PARIS – Luxury goods group LVMH’s sales rose 9 per cent in the fourth quarter as shoppers in Europe and the United States splurged over the crucial holiday season, helping partly to offset Covid-19 disruptions in China.
Sales at the world’s biggest luxury group reached €22.7 billion (S$32.4 billion) in the final three months of the year, with the 9 per cent increase on an organic basis a touch above analyst expectations for 7 per cent growth, based on a consensus cited by UBS.
This marked a deceleration from the 20 per cent growth recorded in the first nine months of the year, due to the hit in China from lockdowns and its subsequent exit from a zero-Covid policy, which has spurred a surge of infections in the world’s second-largest economy.
“China was sharply down in the fourth quarter,” the group’s finance chief, Mr Jean-Jacques Guiony, told reporters.
He said the pandemic had “spread like wildfire” after the Beijing authorities relaxed travel curbs in December, causing problems in warehouses, stores and distribution networks.
“Everybody was sick – it is as simple as that,” he said. The situation had, however, markedly improved since the beginning of the year.
LVMH, a conglomerate spanning spirits, jewellery, cosmetics and fashion that is regarded as a bellwether for the wider luxury industry, does not give a breakdown for its brands.
But it said that in 2022, its star designer label Louis Vuitton, by far the world’s biggest, surpassed €20 billion in sales for the first time – around a quarter of total group revenues for the year and double its sales of 2018.
LVMH has gained market share every year since 2019, its boss Bernard Arnault, the world’s richest man, said. He added that if the trends seen since the beginning of 2023 continued, it would have “another very good year”.
“Our products keep selling incredibly well even though they are difficult to find,” he said, highlighting the exclusivity of the group’s luxury fashions and accessories.
“Louis Vuitton, Christian Dior, Celine, Fendi, Loro Piana, Loewe and Marc Jacobs are all gaining market share globally and reaching record levels of revenue and earnings,” said Bernstein luxury analyst Luca Solca, referring to LVMH’s fashion and leather goods brands.
LVMH’s shares have hit new highs this month, giving the luxury goods group a market capitalisation of €400 billion for the first time and cementing its lead as Europe’s most valuable company.
Analysts expect a strong return of Chinese shoppers – the main source of profits for luxury companies before the pandemic – after three years of Covid-19 disruptions to boost the industry this year.
But the sector is likely to still see a slowdown overall after two years of stellar growth, with demand easing in the US and Europe, where rising prices have prompted some high-end spenders to tighten their purse strings. REUTERS
