Luxury boom pushes LVMH to new heights

LVMH updates

Luxury leader LVMH Booming again In the second quarter, more Louis Vuitton handbags and Moet and Chandon are sold to wealthy consumers, which is expected to far exceed sales before the pandemic this year.

The group is controlled by billionaire Bernard Arnault and benefits from strong demand in its largest markets, the United States and China, although some investors worry that once people can spend on travel and entertainment again, luxury goods will be affected. Impact, but this demand has not subsided.

Excluding the effects of acquisitions and exchange rate changes, revenue in the second quarter was 14.7 billion euros, an increase of 14% over the same period in 2019 before the pandemic. According to Refinitiv’s data, this exceeds analysts’ forecasts of 14.2 billion euros in sales.

Chief Financial Officer Jean Jacques Guiony said: “Demand from all over the world is very strong, in almost all of our categories.” “We are coming out of the crisis with an excellent level of profitability.”

LVMH’s largest fashion and leather goods division, which accounts for nearly three-quarters of its annual operating profit, includes brands such as Louis Vuitton and Christian Dior, driving most of the growth. This is enough to offset the continued weakness of LVMH’s second largest business before the pandemic, its “selective retail” division, which relies heavily on airport duty-free shops.

Driven by demand in the United States and Europe, sales of wine and spirits also increased by 10% in the first half of the year compared with the same period in 2019.

LVMH’s operating profit margin rose to a new high of 26.6% in the first half of the year, 5.5 percentage points higher than the same period in 2019. The profit margin of fashion and leather goods in the first half of the year was 40.8%, higher than the forecast of 37.4%. Jefferies analyst.

Guiony told analysts that although LVMH may have to spend more on marketing and fashion shows in the second half of the year, he does not expect profit margins to decline.

The results show how the largest group in the luxury goods industry Overcome the challenges posed by the epidemicFor example, the interruption of international travel has prevented Chinese consumers who spend large sums of money from shopping in Europe. Instead, their consumption occurs in China and online.

During the pandemic, luxury shoppers have also flocked to classic brands, allowing the largest groups to seize market share from smaller competitors. Analysts believe that there is a gap between top brands including LVMH, Kering, Hermes, Chanel and Richemont and smaller groups such as Burberry and Ferragamo, and they will have difficulty keeping up.

LVMH shares have risen by about 30% this year, reaching a record high of 673 euros per share on Monday before the results are announced. In terms of market value, it is now the largest company in Europe, and Arnault is the third richest person in the world after Amazon founder Jeff Bezos and Tesla founder Elon Musk.

Bernstein analyst Luca Solca wrote in a report: “The strong update of industry leaders should lead to upward corrections in earnings this year and next year, and stabilize the industry.” “LVMH is regarded as the leader in the luxury goods industry. Sheep-this update should be reassuring.”

Luxury goods groups Kering and Moncler will announce results on Tuesday, and Hermes will announce results on Friday.

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