This is Zack Fuss, an investor at Irenic Capital Management. Today we’re breaking down the world’s largest luxury business, LVMH. The LVMH story is deeply reflective of the vision of its 73 year-old founder and architect, Bernard Arnault. Today, the business generates €75 billion in sales across its 75 brands and 3 sector focuses. With a market cap of €350 billion, LVMH is not only the largest luxury business in the world but one of the largest businesses in the entire world.    To break down LVMH, I’m joined by Christian Billinger, the chairman of Billinger Förvaltnings. We discuss the paradox between scarcity and scale in the luxury industry, analyze some of the company’s high profile acquisitions, and delve into the history of this conglomerate’s famous founder. Please enjoy this breakdown of LVMH.     For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.   -----   This episode is brought to you by Tegus. Tegus is the new digital hub for market intelligence. The Tegus platform empowers Investors and Corporate Development teams to invest smarter by pairing best-in-class technology with the highest quality user-generated content and data. Find out why a majority of the top firms are using Tegus on a daily basis. If you're ready to go deeper on any company and you appreciate the value of primary research, head to tegus.co/breakdowns for a free trial.   -----   This episode is brought to you by Scribe. Scribe is the trusted transcription provider for the business and investing community. Scribe is designed to accurately transcribe messy, real-world audio and is unique in that it’s optimized for the complexities of enterprise audio, such as company and product names, currencies, accents and numbers. Visit kensho.com/breakdowns to learn more and unlock your free trial.   —--   Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.   Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.   Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt   Show Notes [00:03:30] - [First question] - How LVMH came to be and Bernard Arnault’s history [00:08:56] - Spread of revenue and margins across their various brands [00:13:38] - What it is about their business that has allowed them to achieve such tremendous scale given the scarcity of luxury goods [00:16:06] - Examples of Arnault reinvesting in the business for the long-term [00:17:04] - Ways all of their brands and different verticals work together to create value [00:18:56] - What the general view on success is after Arnault steps down  [00:21:19] - Key factors that allow luxury houses to enjoy handsome returns on capital historically [00:23:17] - What he’s noticed about luxury brands and their ability to redeploy capital  [00:26:25] - How their capital allocation strategy manifests in their financial profile [00:28:24] - The Arnault family’s control over LVMH [00:31:48] - The evolution of the industry in Europe and the strong getting stronger  [00:33:58] - Cultural differences internationally that allow some countries to thrive in luxury brands compared to others like the US [00:36:17] - Thoughts on the influence of the Chinese consumer on European luxury houses [00:40:30] - What has characterized their M&A strategy historically [00:44:08] - Overview of their recent acquisitions and what it means for LVMH going forward [00:47:46] - Their go-to-market strategy to acquire customers and build the brand [00:48:11] - Some of LVMH’s vulnerabilities and risks  [00:50:44] - Key takeaways for investors and operators when studying LVMH’s story