LVMH, the world’s number one luxury goods company, has reported a 17% rise in first-quarter sales, more than double analysts’ expectations, thanks to a strong rebound in China after the end of COVID-19-related closures.
Sales at the French group, which owns fashion houses Louis Vuitton and Dior, as well as cognac maker Hennessy and U.S. jeweler Tiffany, totaled 21.04 billion euros ($23.10 billion) in the first quarter of 2023.
Organic growth of 17%, which excludes the effect of exchange rate fluctuations and acquisitions, far exceeded analysts’ expectations. Analysts were expecting 8% growth, according to a Visible Alpha consensus.
Like most of the luxury goods industry, which has proven resilient to rising inflation and market turmoil, LVMH’s performance also offered a first glimpse of the extent of China’s recovery in 2023, after the lifting of covid restrictions. By the end of 2022, the closures had taken a heavy toll on luxury sales.
LVMH said first-quarter sales rose 14% in Asia, excluding Japan, compared with an 8% decline in the fourth quarter of last year. The group expects China to drive growth in 2023.
The picture is more mixed in the United States. The strong demand that drove European fashion houses last year is showing signs of waning, especially among younger, lower-spending buyers.
U.S. sales rose 8 percent in the quarter, more than analysts expected. But LVMH CFO Jean-Jacques Guiony said most of that growth was due to strong activity at its beauty chain Sephora.
“For the rest, activity is slowing down a little bit,” he said, citing weaker demand for Fashion and Leather Goods, as well as Jewelry.
In 2022, LVMH generated 27% of its revenue in the Americas and 30% in Asia excluding Japan.
LVMH’s shares have risen 23% since the beginning of the year, outperforming the 14.5% rise in the French blue chip index. 420 billion – double the level of three years ago – cementing its position as Europe’s most valuable company.
Bernard Arnault is not content with his group’s record sales and the status of richest man in the world, recently awarded by Forbes magazine. He is also enriching his portfolio of brands, particularly in jewelry, where the French businessman wants to diversify. LVMH has just acquired Platinum Invest. This manufacturing group owns five factories in France. With a team of 800 craftsmen, it already produces for big names such as Bvlgari and Cartier and will now boost other names of the French group, such as Tiffany & Co.
The acquisition comes amid a surge in demand, which some LVMH officials have called a record.
Read also >Mercedes-Benz: 34% increase in net profit by 2022
Featured photo: © Press
