Luxury customers are clinging to LVMH: the French luxury group saw both sales and profits rise by almost 10 % last year, meaning the group set another record despite unfavourable odds.
Who needs ‘aspirationals’?
LVMH remains “incontournable” when it comes to luxury, CEO Bernard Arnault boasted during the presentation of his company’s annual results. Indeed, half of the world’s “super luxury brands” belong to his group, such as Bulgari, Dior, Louis Vuitton and Tiffany. That positioning at the top of the market allows the group to (largely) escape the fact that “aspirational shoppers” are dropping out of the luxury market, a fact that Burberry admits to be struggling with.
His message was backed up by LVMH’s annual result: sales rose by 9 % in the past year, to 86 billion euros. Both operating and net profits climbed 8 %, to 22.8 billion and 15.2 billion euros respectively. In the fourth quarter, sales rose by 10 % to 24 billion. That was reassuring, as the third quarter saw growth slowing down.
A major setback was the fact that liquor sales dropped by 4 % as demand for champagne and cognac dropped. LMVH points to the loss of middle-class consumers, who indulged in a few good bottles during the Covid pandemic. The group had also overstocked. In the United States, organic growth of only 4 % was somewhat disappointing.
Arnault also announced the accession of his sons Alexandre and Frédéric to the board of directors, although the 74-year-old immediately added that he himself has no intention of resigning.