-EBITDA: 0.8x
We remain financially strong but growth is decelerating. This is not sustainable long-term.
STRATEGIC DECISION REQUIRED
Option A: Accept Maturity (Low risk, low reward) - Operate as mature cash generator - 2-3% revenue growth target - Dividend yield: 2-2.5% - Valuation: 18-20x P/E
Option B: Ultra-Luxury Premiumization (Higher risk, higher reward) - Focus exclusively on $100M+ net worth individuals - Increase prices 5-8% annually - Reduce distribution/volume - Revenue potential: stagnation/slight decline, but margin expansion to 34-36% - Valuation: 22-25x P/E
Option C: Digital Transformation (Highest risk, uncertain reward) - Invest €3-5B over 5 years in digital-native initiatives - Acquire or build younger-skewing brands - Modernize heritage positioning - Revenue potential: 4-5% CAGR, margins compress to 26-28% - Valuation: 20-24x P/E
Recommendation: Pursue hybrid of Option B and selective Option C: - Focus brand portfolio on ultra-luxury and accessible luxury (divest confused middle) - Aggressive pricing on heritage brands for ultra-wealthy - Targeted investment in digital-native brands for younger cohorts - Accept that growth will be 2-3% overall but high-margin
BOARD DECISIONS REQUIRED
- Brand portfolio rationalization (divest Givenchy and weak performers)
- Aggressive pricing guidance (5-7% annual increases on core brands)
- M&A budget for younger-skewing brands (€2-3B over 3 years)
- Accept 2-3% long-term growth guidance and adjust dividend policy accordingly
Confidential board memo