LVMH continues to benefit from Asia’s luxury appetite, says GlobalData

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Following today’s release of LVMH’ figures for Q3, FY2021; Louise Deglise-Favre, associate retail analyst at GlobalData, a leading data and analytics company, offers her view: “Despite year-on-year growth decelerating to 29.8% in Q3 FY2021 (from 55.8% in H1) due to stronger comparatives last year as the first wave of COVID-19 subsided, LVMH’s group revenue continued to soar above 2019 levels (+16.5% compared to +14.3% in H2), rising to €15.5bn (€2.2bn higher than 2019). Asia still represented the group’s biggest market, with sporadic lockdowns over the summer only slightly dampening sales, with 26% organic growth against 2019 compared to 30% in H1. Demand for luxury goods in China continued to be strong, boosted by lower levels of international travel, but the “common prosperity” measures announced at the start of September aimed at narrowing the wealth gap in the country by increasing taxes for the ultra-rich may have an impact on the luxury giant in the future. The US was hot on Asia’s heels, with 22% growth versus 2019, helped by the country’s strong economic recovery and continued demand for luxury fuelled by the remnants of stimulus cheques.

“The Fashion & Leather Goods division was a clear outperformer for the group, achieving 25.3% growth against 2020 to reach €7.5bn, 36.8% above 2019. Louis Vuitton continued to capitalise on the trends of artist collaborations and limited-edition items by releasing six iterations of the Capucine bag featuring work from various artists, portraying its products as collectable art pieces. This recipe has proved successful in the past in the brand’s collaborations with Jeff Koons and caters to Gen-Z’s desire for exclusive products. While supply chain issues have caused problems for other major players in the fashion industry, LVMH has managed to avoid any significant disruptions due to its simple sourcing processes and European-centric manufacturing, as it stated it has experienced no raw material shortages and has absorbed any increases in shipping costs.

“Other areas of the business such as Perfume & Cosmetics and Selective Retailing delivered lacklustre performances (-2.0% and -21.6% respectively versus 2019), due mainly to the continued low amount of international travel, preventing a recovery in duty-free store sales upon which the two categories are heavily reliant. The sustained difficulties in Perfume & Cosmetics indicate that LVMH has not yet managed to fully engage with consumers online in this domain as it has for Fashion & Leather Goods. The group must boost its online proposition and increase engagement to remain a leader in the beauty sector, for instance by increasing marketing and awareness of 24S.com, its multi-brand fashion and beauty platform.” 

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