During the third quarter, luxury goods giant LVMH experienced surging sales for its renowned brand Louis Vuitton, which helped mitigate the negative impact of the COVID-19 pandemic. Despite the challenges faced by the entire industry, LVMH has demonstrated resilience, with its shares only declining by 3% since the beginning of the year.

LVMH reported a 7% decrease in overall comparable sales in the third quarter, surpassing analyst expectations of a 12% decline. Revenues amounted to just under €12 billion ($14 billion). The fashion and handbag division, which includes esteemed brands like Louis Vuitton and Christian Dior, showed exceptional performance, with sales experiencing a 12% increase on a like-for-like basis. Other brands within the division, such as Loewe, Celine, and Fendi, also exhibited signs of improvement.

Industry analysts have observed that LVMH’s positive performance aligns with a broader trend of a strong summer for luxury goods. Brands like Hermes are likely to have also benefited from resurging sales among Chinese customers, as China emerged from lockdown earlier than Europe.

However, LVMH did not completely escape unscathed. The first nine months of 2020 saw a like-for-like revenue decline of 21%, with the retailing division being particularly affected due to travel restrictions. Sales of perfume, cosmetics, watches, and jewelry also saw declines.

Additionally, LVMH’s planned acquisition of US jeweler Tiffany faced significant difficulties as a result of the pandemic. LVMH recently announced its inability to complete the deal, citing French political intervention and Tiffany’s underperformance. Currently, the two companies are embroiled in a legal battle in Delaware, with Tiffany seeking to enforce the agreement.

Despite these challenges, LVMH remains optimistic about obtaining approval for the acquisition from European authorities in October. Meanwhile, Tiffany has released preliminary results indicating a rebound in sales for October, with an expectation of a less than 10% decline in fourth-quarter sales.

Overall, LVMH’s performance in the third quarter highlights the resilience of the luxury goods industry as brands adapt to changing market conditions and consumer behavior. The robust sales of Louis Vuitton and other brands within the fashion and handbag division have helped counterbalance declines in other areas of the business. With the gradual recovery of the global economy, luxury goods companies maintain a cautious optimism for the future.

Useful links:

1. China’s Role in Luxury Goods Sales
2. Global Luxury Goods Market Outlook