French luxury group LVMH CEO Bernard Arnault. (Photo by ERIC PIERMONT / AFP) (Photo by ERIC … [+]
Luxury conglomerate LVMH Moët Hennessy Louis Vuitton—the owner of Christian Dior, Louis Vuitton and Tiffany—posted record revenue of €79.2 billion ($86 billion) in 2022, with profit jumping to €21.1 billion ($23 billion). Key drivers were the fashion brand portfolio and a rebound in international travel.
Across the French company’s five divisions, the biggest, Fashion & Leather Goods, saw a 20%* hike to $42 billion, another record, well ahead of the group’s overall organic growth of 17%. Louis Vuitton, the company’s lead fashion brand, crossed €20 billion ($21.8 billion) for the first time.
The other notable performance came from Selective Retailing, the next biggest division. It houses the likes of beauty giant Sephora, which is soon to debut a physical presence in the United Kingdom; and duty-free retailer DFS Group, operating Samaritaine in Paris but still suffering from a lack of Chinese travelers in greater China.
Selective Retailing’s 17% growth was mostly the result of Sephora achieving a record performance in both revenue and earnings with a strong rebound in store activity. In the United States, the network is being expanded substantially thanks to a partnership with Kohl’s.
In an investor call, LVMH’s chairman and CEO Bernard Arnault—who has begun a succession plan for the business—stressed “the quality and desirability of our products” and said that in difficult times, referring to the Covid crisis and the tough geopolitical environment, LVMH was gaining market share. “This has been the case since 2019,” he pointed out.
Sophie Lund-Yates, lead equity analyst at investment group Hargreaves Lansdown, said: “Bernard Arnault’s empire has seen its valuation swell over 200% in the past five years, and momentum doesn’t appear to be running out. LVMH has a highly dependable customer base; the ultra-wealthy aren’t put off by economic ups and downs, and inflation is unlikely to dent their spending.”
Creativity counts in luxury
Moreover, this is while working with an average operating margin across the business of 26.6%, and even higher for high-end fashion and accessories. “So the virtuous cycle of design, marketing and sales can continue,” said Lund-Yates.
“Therein lies LVMH’s true strength. The likes of Louis Vuitton and Christian Dior have enjoyed genuine artistic superiority in recent quarters. The group is also benefiting from the return of travelers as borders reopen, especially China. This doesn’t just help domestic markets, tourism spending is also important. There aren’t many businesses that can weather the recent economic and market storms as stylishly as LVMH.”
A white with red and black monogram print pattern circle leather crossbody bag from Louis Vuitton … [+]
When talking to financial analysts, Arnault was also keen to talk about how creativity, including cultural and historical dimensions, have led to the “the exceptional appeal of our maisons.” The results bear out this strategy while the share price, already at a new high above 800 euros for the first time on Thursday is likely to trend higher on Friday.
In a statement, Arnault said: “We approach 2023 with confidence but remain vigilant due to current uncertainties. We count on the desirability of our maisons and the agility of our teams to further strengthen our lead in the global luxury market and support France’s prestige throughout the world.”