LVMH, the luxury goods conglomerate, has showcased its resilience in the face of various challenges, including geopolitical tensions and the ongoing pandemic. The company reported impressive sales of nearly 80 billion euros in 2022, thanks to its strategic distribution of activities globally. The United States accounted for 27% of total sales, while Europe and Asia contributed 24% and 30%, respectively. With a renewed focus on China, LVMH is hopeful for a significant recovery in the coming year.

Jean-Jacques Guiony, LVMH’s financial director, highlights the favorable balance achieved in sales distribution across different geographical areas. Japan maintained a steady share of 7%, while France and the rest of Europe witnessed an increase from 6% to 8% and from 15% to 16%, respectively. Notably, sales in Japan experienced a substantial growth of 31% in 2022. However, Asia, excluding Japan, faced challenges due to prolonged confinement in mainland China, leading to an 8% decline in sales during the second and fourth quarters. Consequently, Asia’s share of sales decreased from 35% in 2021 to 30% in 2022.

Looking ahead to 2023, LVMH remains optimistic about the potential for recovery in China. CEO Bernard Arnault believes that the Chinese government will implement measures to revitalize the country’s economic growth. Arnault observes positive developments in locations like Macau, where shops are bustling and travel restrictions have eased. He expects Chinese travel to resume fully in the second half of the year, albeit with a gradual return to pre-Covid levels.

Nevertheless, Jean-Jacques Guiony urges caution, emphasizing that it is still premature to adjust budgetary outlooks. While the recent improvements in China’s situation are encouraging, there are still constraints on Chinese customers’ ability to travel abroad, including flight availability, complicated visas with Korea and Japan, and testing requirements for certain destinations. Guiony further highlights that foot traffic in China is still far from pre-pandemic levels, with sales in December 2022 standing at 85% below 2019 levels. In January 2023, sales improved but remained around 35-40% lower than 2019 levels.

In the meantime, LVMH can rely on its main market, the United States, which continues to exhibit growth. The company’s market share in the US increased from 26% to 27% in 2022. Despite some American customers shifting their purchases to Europe, overall sales growth in the US remained robust, experiencing increases of 26% and 22% in the first two quarters of 2022. The slower growth in the latter half of the year is attributed to favorable year-on-year comparisons, as many shops were closed during the preceding year due to the pandemic. Additionally, the strengthening of the dollar in the second half of the year attracted tourists to Europe, encouraging them to take advantage of the favorable currency exchange rate.

In Europe, LVMH saw significant sales growth of 35% in 2022. This compensatory growth helped offset the slower growth in the United States and was particularly pronounced in the last two quarters. The company attributes this success to a low comparison base earlier in the year and sustained growth in later months. Furthermore, sales from other markets outside of the US, Europe, and Asia increased from 11% to 12% between 2021 and 2022.

Overall, LVMH’s sales performance in 2022 highlights its ability to navigate through challenging times successfully. The company’s strategic distribution of activities across different regions has allowed it to maintain stability while capitalizing on opportunities for growth. With hopes for a recovery in China in 2023 and continued growth in the US and Europe, LVMH remains optimistic about the future.

Useful links:
1. LVMH Official Website
2. CNBC Article on LVMH’s Sales and China Growth