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Luckily Louis Vuitton is a publicly traded company, so we can see that its average profit margin is actually only 12%. Rule of thumb says that a company needs

Luckily Louis Vuitton is a publicly traded company, so we can see that its average profit margin is actually only 12%. Rule of thumb says that a company needs a 10% margin to be considered healthy. This suggests that while they are in a good place at current wages, there isn't a whole lot of wiggle room. People will take anything if you give it away for free, but it is doubtful that their products would still remain desired by the customers if wages went up and they retained a healthy margin. Fashion products aren't exactly inelastic.

lossolo 3y ago
> Luckily Louis Vuitton is a publicly traded company, so we can see that its average profit margin is actually only 12%. It's not 12%, it's 18% as a whole company. 12% is 20 year average. Louis Vuitton owns many companies, I'm specifically talking about bags but you also have things like: > LVMH Moët Hennessy - Louis Vuitton Société Européenne's operated at median gross profit margin of 66.6% from fiscal years ending December 2018 to 2022. Looking back at the last 5 years, LVMH Moët Hennessy - Louis Vuitton Société Européenne's gross profit margin peaked in June 2023 at 68.7%. 68.7%... > LVMH doesn't break out individual brands' financial results, but analysts say Vuitton's profit margin came in at around 50% last year[1] [1] https://www.wsj.com/articles/louis-vuitton-bernard-arnault-abloh-kusama-revenue-richest-person-d0c2c7f2 https://www.wsj.com/articles/louis-vuitton-bernard-arnault-a...
- randomdata 3y ago
  > It's not 12%, it's 18% as a whole company. 12% is 20 year average. So, 12%. Got it. One successful year doesn't paint much of a picture. Especially when you remember that employees don't usually take pay cuts when business is not doing so well. In many jurisdictions, it is even illegal to see employee pay cuts. > I'm specifically talking about bags General coffers. Even if the margins really are 90% on bags, they're losing money elsewhere. That money is gone no matter how you slice it. They don't magically still have it to offer the workers. Business is hard. > but analysts say Vuitton's profit margin came in at around 50% last year Gross margin, yes. There is more to running a business than COGS, however. Especially a business of their nature.
  - lossolo 3y ago
    > So, 12%. Got it. It's 50% more compared to that number. And for last 5 years it was only going up, it's not one successful year. So it's not 12%. Got it? I don't know of anyone talking about margins and talking about 20 years average, they had 0% in 2001, it's counted in that ~20 years, don't you see how stupid this is to include that into discussion? profit margins from 20 years ago. Labor and material are the lowest costs on bags, highest is marketing. Why I need to pay more to workers if I can build new corporate HQ? When I can pay for bonuses of people at the top? or get ~20% profit. I have 50% of the company profits anyway and I make all the decisions[1]. You want me to tell that he (Bernard Arnault) can't pay people that make these bags more because he don't have money? come on, this is such a naive view. Some products/industries indeed can't but this is not one of them, software also with average of 25-30% NET profit margins. 1. At the end of 2017, the only declared major shareholder in LVMH was the Arnault Family Group, the holding company of Bernard Arnault. The group's control amounted to 46.84% of LVMH's stock and 63.13% of its voting rights.
    - randomdata 3y ago
      > I don't know of anyone talking about margins and talking about 20 years average You can't forget the past. Louis Vuitton aside, it is well understood that even wildly successful businesses haemorrhage money for the first 5-10 years before reaching profitability. You're saying that as soon as a business does reach profitability, all the excess profit should go to the workers, even when they haven't asked for it, and not pay back the lost opportunity? If so, why would anyone take the risk? > Labor and material are the lowest costs on bags, highest is marketing. Indeed. As you recognize this, and as marketing is not included in COGS, I find it strange that you pointed to their gross profit margin earlier. What was meant to be the significance of that? > You want me to tell that he (Bernard Arnault) can't pay people that make these bags more because he don't have money? He did pay them more. Said workers went on strike last year because they wanted more, and shortly thereafter he responded by paying them more... Ask and you shall receive, as they say. What are you expecting, exactly? Is it that you are appalled that workers have to make it known how much they expect to be paid? Do you want Bernard to walk the streets and surprise offer $100 bills to random passers-by? If so, what about you? Everyone on HN can spare a a few hundred dollars (you couldn't afford to be here otherwise), and more likely, given how much the audience is generally worth, can spare tens, even hundreds, of thousands of dollars. How many $100 bills did you unsolicitedly hand out today? Or are you one of those people who never pays more than the asking price even though you can afford to pay more?

lossolo 3y ago

> Luckily Louis Vuitton is a publicly traded company, so we can see that its average profit margin is actually only 12%. It's not 12%, it's 18% as a whole company. 12% is 20 year average. Louis Vuitton owns many companies, I'm specifically talking about bags but you also have things like: > LVMH Moët Hennessy - Louis Vuitton Société Européenne's operated at median gross profit margin of 66.6% from fiscal years ending December 2018 to 2022. Looking back at the last 5 years, LVMH Moët Hennessy - Louis Vuitton Société Européenne's gross profit margin peaked in June 2023 at 68.7%. 68.7%... > LVMH doesn't break out individual brands' financial results, but analysts say Vuitton's profit margin came in at around 50% last year[1] [1] https://www.wsj.com/articles/louis-vuitton-bernard-arnault-abloh-kusama-revenue-richest-person-d0c2c7f2 https://www.wsj.com/articles/louis-vuitton-bernard-arnault-a...

randomdata 3y ago
> It's not 12%, it's 18% as a whole company. 12% is 20 year average. So, 12%. Got it. One successful year doesn't paint much of a picture. Especially when you remember that employees don't usually take pay cuts when business is not doing so well. In many jurisdictions, it is even illegal to see employee pay cuts. > I'm specifically talking about bags General coffers. Even if the margins really are 90% on bags, they're losing money elsewhere. That money is gone no matter how you slice it. They don't magically still have it to offer the workers. Business is hard. > but analysts say Vuitton's profit margin came in at around 50% last year Gross margin, yes. There is more to running a business than COGS, however. Especially a business of their nature.
- lossolo 3y ago
  > So, 12%. Got it. It's 50% more compared to that number. And for last 5 years it was only going up, it's not one successful year. So it's not 12%. Got it? I don't know of anyone talking about margins and talking about 20 years average, they had 0% in 2001, it's counted in that ~20 years, don't you see how stupid this is to include that into discussion? profit margins from 20 years ago. Labor and material are the lowest costs on bags, highest is marketing. Why I need to pay more to workers if I can build new corporate HQ? When I can pay for bonuses of people at the top? or get ~20% profit. I have 50% of the company profits anyway and I make all the decisions[1]. You want me to tell that he (Bernard Arnault) can't pay people that make these bags more because he don't have money? come on, this is such a naive view. Some products/industries indeed can't but this is not one of them, software also with average of 25-30% NET profit margins. 1. At the end of 2017, the only declared major shareholder in LVMH was the Arnault Family Group, the holding company of Bernard Arnault. The group's control amounted to 46.84% of LVMH's stock and 63.13% of its voting rights.
  - randomdata 3y ago
    > I don't know of anyone talking about margins and talking about 20 years average You can't forget the past. Louis Vuitton aside, it is well understood that even wildly successful businesses haemorrhage money for the first 5-10 years before reaching profitability. You're saying that as soon as a business does reach profitability, all the excess profit should go to the workers, even when they haven't asked for it, and not pay back the lost opportunity? If so, why would anyone take the risk? > Labor and material are the lowest costs on bags, highest is marketing. Indeed. As you recognize this, and as marketing is not included in COGS, I find it strange that you pointed to their gross profit margin earlier. What was meant to be the significance of that? > You want me to tell that he (Bernard Arnault) can't pay people that make these bags more because he don't have money? He did pay them more. Said workers went on strike last year because they wanted more, and shortly thereafter he responded by paying them more... Ask and you shall receive, as they say. What are you expecting, exactly? Is it that you are appalled that workers have to make it known how much they expect to be paid? Do you want Bernard to walk the streets and surprise offer $100 bills to random passers-by? If so, what about you? Everyone on HN can spare a a few hundred dollars (you couldn't afford to be here otherwise), and more likely, given how much the audience is generally worth, can spare tens, even hundreds, of thousands of dollars. How many $100 bills did you unsolicitedly hand out today? Or are you one of those people who never pays more than the asking price even though you can afford to pay more?