Lvmh

LVMH
Passionate about creativity
ANNUAL REPORT

Contents
02 Chairman’s Message
06 Financial Highlights 08 Interview with Antonio Belloni: New expectations for luxury 10 Corporate Governance 12 The LVMH Share

14 Review of operations
16 Wines & Spirits 24 Fashion & Leather Goods 32 Perfumes & Cosmetics 40 Watches & Jewelry 46 Selective Retailing

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52 Sustainable development54 Our Code of Conduct 55 Human resources Contributing to the future of tradition 63 Corporate sponsorship to support culture, youth and humanitarian action 64 Protecting the environment

71 Consolidated Financial Statements

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PASSIONATE ABOUT CREATIVITY

01

WITH TALENT AND DISCIPLINE, OUR TEAMS HAVE RESPONDED TO THE CHALLENGE

Bernard Arnault
We took advantageof this turbulent period, during which our clients sought a return to core values, to recall our heritage of excellence, and the values of creativity and durability which are embodied by the Group’s brands. The future holds excellent potential, in historic markets as well as in emerging markets, for brands which know how to continually inspire their contemporaries, regardless of where they are inthe world, and are committed to quality, beauty and authenticity.

PASSIONATE ABOUT CREATIVITY

At the end of a year marked by an unprecedented global crisis, our Group responded to the challenge set and increased its market share. Making the most of improved conditions in the third quarter, LVMH even managed to register record revenue in the month of December. We owe this performanceprimarily to the talent of our teams and their perfect execution of Group strategy. The commitment of the men and women in the Group allowed us to combine the disciplined management approach called for by market conditions, with proactivity and efficiency, underpinned by targeted investments and a tradition of high quality creativity.
As in previous difficult periods, our Group demonstrated thesoundness of its growth model in 2009 and found the necessary resources to meet new challenges and further its development. The Group’s resilience was largely due to the diversity of our businesses: while our Wines & Spirits and Watches & Jewelry brands were most impacted by the crisis due to destocking at distributors and retail traders, the businesses where we are in direct contact with our customers,through our own store networks, enjoyed better conditions. Our strategy of focusing our efforts on our star brands, key markets and opportunities offering the best return on investment, bore its fruit. Finally, the reactivity of our organisation and the extremely rigorous management of costs and stocks throughout all our businesses, enabled us to preserve an excellent level of profitability atGroup level. This has resulted in an operating margin of nearly 20% and significantly improved cash flow.

A commitment to youth: LVMH’s “Discovery and Learning” classes organized during exhibits supported by the Group have been attended by over 20,000 children to date. Dozens of school groups took advantage of this special educational program during the exhibitions of « Picasso and the Masters » and »The Great World of Andy Warhol » at the Grand Palais in Paris in 2009.

UNDENIABLE SUCCESSES FOR ALL OUR BUSINESSES
It is worth highlighting that the teams across all our businesses have registered some real successes: Louis Vuitton had an exceptional year, achieving double-digit global growth and progress in all of its product categories. Sephora continued to forge its unique approach in theworld of beauty products and to expand in different regions of the world. Thanks to the success of its innovation strategy (Hennessy Black and Hennessy VS 44 in honour of Barack Obama…) and through intense ground work, Hennessy returned to growth in the United States during the year and strengthened its position in a market which had a particularly difficult 2009. Parfums Christian Dior…