Chairman’s message

TAKING A LONG VIEW

In 2016, amid economic and geopolitical uncertainties, our Group delivered record results. The creativity of our Maisons, the quest for excellence that inspires them, and their entrepreneurial spirit are the keys to our success.

Once again in 2016, strong creative momentum across each of the Group’s businesses helped LVMH achieve a new year of growth. The exceptional performances of Louis Vuitton, Fendi and Moët Hennessy, Christian Dior’s new market share gains in fragrances, TAG Heuer’s return to robust growth, and Sephora’s steady advances as it consolidates its position as the top selective beauty retailer in the United States: these are just some of the achievements made possible by the commitment and talent of our teams.

2016: A year replete with new projects and investments

In 2016, the Group reaffirmed its ambition to be at the forefront of innovation and creativity. Louis Vuitton continues to demonstrate its talent for reinventing itself and creating surprises. The announcement of a collection of fragrances, after a seventy-year pause, was one of the year’s most highly anticipated events. Louis Vuitton lived up to its promise, with the passion for perfection that imbues everything it does. The new fragrances were an immediate success, rapidly attracting a strong following despite only being available in Louis Vuitton stores.
In the fall of 2016, coinciding with this launch, both Christian Dior’s and Louis Vuitton’s Master Perfumers set up their creative ateliers in Grasse, the undisputed capital of perfume, at Les Fontaines Parfumées. This newly restored jewel allows our perfumers to work even more closely with rose and jasmine producers, and represents a new phase in the quest for excellence of our perfume houses, while enhancing the economic vitality of this exceptional region.
Bvlgari has also inaugurated a new jewelry manufacturing facility in the northern Italian town of Valenza, combining artisanal excellence with the latest advances in technology and environmental performance, and giving it the production capacity to meet its growth plans.
In Wines and Spirits, Ao Yun’s first vintage, made in the Himalayan foothills, has crowned years of research to bring an audacious dream to reality. The singular qualities of this terroir and its expert, highly talented winemaking team leave no doubt that Ao Yun has what it takes to become China’s finest wine.
Last but not least, we welcomed Rimowa into our Fashion and Leather Goods business group. Renowned worldwide for the quality, innovative spirit and design of its premium luggage, Rimowa – a jewel in that class of robust, dynamic, family-owned businesses known as the Mittelstand – thus becomes our first German Maison.

Continuity to secure the future

Innovation was a core focus for all our businesses in 2016, but so was continuity, an essential investment for the future of our Maisons. Under the aegis of the Institut des Métiers d’Excellence (IME), our professional training organization dedicated to passing down our expertise to younger generations, which currently has several hundred apprentices, we created a new watchmaking program, the École d’Horlogerie LVMH. We take particular pride in the IME’s accomplishments: many of its apprentices obtain the most coveted professional distinctions in their fields, and it is also a valuable talent pool for our Maisons.
At Hennessy, the Master Blender – a member of the same Cognac family that has served in this position for seven generations – will soon hand the reins over to his nephew, after an exceptional career. As he steps into his predecessor’s shoes, the new Master Blender gains privileged access to Hennessy’s wealth of knowledge about eaux-de-vie, spanning more than two centuries. He will be continuing this long tradition, the art of selecting and blending that gives Hennessy a style all its own.
Sharing and transmission were also the key threads tying together the third edition of our Journées Particulières open days. This event, during which access was provided to more than 50 sites that are usually closed to the public, enjoyed unprecedented popularity. We are pleased to have welcomed over 145,000 visitors to our workshops, allowing them to discover some of the treasures of our heritage and the virtuosity of our artisans, to attend fascinating talks and demonstrations given by creative team members, even acquiring hands-on experience in some of the techniques used in our professions. They thereby gained an understanding from the inside of the passion, talent and creativity driving all of the women and men behind our Group’s success, and have no doubt taken away some extraordinary memories.

A decisive step for the Fondation Louis Vuitton’s artistic project

Lastly, I would like to mention two major accomplishments by the Fondation Louis Vuitton during the year. The first of these was Observatory of Light, an installation by Daniel Buren, who offered an in-situ celebration of color over the building’s glass sails, conceived in intimate dialogue with Frank Gehry’s architectural language. The second was Icons of Modern Art: The Shchukin Collection, a landmark event paying tribute to one of the greatest collectors of the early 20th century, a visionary and exemplary patron of the art of his time, whose approach finds deep resonance with the Fondation Louis Vuitton’s artistic project. The Shchukin Collection set a new attendance record for exhibitions in France, attracting more than 1,200,000 visitors in just over four months, indisputably placing the Fondation Louis Vuitton among the world’s foremost cultural institutions.
In this same vein, I put forward a proposal, which has been accepted by the City of Paris, for another major cultural project: to convert the former Musée National des Arts et Traditions Populaires, located near the Fondation Louis Vuitton, into a center for craftsmanship, art and live performance. Frank Gehry will be giving this building designed by Jean Dubuisson a new lease on life.

Prudence and determination for 2017

Despite strong global demand, geopolitical and monetary uncertainties are a significant part of the picture in early 2017. We are therefore viewing the coming months with prudence. There is a clear risk that the world economy will not be able to avoid a serious crisis in the coming months or years, given the imbalances of all kinds it currently faces. But come what may, we can count on the financial strength of LVMH, the appeal of our brands, and the agility of our teams to face the future head-on and further consolidate our global leadership position.

A forward-looking group

LVMH is driven by its long-term vision. All of our avenues for progress – strengthening our supply chains and reinforcing our commitment to protect natural resources; attracting young, creative and talented individuals and giving them the means to fully realize their potential; exploring and conquering new realms in the digital economy; inventing the customer experience of tomorrow – as distinct from any unexpected obstacles that may appear in our paths, depend on the efforts of everyone, throughout the Group. Our teams have their sights set on the future as they continue to focus on the values that have built LVMH’s success and that guarantee the longevity of our Maisons.
LVMH is a group with a family spirit. Creativity and innovation are central to everything we do. We are committed to continuing the artisanal traditions that form the cornerstone of all our Maisons. LVMH also aims to ensure that its development remains as sustainable as possible.
Taking a long view – that’s what the LVMH Group is all about.

Bernard Arnault
Chairman and Chief Executive Officer