LVMH Rises as Demand for Luxury Stays Sticky

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LVMH Rises as Demand for Luxury Stays Sticky
Credit: © Reuters.

Dhirendra Tripathi – LVMH stock (PA: LVMH ) traded more than 2% higher in Paris as sustained high demand for luxury helped the French group go past the estimates for the third quarter.

The fashion and leather goods business division, owner of brands such as Louis Vuitton and Kenzo, reached record levels over the period, posting organic growth of 38% over the third quarter of the pre-pandemic 2019. The division accounts for almost three-quarters of annual operating profit at LVMH and close to half of its revenue.

It brought in 7.45 billion euro of the total 15.51-billion-euro revenue ($17.91 billion) at LVMH in the third quarter. The Group said it is confident the current growth will continue.

On a year-on-year basis, organic revenue growth in the fashion and leather goods business was 24%.

Other business grew too, alleviating fears that the Chinese authorities' new policy of reducing inequality would hit consumption in a key market. Previous campaigns against ostentatious spending by China's new elite have only ever had fleeting impacts on sales there. 

Perfumes and cosmetics, and watches and jewelry grew sales by 19% and 18%, respectively, from a year earlier, the latter boosted by the long drawn-out acquisition of Tiffany. 

In an environment marked by a limited recovery in international travel and the closure of many points of sale, the major brands continued to rely more than is usual on online sales via their own websites, the company said.

Wines and spirits grew strongly in the U.S., Europe and China, its biggest markets. The business recorded 10% growth in organic revenue from the 2020 quarter.




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