Luxury group LVMH sales surge as Chinese consumers start to splurge
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Organic sales at LVMH’s biggest unit, which sells fashion and leather goods, rose 18 per cent in the first quarter.
PHOTO: BLOOMBERG
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PARIS – Sales at luxury goods group LVMH soared as Chinese shoppers bounced back from the world’s strictest lockdowns and splashed out on luxury items.
Organic sales at the group’s biggest unit, which sells fashion and leather goods, rose 18 per cent in the first quarter, LVMH said in a statement on Wednesday.
This was almost twice the gain that analysts were expecting from Europe’s most valuable company.
The division’s growth in China came in at a double-digit percentage, LVMH chief financial officer Jean-Jacques Guiony told analysts on a call.
LVMH was “extremely optimistic” about China in 2023, said Mr Guiony, adding that numbers in the first quarter “bode well for the rest of the year” there.
Shares of LVMH have rebounded by more than 20 per cent so far this year after the slump in Chinese demand began to recede and the mainland moved towards living with the coronavirus.
Asia, excluding Japan, represented 30 per cent of sales in 2022, compared with 35 per cent in the previous year – demonstrating just how the many strict measures to fight Covid-19 weighed on demand for Christian Dior handbags and Tiffany rings.
Demand is surging again in every region.
Geographically, Japan saw the strongest quarterly growth in the first quarter, rising 34 per cent on an organic basis, followed by a 24 per cent uplift in Europe and a 14 per cent jump in Asia outside Japan.
Although sales in the United States grew 8 per cent, Mr Guiony said LVMH saw a “little bit of slowdown” there for its fashion and leather goods, as well as jewellery and watches.
“For the time being, it is perfectly manageable,” he said.
LVMH will have a major milestone when Tiffany’s flagship store in New York City reopens at the end of this month.
This shop contributed almost 10 per cent of total Tiffany sales before LVMH took over the brand two years ago, Mr Guiony told analysts.
Its reopening should have a “positive impact” on sales while also benefiting the overall branding and marketing efforts of the US jeweller, he added.
The French luxury conglomerate said its selective retailing unit, which includes Sephora, grew 28 per cent, the strongest overall growth rate among all the divisions.
LVMH will do only product price increases this year that Mr Guiony described as “tactical” after having proceeded with significant increases last year across the group.
He acknowledged that Hennessy cognac sales in the US took a hit in the quarter, likely due to price rises that consumers rejected. He also described the cognac market there as being “cyclical” historically.
Paris-based LVMH is the first luxury goods maker to publish first-quarter sales this year and is generally considered a bellwether for the rest of the industry.
Hermes International reports quarterly sales on April 14.
LVMH’s multi-billionaire founder, Mr Bernard Arnault, saw his fortune cross the symbolic US$200 billion (S$265 billion) threshold last week.
On Wednesday, it stood at US$198 billion, according to the Bloomberg Billionaires Index, making Mr Arnault the world’s wealthiest person. BLOOMBERG
