LVMH, the prominent luxury goods company, has delivered impressive results for the third quarter despite a volatile market. The company’s “fashion & leather goods” division, which is its most profitable sector, achieved sales of 9.68 billion euros between July and September 2022, marking a 22% organic increase. Over the nine-month period, sales growth reached 24%, totaling 27.8 billion euros. These figures represent a 31% increase at current exchange rates.

These exceptional results are especially notable given the challenging global conditions, including a slowdown in the American market, economic difficulties such as recession, price hikes, raw material shortages, and geopolitical tensions. Speaking during a conference call with analysts, LVMH’s CFO, Jean-Jacques Guiony, acknowledged the unusual circumstances, saying, “Frankly, 2022 has not been short on surprises, good or bad.”

Despite these challenges, LVMH has outperformed expectations. The “fashion & leather goods” division experienced a growth acceleration of 22% in the third quarter, compared to 19% in the previous quarter. This growth can be attributed to the success of standout brands such as Christian Dior, Louis Vuitton, Celine, Loewe, Loro Piana, and Fendi. Christian Dior, in particular, witnessed sales growth across all categories, with its renovated boutique at 30 Avenue Montaigne becoming a popular destination. Louis Vuitton also delivered exceptional performance.

Although LVMH experienced growth across all regions in the first nine months of the year, sales in Asia, excluding Japan, dropped from 36% to 32% due to ongoing restrictions in China. However, over the last three months, there has been a 6% increase in sales in China, a remarkable improvement compared to the 8% decline in the second quarter. Sales in China are primarily driven by the online channel, while other markets have observed a resurgence in in-store sales. E-commerce continues to play a vital role, accounting for 13% of LVMH’s total sales.

Another noteworthy development is the deceleration of momentum in North America, with organic growth at 11% in the third quarter, compared to 22% in the second quarter. This market now constitutes 26% of LVMH’s total sales. Guiony attributed this slowdown to a significant number of American consumers taking advantage of the strong dollar by making purchases in Europe.

Despite the upcoming challenges, LVMH remains confident for the rest of the year. Guiony believes that although the luxury industry is not immune to economic shocks, historical evidence indicates that these shocks are usually short-lived, and the strongest brands emerge even stronger. However, the fourth quarter is expected to be more demanding, with the European market grappling with rising energy costs, reduced purchasing power, and a likely decline in tourism.

In conclusion, LVMH’s robust performance in the third quarter highlights its resilience and ability to adapt to a changing market landscape. With its leading brands and a strategic focus on innovation and enhancing the customer experience, the company is well-positioned to navigate the challenges ahead and maintain its position as a leader in the luxury goods industry.

Useful Links:
1. LVMH Official Website
2. Forbes Article on LVMH’s Results