Following yesterday’s release of LVMH’s figures for the first quarter to 31 March 2023; Louise Deglise-Favre, Apparel Analyst at GlobalData, a leading data and analytics company, offers her view: “LVMH has released yet another outstanding set of results in the context of high inflation and economic uncertainty, with total group sales rising 16.8% to €21.0bn in its Q1 FY2023. The conglomerate delivered exceptional results in Japan and Europe, with currency-adjusted sales rising 34% and 24% respectively, due to strong demand from locals and international tourists, especially from China as the government lifted mandatory quarantines for travellers in December 2022. Europe’s impressive performance is also testament to the wealth of local luxury shoppers that continues to protect them from economic challenges, allowing them to keep spending on luxury goods, despite the region suffering from cripplingly high inflation rates and looming threats of recession.
“Despite Europe and Japan capturing some spend from Asian consumers, Asia (excl. Japan) still saw its currency-adjusted sales rise 14%, which is encouraging for the rest of year as it indicates strong demand from the growing middle class, who continue to perceive luxury goods as status symbols. The US saw the weakest growth, but sales still grew by a solid 8%, indicating a slowdown in the region which rose 15% in FY2022. However, this can partially be explained by a transfer of spend towards Europe, as many Americans took advantage of the continued weakness of the Euro to travel and spend in Europe.
“LVMH’s Fashion and Leather Goods division continued to outperform, with sales rising 17.6% to €10.7bn, as its brands remain relevant and desirable across multiple generations, including the crucial Gen Z demographic. In February 2023, Louis Vuitton announced that Pharrell Williams will replace the late Virgil Abloh as its menswear creative director from June 2023 – indicating that Louis Vuitton is betting on star power, mass appeal and streetwear credentials for its new chapter. The conglomerate’s brands shined bright throughout the February fashion weeks, with Louis Vuitton’s womenswear and Dior menswear shows being particularly well-received by critics and consumers alike, generating buzz on social media.
“LVMH’s Selective Retailing division, which includes Sephora and DFS airport stores, also performed exceptionally well, with sales rising 30.3%, allowing it to fully recover from the pandemic and surpass its pre-pandemic levels by 12.8%. The end of mandatory quarantines for travellers in China enabled the return of domestic tourists, boosting traffic in DFS stores in Hong Kong and Macau. Sephora also performed well, especially in the US where its exciting offering of exclusive brands, such as Rare Beauty and One Size, continues to appeal to consumers. The beauty retailer also opened its first UK store in London in March 2023 after its previous exit from UK physical retail in 2005, generating excitement as illustrated by the long queues that formed to enter the store. However, this buzz may be temporary, and the retailer must ensure it adequately promotes its own brand to stand out from competitors, such as Boots which has significantly improved its brand offer with desirable premium brands such as Huda Beauty and Fenty Beauty.”
