Luxury giant LVMH has announced a 20% increase in sales for the third quarter of this year, indicating a strong recovery for the luxury goods industry. While there was a slowdown in revenue growth in Asia and the United States compared to the first half of the year, LVMH’s fashion and leather goods division experienced robust growth, driven by the popularity of its star labels Louis Vuitton and Dior.

The fashion and leather goods division, which accounts for nearly half of LVMH’s group sales, recorded a growth rate of 24% in the third quarter, with revenues 38% higher than their pre-pandemic levels in 2019. This consistent growth demonstrates sustained demand for luxury products.

Although international travel, a key driver of growth in the luxury goods industry, has not fully resumed, LVMH remains optimistic about the market. The company’s Chief Financial Officer, Jean-Jacques Guiony, explained that revenue growth in Asia was temporarily affected by anti-coronavirus restrictions in August. However, LVMH has not observed any significant changes in consumer behavior in China. Concerns about wealth redistribution measures in China, prompted by President Xi Jinping’s call for “common prosperity,” have not impacted LVMH’s customer base, as the majority of their customers belong to the upper-middle class, according to Guiony.

Industry analysts have responded positively to LVMH’s strong revenue performance in the fashion and leather goods division, especially considering uncertainties surrounding Chinese demand trends. This performance brings relief to investors, particularly after a temporary slump in the sector in August.

LVMH’s performance in Europe has also shown improvement in the third quarter, with local travel resuming over the summer. Despite the absence of wealthy Asian visitors, LVMH recorded a 28% revenue growth in the United States and a 12% growth in Asia (excluding Japan). Guiony stated that the group did not face any supply chain issues, as its manufacturing is mainly based in Europe. He also dismissed concerns about rising shipping costs, emphasizing that LVMH has enough margins to manage the situation.

Overall, LVMH’s like-for-like sales, which exclude the impact of foreign exchange fluctuations, increased by 20% to reach €15.51 billion ($17.90 billion) in the three months leading up to September. This growth aligns with the consensus forecast of a 21% rise, according to analysts.

Looking ahead, LVMH plans to continue expanding the appeal of its recent acquisition, U.S. jeweler Tiffany. The company aims to attract younger consumers by refining its product selection and implementing ongoing marketing strategies. LVMH has already undertaken a rebranding campaign for Tiffany, featuring popular figures such as Beyonce and Jay-Z, and actively promoting the brand on social media platforms with K-pop star Rose.

Overall, LVMH’s strong performance in the third quarter reflects a recovery in the luxury goods industry, despite ongoing challenges related to the pandemic. The company’s strategic focus on key markets and efforts to adapt its offerings to changing consumer preferences position it well for continued growth in the luxury sector.

Useful links:
LVMH Official Website
LVMH Stock Information