LVMH surges as shoppers snapping up couture lift sales to record

Bloomberg

LVMH SE shares surged after the luxury giant bounced back from the depths of the pandemic as customers snapped up items ranging from Christian Dior couture to Hennessy cognac.
Revenue last year totaled 64.2 billion euros ($71.6 billion), the Paris-based company said, topping the previous record set in 2019, before Covid-19 lockdowns closed stores and kept shoppers stuck at home. Analysts had expected revenue of 62.2 billion euros.
The shares rose as much as 5.8% early Friday in Paris, lifting LVMH’s market value by more than 18 billion euros ($20 billion), to about 368 billion euros.
The performance of the luxury giant, led by billionaire Bernard Arnault, exemplifies the V-shaped recovery experienced by much of the industry as wealthy customers rushed back to boutiques. The pace of the rebound was underpinned by recovering economies and soaring asset prices.
As the dominant purveyor of luxury goods, LVMH benefited from its range of products, from $1,000 Louis Vuitton Tattoo sneaker boots to Tiffany engagement rings. Organic revenue for its main fashion and leather goods division, which includes Celine and Loewe on top of Louis Vuitton, jumped 42% from 2019 levels.
LVMH’s selective retail category, which includes Sephora and duty-free unit DFS, and the perfumes and cosmetics group are the only two divisions that have yet to see sales match 2019 levels amid a subdued flow of Asian tourists to European capitals. During the virtual presentation before analysts and reporters, LVMH Chief Executive Officer Bernard Arnault warned that international travel may not return before next year or 2024.
‘Remarkable’ Performance
Tiffany, which joined the group a year ago, had a “remarkable” performance despite the brand’s flagship store on New York’s Fifth Avenue being closed for refurbishment, Arnault said. The store is set to reopen by the end of this year, he added Tiffany’s performance was a “very nice surprise, confirming the positive trend in jewelry already displayed by Richemont,” said Cedric Ozazman, chief investment officer at Reyl & Cie in Geneva.
“The beat was broad-based and despite all the issues linked to rising inflation costs, the group was able to post strong margins, thanks to its impressive pricing power,” he added.
Arnault said the group will be “reasonable,” and “respect” its customers when it comes to potential product price increases. But he acknowledged some of the group’s products have pricing power, citing a special watch called the Nautilus launched by Tiffany and Patek Philippe with 170 pieces. Its retail price of $52,635 was widely surpassed at auction and sold for over $6.5 million last month. If needed, LVMH can “react” to inflation pressures, Arnault said.
Some luxury-goods maker such as Chanel have increased prices for their iconic bags by a margin far outpacing inflation rates over the past two years, prompting customers to complain.