For those who are wondering how much of a *markup* is in a LV bag (ro)

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#31
I like the idea of my money going to paying people's salaries and helping them create a good life for themselves... I'm all about spreading it around, eventhough I don't have a lot, I try to spread it out...
 
#34
aluminum_siren said:
I assumed the INDUSTRY AVERAGE was within the industry meant the fashion or high-end luxury. That was somewhat misleading if you didn't read the entire article which I didn't because I assume the numbers were highlighted as a summary of the article.
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Yes, it was very misleading IMO and it shouldn't have been posted like that. Didn't mean to be rude. :idea:
 
#35
aluminum_siren said:
I assumed the INDUSTRY AVERAGE was within the industry meant the fashion or high-end luxury. That was somewhat misleading if you didn't read the entire article which I didn't because I assume the numbers were highlighted as a summary of the article.
Click to expand...

You're right. I made the same assumption when I made the OP. But when I read your comment, I went back to the article & realized my mistake. My apologies.
 
#39
My husband does financial data analysis for a large financial data firm, and this is what he came up with, based on the Segment reporting in the LVMH Annual Report (of course, this is very inexact!):

For each $1,000 in Net Sales:

Cost of sales (direct costs, such as materials & labor):
LV Business Segment - $308

Indirect operating expenses (marketing / advertisement, store personnel's salary, transportation, etc.):
LV Business Segment - $305

Non-cash operating cost (e.g. depreciation of manufacturing equipment):
LV Business Segment - $39

Income Tax:
LV Operating Segment - $160 (this is higher than usual for LVHM - so the taxes are pro-rated to LV)

Net profit after all it's said & done:
LV - $188

Looking at the raw materials, though, the actual cost of the bag is $308, so their gross profit is around $700, which is pretty high, but tacking on other indirect expenses lowers their net on any sales.


Disclaimer: just a rough estimate for LV, Sephora & Fendi since they are all in the same Operating Segment.

Thank you for the post, voodoodoll2005, this has been a lot of fun to decipher the costs associated with our favorite brand!!
 
#42
well...for one lv does not pay their staff with a commission structure...

they have an incentive program...

as for retail markups...lv spends more money on advertising than prada...gucci has gone down the drain in terms of dollars spent on advertising...in it's leading competitors the tiffany group - spends by far, the largest amount on advertising...most of the money any fashion house will gross is minute compared to the cost spent on advertising...
 
#44
I'm reading a fascinating book called Deluxe - How Luxury Lost It's Luster, by Dana Thomas. Here's another way to look at your costs. She quotes that for most luxury brands, the profit is between 10-12 times the cost to make the item and at LV it is up to 13 times. :sweatdrop: It's such an interesting book and has a large focus on the history of LV and Hermes.
 
#45
thats is so intereting .... does anyone have any idea how many bags louis vuitton would produce and sell annually of the permanent lines such as mc, monogram etc ...
 
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