Strong global luxury sales at Louis Vuitton and Christian Dior powered first half results for LVMH Moët Hennessy Louis Vuitton.
In a Nutshell: Fashion and leather goods were behind the French conglomerate’s strong second quarter and first half results.
According to LVMH, the fashion and leather goods division recorded 81 percent organic revenue growth in the first half of 2021 compared to the same period in 2020. Profit from recurring operations rose 74 percent when compared to the first half of 2019, which was also up three times over 2020 levels. The result follow first quarter trends, when the division also drove quarterly sales gains. In a conference call, LVMH chief financial officer (CFO) Jean-Jacques Guiony noted that the company made “some significant improvements” in its fashion and leather margins, citing Dior, Fendi, Marc Jacobs, Veuve and Celine as notable performers.
“The first half of this year marks a return to strong growth momentum after a severely disrupted year in 2020 resulting from the global pandemic,” LVMH said on Monday. “The United States and Asia are up sharply since the start of the year while Europe is experiencing a gradual recovery.”
Louis Vuitton delivered a “remarkable performance” and maintained its “profitability at an exceptional level,” LVMH said, noting the growing wait list for many of the brand’s coveted products. Christian Dior put in a strong showing with local customers, it added.
LVMH’s watches and jewelry group saw a strong rebound in stores, while the company continued integrating Tiffany after last year’s acquisition. In addition, the wines and spirits group recorded organic revenue growth of 44 percent for the half, with champagne (up 10 percent) and Hennessy cognac (up 6 percent) leading the way.
While luxury sales in the U.S. and Asia have been on the rise, the company noted that its duty-free DFS shops are struggling with the lack of international tourism.
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And while much of the growth in luxury turnover came from Americans, Guiony said Europeans were spending too. “And particularly as Vuitton, we see very, very good advances with European clients, in excess of 50 percent,” he said. Although the European customer base is much smaller, Guiony said spending has allowed LVMH to keep stores open, even if doing so hasn’t quite offset the effects of a tourism slump. As for the Chinese consumer, growth is constant versus last year and to 2019 levels, Guiony added.
“Our aim for DFS is to break even, but frankly, it will not be easy,” the financial chief said, noting improvements in Macao as tourists and gamblers have returned. Although “the numbers are pretty good,” he continued, “it’s probably not sufficient to offset the fact that other geographies and particularly, Hong Kong, are seeing no light at the end of the tunnel.”
Based on spending trends in China, LVMH hasn’t seen luxury goods demand decline as consumers shift to other categories, including experiences, Guiony said, offering a glimmer of hope that this pattern will continue as other markets rebound.
Net Sales: For the second quarter, revenue more than doubled to 7.13 billion euros ($8.41 billion) from 3.35 billion euros ($3.95 billion), a 40 percent increase over the same 2019 period.
First half results from January through June saw a 74 percent increase in revenue in the fashion and leather goods division to 13.86 billion euros ($16.37 billion) from 7.99 billion euros ($9.43 billion) a year ago, a 38 percent rise from 2019 revenue.
“This business group is clearly delivering a very strong performance by both Louis Vuitton and Christian Dior with very good performances elsewhere, too,” Chris Hollis, director of financial communications, said of the fashion and luxury division during the conference call. “Performance at Louis Vuitton specifically is, as always, driven by the unique combination of exceptional creativity and a commitment to unparalleled craftsmanship that is endured into brand’s founding.”
Louis Vuitton opened new stores in Paris and Tokyo, which “will be a further draw for visitors to these important cities,” Hollis added.
Christian Dior Couture had outstanding growth across product categories, with its new Caro bag incorporating the iconic Dior caning pattern, Hollis said. The launch of the new summer capsule collection, Dior Riviera, has also performed well. The brand’s New York store on 57th St. will undergo a major renovation, and a temporary store has opened on Fifth Ave.
The Fendi store on 57 St. has reopened with nearly 7,000 square feet in time for the debut of Kim Jones’ new collection. Hollis said the performance of Fendi continues to be strong, driven by its iconic products and newness, touting the success of Jones’ inaugural and the summer Vertigo capsule collection.
Other brands in the group also did well. At Celine, the ready-to-wear collection designed by Hedi Slimane continues to perform well and the Triomphe line remains highly sought after, Hollister said. And at Loewe, with Jonathan Anderson, Hollis said the brand “continues to bring newness and excitement to the Maison with new digital concepts for its shows, such as Show-on-the-Wall and the recent success of its new Goya bag.” At Givenchy, Matthew Williams’ first collection has arrived in stores, and is off to a good start, Hollis said. Also showing signs of strength was the Marc Jacobs brand.
Hollis touched on LVMH’s new majority ownership of Virgil Abloh-founded Off-White, noting that the company looks forward to further elevating the premium streetwear label while the designer straddles his roles with both Louis Vuitton and his original endeavor.
Looking ahead, LVMH plans to keep its brands top of mind with luxury shoppers. “Our strategy of focusing on the highest quality across all our activities, combined with the dynamism and unparalleled creativity of our teams, will enable us to reinforce LVMH’s global leadership position in luxury goods once again in 2021,” it said.
CEO’s Take: “LVMH has enjoyed an excellent half-year and is reaping the benefits of having continued to innovate and invest in its businesses throughout the pandemic despite being in the midst of a global crisis. The creativity, the high-quality and enduring nature of our products and the sense of responsibility that drives us, have been critical in enabling us to successfully withstand the effects of the pandemic; they will remain firmly embedded in all our Maisons, thereby ensuring their continued desirability,” Bernard Arnault, chairman and CEO, said. “I believe that LVMH is in an excellent position to continue to grow and further strengthen our lead in the global luxury market in 2021.”