LVMH, the luxury conglomerate, has announced a remarkable start to the year 2023, with sales of 21.03 billion euros in the first quarter. This represents a notable organic increase of 17%, matching the growth rate witnessed in the previous year. In comparison, the growth rate in the fourth quarter of 2022 was only 9%.
The fashion and leather goods division, as well as the selective distribution sector, played a pivotal role in driving the sales during this period. Fashion and leather goods sales witnessed a remarkable surge of 18%, reaching 10.7 billion euros. The selective distribution segment, which includes popular brand Sephora, experienced a significant increase of 30% (28% on a like-for-like basis), amounting to 3.9 billion euros. The growth in these areas can be attributed to an impressive rebound in China and other parts of Asia. On the other hand, sales in the United States remained stable.
One of the key factors contributing to the growth in the fashion and leather goods division has been the lifting of anti-Covid measures in China. This has resulted in the normalization of consumer behavior, leading to a surge in sales. LVMH witnessed a 14% increase in sales in Asia (excluding Japan) between January and March 2023, which accounted for 36% of its total revenue. In the fourth quarter of 2022, sales in this region had declined by 8%, but for the entire year, they remained steady. The recovery in China indicates a positive trend for the rest of the year, suggesting a return to normalcy with consumers returning to stores. LVMH’s management is optimistic about witnessing robust sales growth in China for the rest of 2023, particularly in the fashion and leather goods segment and jewelry. However, the beauty sector in China continues to face challenges due to the presence of a parallel market selling cosmetics at lower prices.
Apart from China, South Korea and Japan have also contributed significantly to LVMH’s strong performance in the first quarter. South Korea has witnessed an increase in demand for luxury goods from both local consumers and Chinese tourists. In Japan, sales have soared, primarily driven by tourists and domestic customers, with a year-on-year increase of 34% at comparable exchange rates.
The results in Europe have also been encouraging for LVMH, with an organic growth rate of 24% in the first quarter. Despite economic challenges like high inflation rates and the potential threat of a recession, affluent luxury buyers in Europe have continued to splurge on luxury goods. This has helped offset the slowdown in the United States, where sales grew by 8% compared to the same period last year. American tourists capitalized on the favorable exchange rate to make luxury purchases in Europe, while local demand declined. Sephora, perfumes, and watches were the top performers in the US market for LVMH in the first quarter, while sales of fashion and leather goods witnessed a slowdown.
Although the US luxury goods market remains uncertain, LVMH remains confident in its ability to navigate through these challenges. Overall, the rebound in Asia and the strong performance in Europe have helped compensate for the slower growth in the United States. With an impressive start to 2023, LVMH is well-positioned to continue its success in the luxury industry.
It is noteworthy to mention that LVMH’s performance in the first quarter of 2023 can be attributed to various factors such as the recovery in China, flourishing sales in Asia, and the continued demand from European luxury buyers. For readers looking for more information on the luxury industry and LVMH’s performance, the following links may be useful:
1. LVMH Official Website: The official website of LVMH provides comprehensive information about the company, its brands, and its latest news, allowing readers to delve deeper into the world of luxury.
2. Business of Fashion: Business of Fashion is a reputable publication that covers the latest news, trends, and analysis in the fashion and luxury industry. It offers valuable insights into LVMH’s performance and the broader luxury market dynamics.
