LVMH Sees No Wallet Shift Away From Luxury Goods as Markets Reopen – WWD

PARIS — Customers nonetheless seem keen to spend lavishly on luxurious garments and equipment, at the same time as markets reopen and different actions like eating places and journey compete for his or her discretionary {dollars}, LVMH Moët Hennessy Louis Vuitton mentioned on Monday.

The world’s largest luxurious group, which owns 75 manufacturers starting from Dom Pérignon Champagne to Bulgari jewellery, mentioned its trend and leather-based items, or FLG, division was as soon as once more the star performer within the second quarter, serving to to gasoline a better-than-expected rise in general revenues through the interval.

The FLG actions posted gross sales of seven.13 billion euros within the three months to June 30, up 40 p.c on an natural foundation versus the identical quarter in 2019, reflecting the resilience of star manufacturers Louis Vuitton and Dior.

Vuitton alone is predicted to account for greater than half of LVMH’s whole income in 2021.

However executives mentioned different manufacturers, together with Fendi, Loewe, Celine and Marc Jacobs, additionally gained market share and improved their revenue margins, even because the group’s journey retail and resort companies continued to endure from a dearth of worldwide journey.

Commenting on the danger of so-called “pockets shift,” Jean-Jacques Guiony, chief monetary officer of LVMH, mentioned the corporate has been observing developments in China, the place the scenario normalized a lot sooner than in different markets.

“We’ve got not seen demand slowing down and a shift from luxurious renminbis into different classes, together with experiences. So for what it’s price, this offers us some hope that when different experiences, reminiscent of weekend holidays and so forth, change into out there, this won’t come on the expense of luxurious spending,” he mentioned.

The corporate noticed sustained development in Asia and the U.S. and a gradual restoration in Europe, the place native prospects have partly compensated for an absence of abroad guests.

“We’ve seen no indicators of a change of sample within the habits of Chinese language shoppers and the enterprise is basically transferring from power to power in all classes, not solely trend and leather-based,” he mentioned, noting that LVMH was not rising extra reliant on its Chinese language prospects.

“Even though we’re doing very, superb enterprise with the Chinese language shoppers, the share of the Chinese language clientele is just not growing, notably at Vuitton and Dior. The expansion with the Chinese language could be very sturdy, but it surely’s commensurate with the worldwide development of the manufacturers,” Guiony mentioned on a convention name with analysts.

Reporting first-half results after the market close, LVMH posted a web revenue of 5.29 billion euros within the first half, up 62 p.c versus the identical interval in 2019, and 10 occasions the extent recorded final 12 months on the peak of the coronavirus pandemic.

Revenue from recurring operations totaled 7.63 billion euros, representing a rise of 44 p.c versus the identical interval in 2019, with trend and leather-based items accounting for five.66 billion euros, up 74 p.c.

Buoyed by the higher profitability of its trend manufacturers, LVMH is able to reinvest within the second half of 2021 after a 12 months of drastic cost-cutting designed to mitigate the influence of the COVID-19 lockdowns.

“Discovering out the nice advertising and marketing methods and growing true distribution methods is of the essence, and 2020 and the pandemic, hopefully, was only a pause in that,” Guiony mentioned. “The present stage of development that we’re experiencing permits for a major enhance in value with out incurring main influence on margins.”

And whereas he reiterated that LVMH was not able to make one other main acquisition, after completing its $15.8 billion purchase of Tiffany & Co. in January, it’ll take an “opportunistic” strategy to smaller investments — as evidenced by the flurry of exercise over the previous few months.

Since April, the group has increased its stake in Tod’s Group to 10 p.c; taken full management of Emilio Pucci; acquired a minority stake in Phoebe Philo’s new independent, namesake house, and raised its stake in Virgil Abloh’s luxurious streetwear label Off-White to 60 p.c.

The take care of Abloh additionally gives the designer leeway to launch brands and seal partnerships throughout the total vary of the posh conglomerate’s actions.

Past the style division, magnificence retailer Sephora mentioned final week it was shopping for British on-line magnificence retailer Feelunique, whereas the Moët Hennessy wines and spirits division lately teamed up with Campari to launch a three way partnership e-commerce enterprise to promote premium wines and spirits throughout Europe.

Guiony made clear that LVMH’s precedence was to safe Abloh’s continued presence on the helm of the lads’s enterprise at Vuitton, the place since 2018 he has ushered in a brand new inclusive definition of luxurious, and lately unveiled a line of sneakers codesigned with Nike.

“Through the years, he helped us outline a really exact and compelling type at Vuitton, and I feel the Vuitton males’s enterprise, earlier than him and with him, are very totally different and a lot better right now,” Guiony mentioned.

“We’ve been capable of expertise, notably at Vuitton, the immense abilities of Virgil, and if there are collaborations that might generate model enhancement, or good merchandise, or something with him, we’d clearly contemplate it as we converse,” he added.

The group detailed a number of the initiatives it has deliberate throughout its divisions within the second half. Dior is gearing up for the reopening of its historic headquarters on Avenue Montaigne in Paris in an progressive format that will include a restaurant, whereas Tiffany will launch a brand new gold jewellery assortment.

Sephora is because of open 200 places within the U.S. this fall as a part of its partnership with Kohl’s Corp., whereas travel-retail enterprise DFS is getting ready openings in 2022 in Brisbane, Australia, and Queenstown, New Zealand. Guerlain is gearing up for a serious launch in high-end perfumery, and Fenty Magnificence will introduce new powders.

Bernard Arnault, chairman and chief government officer of LVMH, mentioned l highlights of the primary half included the reopening of the La Samaritaine department store in Paris, for which he was joined by French President Emmanuel Macron.

“Throughout the present context, as we emerge from the well being disaster and see a restoration within the world financial system, I consider that LVMH is in a wonderful place to proceed to develop and additional strengthen our lead within the world luxurious market in 2021,” he mentioned in an announcement.

Group gross sales rose 89 p.c year-on-year on a reported foundation to 14.7 billion euros within the second quarter, following a 32 p.c bounce within the first quarter. In natural phrases, gross sales have been up 84 p.c, beating the Bloomberg consensus forecast for a 72 p.c enhance.

In contrast with 2019, group gross sales elevated 14 p.c in like-for-like phrases through the quarter. Gross sales of wines and spirits have been up 7 p.c, whereas watches and jewellery posted a 9 p.c enhance. Perfumes and cosmetics have been down 1 p.c, and selective retailing fell 19 p.c.

Guiony mentioned DFS and luxurious journey operator Belmond would battle to interrupt even. “The season is prone to be too brief. We see a focus of fine enterprise solely on a number of days in every week, and some weeks in a month, or a number of months in a 12 months, mainly, so it’s not ample, in all probability, to soak up all the associated fee base,” he mentioned.

Because of this for now, objects like Vuitton’s Capucines purse and Dior’s Dioriviera summer time capsule will proceed to energy the group because it leads the posh sector again to restoration.

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