The luxury sector has experienced continuous growth, thanks to the influence of high-end customers and the Chinese market. In the first quarter of 2023, sales in the luxury industry have continued to rise, and experts predict that this trend will persist throughout the year.
One of the leading players in the luxury goods industry, LVMH, reported an impressive 17% year-on-year increase in sales, surpassing 21 billion euros in the first quarter alone. CEO Bernard Arnault expressed his optimism about the company’s future, stating that these positive figures are just the beginning and will continue to improve throughout 2023.
This outstanding performance has propelled LVMH to join the list of the top 10 most valuable companies globally. With a market capitalization of 500 billion dollars (454 billion euros), LVMH becomes the first European company to achieve this milestone.
Hermès, a renowned leather goods brand and the third-largest company in the CAC 40 index, also experienced significant sales growth. Their sales increased by 22% to reach 3.4 billion euros in the first quarter. The company remains confident in achieving ambitious sales growth targets.
Kering, the owner of prestigious brands such as Gucci, Yves Saint Laurent, and Balenciaga, faced challenges at the end of 2022 but managed to recover with a 2% increase in sales, reaching 5 billion euros. However, Kering’s performance still lags behind that of its competitors.
The success of the luxury industry can be attributed to its ability to target high-net-worth individuals. Italian brands, in particular, have excelled in catering to this affluent customer base. For example, Brunello Cucinelli achieved a remarkable 34.7% year-on-year increase in sales, reaching 265 million euros.
Gucci, on the other hand, has faced challenges due to its focus on a less affluent clientele compared to its competitors. To address this issue, Kering’s CEO François-Henri Pinault outlined a strategy of “elevation.” The opening of the first “Gucci salon” in Los Angeles, where products start at 40,000 euros, aims to attract a high-end clientele.
Overall, the first-quarter figures for the luxury sector are seen as a positive indicator for the year ahead. Experts believe that a company capable of achieving volume growth, maintaining price levels, and securing a significant market share in China can expect an organic growth rate of 12% to 13% in 2023.
Despite concerns of a slowdown in the US market, HSBC bank predicts continued growth in the luxury sector for the following three quarters. The reopening of China after the pandemic has played a vital role in supporting the industry.
Bernard Arnault expressed confidence in the Chinese market, believing that the country’s leaders are wise and will take necessary steps to revitalize Chinese growth. This optimism is further supported by Arnault’s recent meeting with the Chinese Minister of Commerce, Weng Wentao, at the Dior boutique in Paris.
Overall, the luxury sector remains optimistic about its future growth prospects, driven by high-end customers and the recovery of the Chinese market. These factors are expected to continue fueling the industry’s success throughout 2023 and beyond.
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