LVMH Annual Report

201 8 ANNUAL REPORT Passionate about creativity

Passionate about creativity

WHO W E A R E

A creative universe of men and women passionate about their profession and driven by the desire to innovate and achieve. A globally unrivalled group of powerfully evocative brands and great names that are synonymous with the history of luxury. A natural alliance between art and craftsmanship, dominated by creativity, virtuosity and quality. A remarkable economic success story with more than 156,000 employees worldwide and global leadership in the manufacture and distribution of high-quality products. A global vision dedicated to serving the needs of every customer. The successful marriage of cultures grounded in tradition and elegance with the most advanced product presentation, industrial organization and management techniques. A singular mix of talent, daring and thoroughness in the quest for excellence. A unique enterprise that stands out in its sector.

Our philosophy: passionate about creativity

LV MH VA LU E S

I N N OVAT I ON A N D C R E AT I V I T Y Because our future success will come from the desire that our new products elicit while respecting the roots of our Maisons.

E XC E L L E N C E O F P RODU C T S A N D S E RV I C E Because we embody what is most noble and quality-endowed in the artisan world.

E N T R E P R E N E U R S H I P Because this is the key to our ability to react and our motivation to manage our businesses as startups.

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Fondation Louis Vuitton. #MyFLV architecture photography competition.

T H E LV MH G ROU P

Chairman’s message

06

Interview with the Group Managing Director

12

Governance and organization Our Maisons and business groups Performance and responsibility

14

16

18

Key figures and strategy Commitments in 2018

20

22

Talent

30

Environment

34

Corporate philanthropy

38

Ethics and responsible partnerships

42

BU S I N E S S G ROU P I N S I GH T S

Wines & Spirits

46

Fashion & Leather Goods Perfumes & Cosmetics

56

66

Watches & Jewelry Selective Retailing

76

86

LV MH S T OR I E S P E R FOR MA N C E M E A S U R E S

96

Stock market performance measures Financial performance measures Non-financial performance measures

130

132

134

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INSPIRING DREAMS

T O U N D E R S TA N D LV MH , YOU H AV E T O LOOK B E YON D T H E F I G U R E S . OU R G ROU P ’ S P E R F OR MA N C E I S A B OV E A L L T H E C ON S E QU E N C E O F OU R LON G -T E R M V I S I ON .

LVMH 2018 . C h a i r m a n ’s m e s s a g e

A shared passion to achieve and inspire drives all our Maisons, and thrives within each of them. It is reflected in themyriadways they blend traditionwithmodernity, and excellence with responsibility. They all have a single ambition: to evoke emotion and imagination with artisanal products that are ever more beautiful, exquisitely crafted, and unique.

ANOTHER RECORD YEAR FOR LVMH

LVMH scaled new heights in 2018: our revenue exceeded €46 billion, up 10%, while profit from recurring operations crossed the €10 billion mark, up 21%. This excellent perfor- mance, to which all our business lines contributed, was buoyed by momentum in each of the regions where we operate. In particular, Asia and the United States saw strong growth, because the creativity and quality of our products, along with the unique in-store and online shopping experience we offer our customers, resonate especially well in those markets. The year’s many successes are testament to the tremendous vitality of our Maisons: the remarkable performance of our champagne Maisons’ cuvées de prestige, exceptional grape harvests in terms of both quality and quantity, Hennessy’s strong growth, Louis Vuitton’s continued series of triumphs, Christian Dior’s very strong first year as part of LVMH, creative renewal at Celine and in Menswear for Louis Vuitton, Dior and Berluti, the enthusiastic reception for Parfums Christian Dior’s innovations, Bvlgari’s new market share gains, Sephora’s enriched offering and innovative services, Rimowa’s bold collaborations with designers… These are the successes that reinforced our leadership position in the global luxury market in 2018.

DESIRABLE BRANDS, TRUE TO THEIR HERITAGE

This leadership position has been achieved thanks to LVMH’s roots and heritage. Our Group is essentially a collection of family brands with remarkable histories and identities that provide endless sources of inspiration. In 2018, for example, Louis Vuitton continued to successfully revisit its iconic handbags, while Christian Dior reinterpreted the Toile de Jouy patterns that have been a feature of the Maison since its beginnings. Every season, Guerlain, Loro Piana, Bvlgari and Fendi develop original creations inspired by their rich heritage. There is something eternal about all our Maisons. They draw on their impressive

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legacy to continue to build their place in history. The terroirs and wines of Dom Pérignon, Château d’Yquemand Château Cheval Blanc aremade to stand the test of time. Belmond, the prestige hotel group with which we signed an acquisition agreement in 2018, also boasts fantastic properties, names and places that dreams are made of, including Venice Simplon-Orient-Express, Cipriani, and Copacabana. But the dreams that LVMH inspires do not only pay tribute to the past. We also know how to invent the future, starting afresh with entirely new projects like the hugely successful cosmetics brand Fenty Beauty by Rihanna, which burst onto the scene just two years ago.

ENTREPRENEURIAL SPIRIT

Another factor behind the power and performance of our Group is the talent and passion of our teams: around the world, employees at our Maisons are all driven by the same commitment. Designers, artisans, executives, store managers, researchers… These are the Group’s lifeblood. Our decentralized organization means that we can attract and retain the best talent, encouraging our employees to give free rein to their entrepreneurial spirit. In 2018we also stepped up our collaborationswith startups, which are sources of inspiration for us. As well as taking part in Viva Technology and organizing the LVMH Innovation Award, we launched La Maison des Startups LVMH at Station F, the world’s biggest startup incubator. Working alongside startups helps keep us up to date with the latest innovations. In-house development programs allow our most inventive employees to turn their new ideas into concrete projects. It is in this richly diverse entrepreneurial environ- ment, bringing together different generations, backgrounds and perspectives, that our people are giving shape to the LVMH of tomorrow. Another reason why LVMH can continue to expand, allowing its Maisons to carry on inspiring dreams, is that we have always prepared for the future: year after year we consolidate our foundations, laying the groundwork for new developments. In 2018 our Group ramped up its production capacity tomeet ever-growing demand. The bulk of our investment was in France. After opening production workshops in Allier in 2017 and in Vendée in 2018, Louis Vuitton inaugurated a new facility in Maine-et-Loire in early 2019 – the Maison’s 16th in France – and will open twomore in the comingmonths. Construction also continues at Veuve Clicquot’s newproduction site near Reims. The renovation project for La Samaritaine is well underway and its beautifully refurbished or newly created façades are gradually being revealed ahead of its opening, planned for 2020. Maintaining the desirability of our products therefore goes hand in hand with constant improvements in our production methods and our expert craftsmanship. Mastering this expertise is something we cherish: it ensures that our professions endure and that jobs can be created everywhere we operate. Naturally, we are pleased with and take pride in our results. But, most of all, we are proud of our Group’s deep roots in the French economy and in regions across France – through the investments it makes, the jobs it creates year after year, and its contribution to cultural life in Paris. In 2018, LVMH hired more than 13,000 people in France. We also crossed a symbolic threshold in 2018, investing over €1 billion in France. In addition, the Fondation Louis Vuitton has welcomed over 5 million visitors since it opened, and the Jardin d’Acclimatation reopened in 2018, after an extensive makeover. We are therefore proud of LVMH’s significant contribution to France’s economic development and cultural influence. Most of our products are made in France, carrying names beyond its borders, each one evoking the French art de vivre in the dreams of billions of women and men around the world. LVMH’S DEEP ROOTS IN FRANCE

LVMH 2018 . C h a i r m a n ’s m e s s a g e

A SENSE OF RESPONSIBILITY

As ambassadors of excellence, inspired by the continued success of our Maisons, we are also aware of the responsibility we have. The sustainability of our model is built on our exemplary approach to ethics and respect for our partners. Where the environment is concerned, we have already spent over 25 years working to preserve the shared heritage of rare and precious raw materials used to craft our products. Back in 1992, we took the lead by setting up an environment department. Today, more than ever, we are engaged in the protection of the environment, especially in the fight against climate change. For example, we have set ambitious 2020 goals for all our Maisons that concern their products, workshops and stores. It is also our responsibility to increase transparency in our supply chain and ensure that our practices reflect the highest standards of integrity and respect for our partners. Sharing our expertise is another key commitment. For example, we hand down expertise to younger generations through the Institut des Métiers d’Excellence LVMH, which by the end of 2018 had already trained 500 apprentices. And we support up-and-coming creative talent with the LVMH Prize for Young Fashion Designers, which has been showcasing the work of new and emerging designers every year since 2014. Lastly, we also promote and celebrate our artisanal expertise with a multitude of people during the Journées Particulières; the fourth edition of this event in 2018 was an unprec- edented success, with our artisans welcoming 180,000 visitors. In 2019, LVMHwill again demonstrate its strong focus on innovation. Further progress will be made on many existing projects as well as a number of new launches. Powered by their creative momentum, our Maisons will further refresh and enrich their iconic lines while maintaining the exquisite quality of their products. Retail is another growth driver for our products, which will be boosted by our increasingly customer-centric approach as we develop our brands. The growing use of digital technologies in our business activitieswill also enrich the customer experience that we offer, both online and in our physical stores. Over the last 20 years, in addition to its Maisons’ excellence, the Group has benefited from the general increase in living standards worldwide. This trend is set to continue in the years to come. Therefore, while I am watchful, I remain optimistic about the Group’s medium- and long-term outlook. For the short term, conditions at the beginning of this year are buoyant, but we will keep a close eye on developments in light of persistent geopolitical uncertainties. We are therefore cautiously optimistic for 2019 and have set ourselves the ambition of further strengthening our global leadership in high-quality products. CAUTIOUSLY OPTIMISTIC FOR 2019

Bernard Arnault Chairman and Chief Executive Officer

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Château Cheval Blanc

A W E A LT H O F OP P OR T U N I T I E S FOR T H E G ROU P ’ S TA L E N T A N D B R A N D S

ANTONIO BELLONI, GROUP MANAGING DIRECTOR

2018 was another record year for LVMH, which continues

The Group’s workforce has grown considerably, now total- ing more than 150,000 people: designers, winemakers, leather artisans, watchmakers, managers, salespeople and more. Their diverse range of talent, culture and experience is an exceptional asset for LVMH.

on its exceptional growth trajectory. What’s driving this ongoing success?

Beyond its business performance, a company is best defined by its achievements and the talent in its organi- zation. We are proud of our innovative, top-quality prod- ucts; our magnificent stores all over the globe; our workshops, where unique craftsmanship is combined with new technologies. Each of these achievements is a human adventure that requires ambition, creativity and perseverance. Each represents an opportunity for our teams to hone their talent, broaden their skills and add their signature to unique projects. This engagement is the key force driving the development of our Maisons and the desirability of our brands into the future. We cultivate a highly entrepreneurial mindset, which draws its vital energy from creativity, openness to the world and a desire for excellence – and our peoplemake the difference.

Success brings responsibility, which is also important to LVMH. Why is there a stronger focus on making progress in this area, today?

Like all companies, we have an important role to play in society, and a major responsibility as well. Our Group directly drives economic growth, innovation and job creation. But our impact goes further than that. Our rela- tions with the communities we work in and our suppliers; our partnerships with schools for the Institut des Métiers d’Excellence; our cultural initiatives, starting with the FondationLouisVuitton; our LIFEprogram, whichpromotes environmental best practices; our EllesVMH initiative,

LVMH 2018 . I n t e r v i e w w i t h t h e G r o u p M a n a g i n g D i r e c t o r

which supports women’s career development at every level of the organization; our work to promote social responsibility and inclusion… All these contributions are just as important. This wide-ranging social impact is important to our employees, who want to be proud to be part of LVMH. For our customers, a top-quality product is no longer enough: they also want to know about our Maisons’ values, and care about our corporatebehavior.We know there is room for improvement, and we are deeply committed tomoving forward and communicating trans- parently about our objectives and progress. Over the last few years our market has become highly fragmented. Customer journeys and purchasing habits havebecomemore complex. Now, inaddition tomagazines and other traditional media, our customers – especially young people – use a range of digital options to stay informed, communicate with friends and shop. Brand awareness and customer engagement are built on these many different touchpoints. Each one is an opportunity for our talented employees to express our Maisons’ unique values by accentuating our creativity and awakening more emotion. Sephora’s smart mirrors let customers try onmakeup using augmented reality. Moët Hennessy uses artificial intelligence tohelp customers create bespoke tast- ing experiences with their friends. At Guerlain Parfumeur stores customers can explore a vast universe of fragrances and emotions, using a digital perfume organ to craft their own signature scent… The possibilities are endless. Digital technology and innovation will continue to be harnessed for the benefit of our ideas and brands, creating value and enriching the customer experience. What can digital technologies bring to luxury brands, rooted in tradition?

Maison Louis Vuitton Vendôme.

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GOV E R NA N C E A N D ORGA N I Z AT I ON

THE RIGHTS OF LVMH SHAREHOLDERS ARE PROTECTED BY LAW AND THE PRINCIPLES OF CORPORATE GOVERNANCE WHICH GOVERN THE WAY THE GROUP OPERATES.

LVMH’s Board of Directors is the strategic body of the Company which is primarily responsible for enhancing the Company’s value and protecting its corporate inter- ests. It endeavors to promote long-termvalue creation by the Company, while notably accounting for the social and environmental issues pertaining to its activities. Its principle assignments are to approve the Company’s and the Group’s major strategies and supervise their implemen- tation; to verify the fair and accurate presentation of information about the Company and the Group; to pro- tect its corporate assets; and to ensure that core business risks are fully accounted for in the management of the Company. It also makes sure that systems are in place to prevent corruption and influence peddling, andpolicies are implemented to ensure non-discrimination and diversity – notably gender equality within the executive bodies. Lastly, it acts as guarantor with respect to the rights of each of its shareholders and ensures that shareholders ful ll all of their duties. In 2018, the Board of Directors approved the annual and interimparent company and consolidated financial state- ments, monitored quarterly business activity, and gave its opinion on: the Group’s key strategic directions and decisions, its budget, compensation of company officers, the implementation of bonus share and performance bonus share allocation plans, and the implementation of the share buyback plan. Lastly, it approved the plan to acquire Belmond Group.

There are three committees within the LVMH Board of Directors: – In 2018, the Performance Audit Committee reviewed the annual and interimparent company and consolidated financial statements in conjunctionwith a detailed analysis of changes in the Group’s activities and scope. The Com- mittee also worked on the following issues: internal audit; the Group’s internal audit policy and how the financial markets view the Group; the Group’s tax situation; and the transition to the new accounting standard, IFRS 16, from January 1, 2019. – In 2018, the Nominations and Compensation Commit- tee issued proposals on: the fixed and variable compen- sation and benefits in kind of the Chairman and Chief Executive Officer, and the Group Managing Director; the performance criteria pertaining to their variable com- pensation and of the respective weightings of these criteria; the allocation of performance bonus shares to these two people and the requirement to retain a portion of the shares that may be definitively allocated to them. It also provided opinions on the compensation, perfor- mance bonus shares, and benefits in kind attributed to certain members of the Board of Directors by the Com- pany or its subsidiaries. It delivered a favorable opinion on the appointment of a new female director to replace another female director who has resigned. – The Ethics and Sustainable Development Committee ensures compliance with the individual and shared values on which the Group bases its actions, which are detailed in the Code of Conduct as well as the other codes and charters resulting from this code. In 2018, the committee’s work includedmonitoring the compliance program imple- mented by the Group in connection with the Sapin 2 Act and the law on the duty of care for parent companies, in conjunction with the Ethics & Compliance Director.

Further information can be found in the 2018 Reference Document.

LVMH 2018 . G o v e r n a n c e a n d o r g a n i z a t i o n

BOARD OF DIRECTORS  (1)

EXECUTIVE COMMITTEE

Bernard Arnault Chairman and Chief Executive Officer Antonio Belloni

Group Managing Director Antoine Arnault (4) Delphine Arnault (6) Nicolas Bazire

Sophie Chassat (2)(3)  Bernadette Chirac (2) Charles de Croisset (2)(4)(5) Diego Della Valle (2) Clara Gaymard (2) Marie-Josée Kravis (2)(5) Lord Powell of Bayswater Marie-Laure Sauty de Chalon (2)(6) Yves-Thibault de Silguy (2)(4)(5)(6) Hubert Védrine (2)(6)

Bernard Arnault Chairman and Chief Executive Officer

Antonio Belloni Group Managing Director

Delphine Arnault Louis Vuitton Products

Advisory Board Member (1) Paolo Bulgari

Nicolas Bazire Development and Acquisitions

Pietro Beccari Christian Dior Couture

Michael Burke Louis Vuitton

General Secretary Marc-Antoine Jamet

Statutory Auditors Ernst & Young Audit represented by Jeanne Boillet and Patrick Vincent-Genod Mazars represented by Simon Beillevaire and Loïc Wallaert

Chantal Gaemperle Human Resources and Synergies

Jean-Jacques Guiony Finance

Christopher de Lapuente Sephora and Beauty

(1) As of December 31, 2018. (2) Independent Director. (3) Co-opted by the Board of Directors at its meeting on October 25, 2018. (4) Member of the Performance Audit Committee. (5) Member of the Nominations and Compensation Committee. (6) Member of the Ethics and Sustainable Development Committee.

Philippe Schaus Wines and Spirits

Sidney Toledano Fashion Group

Jean-Baptiste Voisin Strategy

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20TH CENTURY 1908 Les Échos 1916 Acqua di Parma 1923 La Grande Épicerie de Paris 1924 Loro Piana 1925 Fendi 1936 Dom Pérignon 1936 Fred 1944 Le Parisien-Aujourd’hui en France 1945 Celine

LVMH comprises 70 prestigious Maisons organized into six business groups.

Each Maison steadfastly preserves and perfects a long tradition of expertise and offers exceptional products.

1946 Christian Dior Couture 1947 Parfums Christian Dior 1947 Emilio Pucci 1952 Givenchy 1952 Connaissance des Arts 1957 Parfums Givenchy 1958 Starboard Cruise Services 1959 Chandon 1960 DFS 1969 Sephora 1970 Kenzo 1970 Cape Mentelle 1972 Parfums Loewe 1974 1976 Benefit Cosmetics 1977 Newton 1980 Hublot 1983 Radio Classique 1984 Thomas Pink 1984 Marc Jacobs 1984 Make Up For Ever 1985 Cloudy Bay 1988 Kenzo Parfums 1991 Fresh 1992 Colgin Cellars 1993 Belvedere 1998 Bodega Numanthia 1999 Terrazas de los Andes 1999 Cheval des Andes 2 1 ST CENTURY 2004 Nicholas Kirkwood 2008 Kat Von D 2009 Maison Francis Kurkdjian 2010 Woodinville 2013 AoYun 2017 Fenty Beauty by Rihanna

14TH CENTURY 1365 Le Clos des Lambrays 16TH CENTURY 1593 Château d’Yquem 18TH CENTURY 1729 Ruinart 1743 Moët & Chandon 1765 Hennessy 1772 Veuve Clicquot 1780 Chaumet 19TH CENTURY 1815 Ardbeg 1817 Cova 1828 Guerlain 1832 Château Cheval Blanc 1843 Krug 1843 Glenmorangie 1846 Loewe 1849 Royal Van Lent 1852 Le Bon Marché 1854 Louis Vuitton 1858 Mercier 1860 TAG Heuer 1860 Jardin d’Acclimatation 1865 Zenith 1870 La Samaritaine

Investir-Le Journal des Finances

1884 Bvlgari 1895 Berluti 1898 Rimowa

LVMH 2018 . O u r M a i s o n s a n d b u s i n e s s g r o u p s

OU R B U S I N E S S G ROU P S

WINES & SPIRITS

FASHION & LEATHER GOODS

PERFUMES & COSMETICS

Moët & Chandon, Krug, Veuve Clicquot, Hennessy, Château d’Yquem… the origins of all these world-famous estates are inextricably linked to the appellations and terroirs of the world’s most prestigious wines and spirits. Whether they are in Champagne, Bordeaux, or other famedwine regions, these Maisons, many of which date back more than a century, all share a powerful culture of excellence.

The Fashion & Leather Goods business group comprises Louis Vuitton, Christian Dior Couture, Celine, Loewe, Kenzo, Givenchy, Pink Shirtmaker, Fendi, Emilio Pucci, Marc Jacobs, Berluti, Nicholas Kirkwood, Loro Piana and Rimowa. While respecting the identity and autonomous management of these brands, LVMH supports their growth by providing themwith shared resources.

LVMH is a key player in the perfume, makeup and skincare sector, with a portfolio of world-famous French brands: Christian Dior, Guerlain, Givenchy and Kenzo. The Group also owns other beauty brands: Benefit, Fresh, Acqua di Parma, Parfums Loewe, Make Up For Ever, Maison Francis Kurkdjian, Fenty Beauty by Rihanna, Kat Von D and Marc Jacobs Beauty.

WATCHES & JEWELRY

SELECTIVE RETAILING

OTHER ACTIVITIES

The LVMHWatches & Jewelry Maisons are some of the most emblematic brands in the industry. They operate in jewelry and watches with Bvlgari, Chaumet, Fred, TAG Heuer, Hublot,

The Selective Retailing business group comprises Sephora, the world’s leading selective beauty retailer, Le Bon Marché, a Paris department store with a unique atmosphere, and travel retailers DFS and Starboard Cruise Services.

Other activities include Groupe Les Echos, which comprises leading French business and cultural news publications; Royal Van Lent, the builder of high-end yachts marketed under the brand name Feadship; and Cheval Blanc, the collection of exceptional hotels.

Zenith and Dior Montres. These Maisons are guided by a daily quest for excellence, creativity and innovation.

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LVMH 2018 . P e r f o r m a n c e a n d r e s p o n s i b i l i t y

A R E S P ON S I B L E MOD E L D E D I C AT E D T O E XC E L L E N C E

FORGED OVER GENERATIONS BY ALLIANCES BETWEEN MAISONS – WEAVING TOGETHER THEIR TRADITIONS OF EXCELLENCE AND CREATIVE PASSION – LVMH HAS BUILT ITS LEADING POSITION ON A UNIQUE PORTFOLIO OF ICONIC BRANDS.

Nurturing talent

These Maisons draw their energy from their exceptional heritage, innovative mindset and receptive outlook. The Group supports their development in a spirit of entrepre- neurship, long-term vision and respect for the source of their strength and stature. As ambassadors of an authentic art de vivre, it is our responsibility to set the right example in every aspect of our business, from product design to the experience that customers have throughout their relationships with our brands; from investment choices to social and environ- mental initiatives. Because what we do requires a diverse range of talent, we are committed to training teams that embody excellence. Because passing on skills is an inte- gral part of our culture, we want to use that opportunity to promote social inclusion and employment. Because our crafts make the most of nature at its purest and most beautiful, we see preserving the environment as a strategic imperative. The values and actions encompassed by our sustainable development attitude emerge from a tradition that dates back to the origins of our Maisons and forms an integral part of our heritage. Our long-term success depends not only on the Group’s solid business model and profitable growth strategy, but also on our unwavering commitment to creativity, excellence, and our environmental impact and corporate citizenship.

Encouraging all our employees to reach their full career potential and achieve their aspirations. Developingdiversity and the wealth of human resources at our companies in all the countries where we operate, and encouraging initiatives in these areas. Contributing to the knowledge and preservation of our crafts outside the Group in addition to our own expertise as artisans and designers. Working together to preserve the planet’s resources, to design and develop products that are compatible with environmental concerns, reporting on our policies and projects and the progress achieved in meeting our objectives. Contributing to environmental protection above and beyond factors directly related to our operations by entering into active partnerships with cooperating businesses, local authorities and associations. Maintaining and strengthening responsible relationships with our partners, suppliers and subcontractors. Imple- menting a patronage program for the widest possible public benefit which reflects and transmits our funda- mental values. Providing active support for major causes, humanitarian projects and public health programs, and developing initiatives in support of art and young people. Environment Partnerships and support

Business performance

Combining profitable growth and sustainability with commitments to creativity and excellence. Applying our creative passion to the art de vivre towhich our customers aspire. Strengthening our position as a global leader, and being the benchmark for managing and developing high-quality brands.

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T H E WOR L D ’ S L E A D I N G LU X U RY GOOD S G ROU P

Profit from recurring operations € 10.0 bn +21%

Net profit Group share € 6 .4 bn +18%

Revenue € 46 . 8 bn +10%

70 countries

4 , 592 stores

156 ,088 employees

70 brands

A UNIQUE OPERATING MODEL ANCHORED BY SIX PILLARS

DECENTRALIZED ORGANIZATION Our structure and operating principles ensure that our Maisons are both autonomous and responsive. This allows us to be extremely close to our customers, to ensure that rapid, effective and appropriate decisions can be made. This approach also sustains the motivation of our employees, encouraging them to show true entrepreneurial spirit. ORGANIC GROWTH The LVMH Group places priority on organic growth and commits significant resources to develop its Maisons, as well as to encourage and protect creativity. Our employees are key to this approach, making it essential to support their career growth and encourage them to excel.

VERTICAL INTEGRATION Vertical integration fosters excellence both upstream and downstream, allowing control over every link in the value chain – from sourcing and production facilities to selective retailing – which in turn means that the image of our Maisons is carefully controlled.

SUSTAINING SAVOIR-FAIRE

Our Maisons pursue a long-term vision. To preserve their distinctive identities and excellence, LVMH and its Maisons have developed forward-thinking initiatives to transmit savoir-faire and ensure that craftsmanship and creative skills are valued by younger generations. BALANCE ACROSS BUSINESS SEGMENTS AND GEOGRAPHIES Our Group has the resources to sustain regular growth thanks to the balance across its business activities and a well-distributed geographic footprint. This balance means that we are well-positioned to withstand the impact of shifting economic factors.

CREATING SYNERGIES

Sharing of resources on a Group scale creates intelligent synergies while respecting the individual identities and autonomy of our Maisons. The combined strength of the LVMH Group is leveraged to benefit each of its Maisons.

LVMH 2018 . K e y f i g u r e s a n d s t r a t e g y

2018 REVENUE BY REGION (in %)

2018 REVENUE BY BUSINESS GROUP (in %)

Other markets 11%

France 10%

Selective Retailing and Other activities 28% Watches & Jewelry 9% Perfumes & Cosmetics 13%

Wines & Spirits 11%

Asia (excl. Japan) 29%

Europe (excl. France) 19%

United States 24%

Fashion & Leather Goods 39%

Japan 7%

GEOGRAPHIC FOOTPRINT (as of December 31, 2018)

UNITED STATES Revenue: €11,207 m 783 stores 32,724 employees

FRANCE Revenue: €4,491 m 514 stores 31,156 employees

EUROPE (excl . France) Revenue: €8,731 m 1,153 stores 38,645 employees

JAPAN Revenue: €3,351 m 422 stores 6,905 employees

OTHER MARKETS Revenue: €5,323 m 431 stores 11,856 employees

ASIA (excl. Japan) Revenue: €13,723 m 1,289 stores 34,802 employees

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Chaumet, 2018 edition of the LVMH Journées Particulières.

LVMH 2018 . C o m m i t m e n t s i n 2 0 1 8

C OMM I T M E N T S I N 2 0 1 8

IN 2018, LVMH GROUP STEPPED UP INITIATIVES FOR INNOVATION, THE ENVIRONMENT, ENTREPRENEURSHIP, AND YOUNG TALENT.

— OCTOBER 2018

TRADITION & EXPERTISE

LVMH’S INSTITUT DES MÉTIERS D’EXCELLENCE IN FRANCE AND SWITZERLANDWELCOMES ITS FIFTH CLASS OF STUDENTS AND EXPANDS IN ITALY In October 2018, LVMH’s Institut des Métiers d’Excellence (IME) welcomed its fifth class of students, hitting a major milestone with over 500 apprentices trained this year. In 2018, IME expanded significantly in France and Switzerland, increasing the number of training courses it offers and developing others in partnership with schools. At the end of November, IME in Italy celebrated its second class of apprentices with the announcement of three new partnerships for training courses in artisanal professions and sales – women’s footwear at Politecnico Calzaturiero in Capriccio di Vigonza, men’s footwear at the Berluti Academy in Ferrara and sales training the Ca’ Foscari University of Venice.

LVMHand its Maisons are the heirs and custodians of a long tradition of artisanal and creative skills, some of which date back centuries.They scrupulously safeguard and develop this cultural heritage. Perpet- uating these professions and their traditions is vital for LVMH’s long-term future, since only very highly skilled artisans can make our beautifully crafted products. And this unique legacy, this expertise, is also what we are known and respected for worldwide. In 2018, LVMH’s Journées Particulières enjoyed unpre­ cedented success with a record 180,000 visitors. The fourth edition of this one-of-a-kind event was even bigger andmore international than the previous ones, with 56 of the LVMHGroup’sMaisons opening 77 exceptional venues to the public – 40of them for the first time – in 14 countries on five continents. For three days (fromOctober 12 to 14), perfumers, watchmakers, jewelers, shoemakers, trunk- makers, wine experts, barrel-makers, makeup artists and more, welcomed visitors fromall backgrounds to showcase their expertise and share the many facets of their work with them. It was an exceptional event, full of memorable moments that will stay with participants as they await the next edition… — OCTOBER 2018 THE 2018 LVMH JOURNÉES PARTICULIÈRES

— JUNE 2018

THE FIFTH ANNUAL LVMH PRIZE FOR YOUNG FASHION DESIGNERS

The LVMH Group always strives to support emerging talent, and in 2018 it awarded the LVMH Prize for Young Fashion Designers, which each year honors the work of a talented stylist, selected by a jurymade up of the creative directors of the Group’s Maisons. With 1,300 candidates from more than 90 different countries, the LVMH Prize saw record participation levels in 2018. The nine finalists presented their designs at a ceremony held at the Fondation Louis Vuitton on June 6. At the close of this exceptional day, the jury named Tokyo-based Japanese designer Masayuki Ino as the grand prize winner of the fifth annual LVMH Prize, for his fashion label, Doublet.

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— FEBRUARY 2018 LAUNCH OF THE INSIDE LVMH PROGRAM

In February 2018, the LVMH Group launched the Inside LVMH program, a unique digital experience for students from Europe’s top 50 schools and universities and for Group interns. The programallows talented young people to deepen their understanding of the strategic challenges in the luxury industry and “Imagine the Luxury Experience of Tomorrow”. In all, more than 4,400 talented young participants joined the program. Of the 200 short-listed students, three winning teams had the opportunity to present their ideas at the LVMH Group’s headquarters in Paris, with LVMH Chairman and CEO Bernard Arnault in attendance, along with 50 members of the Group’s top management, including Maison Presidents andmembers of the LVMH Executive Committee. This initiative reflects the Group’s ambition to identify the next generation of international talent and bridge the gap between the academic and professional worlds.

SOCIETY & THE ENVIRONMENT

Since its inception, the Group has made sustainable development one of its strategic priorities. This policy provides a powerful response to the issues of corporate ethical responsibility in general, as well as the role a group like LVMH should play within French society and internationally.

— DECEMBER 2018 SIXTH ANNUAL LVMH ENGAGED MAISONS DINNER

On December 5, 2018, LVMH’s sixth annual Engaged Maisons Dinner was held at the Palais Brongniart. This annual event celebrates the Group and its Maisons’ com- mitment to humanitarian causes and partnership with nonprofits such as UNICEF, Belle & Bien, Cancer@Work, ELA, Epic Foundation, ESAT de L’Arche, Force Femmes, Kelina, Les Restos du Cœur, Les Virades de l’Espoir, Save the Children and Toutes à l’École. The Group supports these organizations all year round and raises funds for the fight against sickle-cell anemia at this event. Alongside the staff of Robert-Debré Hospital in Paris, LVMH and its Maisons help battle this disease by funding research and patient treatment.

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— JULY 2018 LVMH, A SIGNATORY OF ACT4NATURE

LVMH took its long-standing commitment to preserving biodiversity to a new level by supporting “act4nature”, which was launched in 2018 by the Association Française des Entreprises pour l’Environnement (Association of French Companies for the Environment). Together with around sixty other companies, the Group signed a charter of commitments. Ten of themare collective commitments to include biodiversity issues in all areas of business, from governance and strategy to themost concrete operations. The aim is to ensure that each company makes a “net positive contribution to nature”. In addition, each signatory pledges to implement new initiatives that are relevant to its businesses. By taking part in this forward-looking movement, LVMHwill helpprepare two key events in 2020: the World Conservation Congress of the International Union for Conservation of Nature, which will be held in Marseille, and the COP15 Convention on Biological Diversity in Beijing. LVMH encourages its Maisons to develop their relations with companies that employ people with permanent or temporary severe disabilities, and provide them with special facilities and support (sometimes known as “shel- tered” employment). To raise its profile in this area, the Group holds the Disability, Employment and Responsible Purchasing trade fair in France, which is open to the general public. The third annual trade fair, which was held on May 28 in Paris, drew 3,500 visitors, confirming the event’s success. The Maisons also organize a range of different initiatives outside France. For example, in 2018, Sephora recruited 100 people with disabilities at its Olive Branch distribution center in the United States. In Italy, LVMH actively supported two nonprofits that help people withDown syndrome integrate society and theworkplace. InPoland, ParfumsChristianDior heldadayof jobcoaching for people with disabilities. — JUNE 2018 LVMH’S COMMITMENT TO DISABILITY

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— MAY 2018 LIFE 2020 GOES TO TOKYO

LVMH wants all its employees to embrace its environ- mentally friendly approach. In September 2017, to mark the 25th anniversary of its Environment Department, the Group officially presented its aims for 2020 to the teams at an event inParis entitled “Future LIFE”. In 2018, theGroup hosted a second edition of this event in Japan on May 30. Like the first, it explained to the 250participants howLVMH intends to continue its long-standing commitment to pre- serving natural resources and fighting climate change. — MAY 2018 A NEW EDITION OF THE LIFE IN STORES AWARDS LVMH launched LIFE in Stores to encourage environmen- tal excellence at its Maisons and recognize the stores with the best energy performance. The latest innovations in this field were presented at the second edition on May 16 and 17, 2018. At the event’s closing ceremony, sevenMaisons – Celine, Louis Vuitton, Loro Piana, Guerlain, DFS, Loewe and Sephora – were recognized for their efforts. More than just a prize, the LIFE inStoresAwards are a source of inspiration for others within the Group, since they open up new avenues in areas as diverse as building insulation, discreet lighting, consumption management and air purity. After drawing up the Charter on Working Relations with Fashion Models and Their Well-Being in consultation with Kering, and having it signed by magazines Elle and Version Fémina, in February 2018, the LVMH Group launched wecareformodels.com. This website is an inte- gral part of the drive for empowerment, transparency and emancipation initiated by the Charter. It reminds models of the commitments made by both groups to ensure their well-being and the quality of their working relations during runway shows and fashion shoots. Wecareformodels.com also provides models with useful information, good practices and advice from experts. — FEBRUARY 2018 LAUNCH OF WECAREFORMODELS.COM

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LEADERSHIP & ENTREPRENEURSHIP

At LVMH, leadership drives performance. Thanks to the leadership of all our employees with vision – and the ability to instill this vision in their staff – we are able to achieve highly ambitious goals. Our decentralized organization lets us build close rela- tionships with our customers; make fast, effective decisions; and motivate our employees for the long termby encouraging them to take an entrepreneurial approach. It promotes risk-taking and perseverance, and requires pragmatismand the ability to rally staff to give their very best. We foster collective intelligence and run in-house innovation development programs so that our boldest employees can transform their innovative ideas into business plans. The DARE (Disrupt, Act, Risk – to be an Entrepreneur) program stimulates innovation by providing 12 teams of employees with a unique experience inspired by the new economy and the world of startups. Each team – with the help of mentors, senior managers from the Maisons and external entrepreneurs – works on transforming its inno- vative ideas into concrete projects. At each session, three winning projects are selected by the jury to be implemented at LVMH. Following two successful initial programs in 2017, which were held in France and focused on global innovation and sustainable development, DARE took center stage again in 2018, with amuch larger, more international scope, first in Italy inMarch 2018, with an event focusingongender diversity, then in Shanghai in June 2018, and finally in New York in October 2018, with events looking at the future of luxury. Since its launch, more than 1,500 talented participants have dared to share their innovative ideas. Of these, 36 projects have been developed further through DARE events, and around fifteen winning projects have moved from the drawing board to reality. — MARCH, JUNE, OCTOBER 2018 NEW EDITIONS OF THE DARE PROGRAM

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— MAY 2018 THIRD EDITION OF VIVA TECHNOLOGY

ART & CULTURE Art has always inspired the creation of exceptional products, and at LVMHhighly skilled craftsmanship and rare professions are a precious cultural resource. It is therefore only natural that the Group should take action to foster art and culture. Our support spans several areas, in France and further afield: we help restore historical monuments, enrich the collec- tions of major museums, contribute to key national exhibitions and support contemporary artists. — JUNE 2018 RECTO/VERSO AT THE FONDATION LOUIS VUITTON In June 2018, the Fondation Louis Vuitton hosted its second recto/verso (front/back) exhibition, organized by the Secours Populaire Français nonprofit in collaboration with more than 100 contemporary artists from around the world. Their works, which were exhibited for the first time, were then sold in an auction and the proceeds were donated to Secours Populaire Français to help facilitate access to art and culture for people in need. The exhibition Being Modern: MoMA in Paris, which was held fromOctober 2017 toMarch 2018, featured an excep- tional selection of 200 artworks from New York. Shown for the first time in France, they retraced the history and mission of the Museum of Modern Art. In the spring, another exhibition entitled In Tunewith theWorld brought together modern and contemporary works by nearly 30 artists, including Alberto Giacometti, Henri Matisse, Gerhard Richter, Pierre Huyghe, Yves Klein and Takashi Murakami. Lastly, two exhibitions were held in the fall of 2018: Egon Schiele and Jean-Michel Basquiat. A selection of 250 artworks taken from their exceptional body of work presented the itineraries of these two artists whose intense and meteoric lives still fascinate us today. — 2017 - 2018 SUCCESSFUL EXHIBITIONS AT THE FONDATION LOUIS VUITTON

With over 100,000 visitors keen to discover the latest innovations presented by 9,000 startups and hundreds of large companies – including LVMH and 22 of its Maisons – the third Viva Technology trade fair was a resounding success. Throughout this key three-day event devoted to digital transformation, the LVMH Luxury Lab was a major attraction, welcomingFrenchPresident Emmanuel Macron and hosting conferences to present its Maisons’ latest innovations and pitches by the 30 startups shortlisted for the LVMH Innovation Award, which went to French startupOyst. Thanks to the huge efforts of its employees, the LVMH Group was the twelfth-most frequently men- tioned company name at Viva Technology this year, climbing to fifth place in the event’s ranking of its most influential partners. LVMH constantly seeks excellence and in 2018 the Group reasserted its intention to remain at the cutting-edge of innovation by launching an accelerator program at Station F, theworld’s biggest startup campus. The project, named La Maison des Startups LVMH, aims to ramp up collaboration between entrepreneurs and the Group’s Maisons, so that together they can invent the future of luxury in a range of sectors. La Maison des Startups LVMH boasts 220 square meters and 89 work stations. Every year, it welcomes 50 international startups working in areas relevant to the challenges faced by the Group and its Maisons. Most of the startups that have already joined the program were spotted at Viva Technology, especially if they participated in the second edition of the LVMH Innovation Award. — APRIL 2018 LA MAISON DES STARTUPS LVMH IS LAUNCHED AT STATION F

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Egon Schiele – Self-portrait with peacok waistcoat, standing, 1911.

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Paris edition of the DARE program.

LVMH 2018 . Ta l e n t

C U LT I VAT I N G OU R E N T R E P R E N E U R I A L S P I R I T ! BEING ENTERPRISING MEANS PREPARING FOR THE FUTURE, ANTICIPATING TOMORROW’S WORLD AND CONTINUING TO SURPRISE MARKETS IN PERPETUAL FLUX. IT MEANS COMBINING INNOVATION AND TRADITION, DARING AND THE QUEST FOR PERFECTION, BUT ALSO GIVING FREE REIN TO OUR IMAGINATIONS AND EXPLORING THE OPPORTUNITIES CREATED BY NEW TECHNOLOGIES.

Our Group, which operates in a fast-moving business environment with an increasingly international organi­ zation – 156,000 employees worldwide, 52% of whom aremillennials – has rolled out an ambitious talent recruit- ment and development policy. It aims to meet future challenges by encouraging employees to be bolder and embrace the Group’s founding values: be creative and innovative, deliver excellence and cultivate an entrepreneurial spirit. In 2018, LVMH recruited 40,000 employees on permanent contracts and over 7,300 interns with either Bachelor’s or Master’s degrees. We seek to attract the most promising candidates to support the Group’s development so that we can continue to deliver excellent performance in a highly competitive environment. Through our staff development policy and by champion- ing diversity within our ecosystem – in all our different Maisons, business lines, activities and geographic areas – we endeavor tooffer everyone unique career opportunities, making LVMH a very attractive employer for top talent. Attracting the best is fundamental for LVMH. The Group and its Maisons seek people with skills and experience, but who are also sensitive to and aware of their environ- ment; people who can understand the duality of LVMH’s world: the enduring, lasting nature of our Maisons, but the need for us to be responsive, agile entrepreneurs. We seek people who will blossom in a business environ- ment where proactive entrepreneurship and innovation are highly valued, and there are plenty of opportunities to build a career commensurate with their ambitions. Enriching our talent pool

In order to identify future employees as early on as possible, LVMH has forged strong ties with schools and universities. This year, we organized or took part in over 250 events and initiatives where students could find out more about the Group and our Maisons. For example, we launched the Inside LVMH program (see page 24) in January 2018, a first-of-its-kind omnichannel event, which plunged over 4,400 students from 50 partner schools and universities in six European countries into the world of LVMH and its Maisons. To hiremore experienced employees, LVMHhas a network of 800 internal recruiters. It uses forums and committees tomaximize their knowledge of themarket and guarantee effective recruiting. External hiring is a sourceof enrichment for the Group and its Maisons, so, as well as encouraging internal mobility, we recruit people from different back- grounds outside the Group who can provide us with fresh perspectives. LVMH’s 156,000 employees are central to the Group and its Maisons’ success, both individually and collectively. Creating a work environment that ensures they are both fulfilled and committed is a priority for the Group’s and the Maisons’ senior executives, managers and HR teams. We believe in our people and know our success depends on their talent. Our mobility policy offers them career opportunities that grow their skills and help themestablish a robust professional network. The annual career reviews conducted by our managers and Human Resources teams enable us to build up a keen understanding of our employees and their professional aspirations. Employees Committed to our talented employees

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share and exchange with their managers during these interviews and together they build their career plan. Our people also have access to all the Group’s vacancies via a dedicated website. In 2018, it featured almost 9,000 job offers at Maisons around the world. Employees apply for the positions directly and are proactively involved in their owncareer development. In2018, for example, 3,600Group managers found new positions and 56% of managerial vacancies were filled internally. Our key talent detection tool, the annual Organizational Management Review, is further proof of how vital we believe our people are. In 2018, 67% of executive positions were filled by in-house talent, half of whomwere identified in succession plans. This system also allows us tomonitor our progress inmeeting the Group’s objective to increase gender diversity in senior executive teams – women now hold 42% of the positions (compared with 23% in 2007). In a sector as dynamic as the luxury industry, if we want to learn every day, we have to call things into question and be open to the world around us. Change and trans- formation are critical issues for the Group’s Maisons. They must therefore embrace this mindset and function as learning organizations. We constantly encourage our staff to learn from each other by sharing their experi- ences – both their successes and their failures. Our employee skills development initiatives focus on four main topics: understanding the culture and values that make our Groupwhat it is and are the very essence of our organization; developing management and leadership among LVMH managers; promoting business excellence by exploring issues like brand desirability; and pursuing open innovation initiatives (like DARE – see page 27), which are designed to interest everyone in new, more agile methods of working. The Group founded the Institut des Métiers d’Excellence LVMH in 2014 to ensure that its craftsmanship, design and sales expertise is passed on to the next generation. IME offers free, practical vocational training programs for Promoting a culture of learning

themost talented young applicants, whatever their back- ground. By doing this, IME promotes equal opportunities without compromising on its strict selection criteria. Since its inception, it has trained a total of 500 appren- tices in France, Switzerland and Italy, enhancing their employability. IME is yet another example of LVMH’s efforts as a responsible employer to foster diversity of origin and culture in its Maisons. LVMH’s approach to corporate social responsibility is based on a long-term vision for our employees and the communities around us. Both in-house and outside the Group, our managers and staff are committed to meeting four corporate social responsibility (CSR) goals: developing employee expertise and talent; promoting their physical and psychological well-being; preventing discrimination; and supporting local communities and regional development. Our employees receive regular information about our CSR initiatives in integration seminars, training courses (e.g. anti-discrimination training), specific communications (for example about opportunities for engagement – sponsorship of nonprofits, ambassador positions for the causes supported by a Maison), and at events like the Engaged Maisons Dinner (see page 25). The Group is involved in a range of programs and partnerships with organizations working at the grass- roots level. For example, it helps young people find a pro- fession; vulnerable, isolated women reclaim their rights; the inhabitants of stigmatized neighborhoods, etc. LVMH also pays special attention to the employment of people with disabilities. The Group and its Maisons are responsible for several initiatives in this field in France and internationally. For example, in 2018, LVMH actively supported two nonprofits in Italy that help people with Down syndrome integrate society and the workplace. Sephora’s Olive Branch distri- bution center in the United States also hired 100 people with disabilities. Being people-focused

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