The luxury sector may not be immune to global economic recessions, but LVMH, the world’s biggest luxury conglomerate, is bucking the trend so far.
The Paris-based group saw quarterly sales soar to 19.8 billion euros, beating expectations and booking an increase of 19 percent over the same period last year. LVMH said its Fashion & Leather Goods business group recorded revenue growth of 31 percent in the first nine months of 2022.
Demand for its roster of star brands, which include Louis Vuitton, Dior, Loewe, Celine and Fendi, saw an increase of 22 percent, anchored by strong sales in Europe. While tourists from Asia may have been far and few, traveling Americans helped bolster sales by 43 percent, with the high value dollar dominant in the currency exchanges. Sales in North America rose 11 percent, compared to 22 percent last quarter.
In an earnings call with analysts LVMH chief financial officer Jean-Jacques Guiony said “We had a very good level of business with Americans but the way it spread between the domestic and tourist market was entirely different. A good part of the business taking place in Europe as Americans tend to take advantage of the strong dollar.”
LVMH said Louis Vuitton continued to outperform its other brands, with new designs in accessories and watches boosting sales. The three-year renovation of the Dior Paris flagship was finalised, unveiling the brand’s new vision under creative director Maria Grazia Chiuri, and was no doubt a feather in the cap of one of its strongest growing brands.
LVMH does not disclose revenue by brand
LVMH does not break down sales by individual brand, but failing to mention Givenchy in its quarterly update, speaks volumes. The maison has been under increasing scrutiny for failing to deliver hype under creative director Matthew Williams, who’s contract is thought to expire by mid 2023.
China and Japan saw somewhat of a recovery with a 6 percent growth in Asia sales after they dropped 8 percent in Q2. While Japan this week announced it would fully re-open to travellers, China remains under strict Covid regulations and still requires visitors to quarantine for a minimum of 10 days. As Reuters reported in March, the lack of Chinese travellers has created a 280 billion dollar black hole for global tourism.
Looking forward, LVMH said it is confident in the continuation of current growth and will maintain a policy of cost control and selective investment, rather than stringent belt tightening and rationing its marketing expenditure. The Group’s strategy “will remain focused on continuously strengthening the desirability of its brands”.
Hermes and Gucci parent Kering are set to post their third quarter revenue on 20 October.