French luxury group LVMH has presented excellent results as Chinese and American consumers, in particular, are once again happy to treat themselves to handbags and champagne in the absence of other entertainment.
Fashion up by half
LVMH continues to exceed the expectations of analysts and investors. In its first quarter, one year after the outbreak of the fatal coronavirus pandemic, the luxury group recorded an increase in sales of 30 % on a comparable basis. Turnover rose by a third to 13.96 billion euros, while analysts had predicted over a billion less.
Remarkably, the French group of billionaire Bernard Arnault also did well regardless of the Covid effect: even compared to the first quarter of 2019, long before Covid-19, comparable sales were up 8 %. This is mainly thanks to the group’s clothing and leather goods, with Louis Vuitton and Dior as the star performers. Those two labels recorded 52 % more sales than a year ago – and still 37 % more than in 2019.
Let’s go shopping
According to a Financial Times’ analysis, it is mainly the Chinese and American population who treat themselves to some luxury in the light of the pandemic. Europe, on the other hand, remains in crisis mode. Also, now travel opportunities are strictly limited, the absence of Chinese shoppers in the European luxury stores is striking and leaves a void. At the same time, the lack of travel gives an impulse to consume more at home, including items like handbags and champagne.
So at LVMH, not only does the recovery seem to be underway, but the holding company is already on the road to growth. However, we will have to wait and see what happens when the Covid restrictions are lifted fully to see the impact of the extremely expensive takeover of jewellery chain Tiffany & Co. Arnault’s son, among others, must now steer the integration in the right direction. The large luxury groups do not currently provide specific guidelines or predictions for this financial year.
