Luxury fashion houses Dior and Louis Vuitton have played a major role in driving the first-quarter sales of luxury conglomerate LVMH. Despite facing challenges such as geopolitical tensions, Covid-19 lockdowns in China, and volatile stock markets, LVMH’s fashion and leather goods division achieved a remarkable 30% rise in sales on a like-for-like basis, surpassing analyst expectations of 17%.
Dior and Celine experienced faster growth compared to other labels, while Louis Vuitton consistently performed well within its division. LVMH Chief Financial Officer Jean-Jacques Guiony revealed that the company plans to gradually increase prices at its fashion labels to reflect rising business costs. Over the past six months, the luxury industry has witnessed an average price increase of 8%, and Louis Vuitton and Tiffany saw hikes ranging from 20% to 23%.
In the watches and jewellery segment, there was strong performance with a 19% increase in sales for high-end products, primarily driven by Tiffany in the United States. The brand’s new French owner is targeting younger audiences through marketing campaigns featuring K-pop star Rose adorned in bold gold jewellery.
Selective retail division, Sephora stores, also contributed to LVMH’s success with a 24% organic sales growth. However, travel restrictions in Asia, particularly in Hong Kong, continued to impact the luxury group’s DFS travel retail business. Guiony remains optimistic and predicts that turnaround efforts at DFS could lead to breaking even this year.
Despite concerns about disruptions in China caused by Covid-19 restrictions, Guiony reassured investors that demand would swiftly rebound once the situation improves. Cities not under lockdown measures are already experiencing a decline in traffic as people are traveling less.
Overall, LVMH’s first-quarter sales rose by 23% on a like-for-like basis to 18 billion euros, surpassing the consensus estimate of 18% growth. The resilience demonstrated by the company in the face of various challenges is a positive indicator for the luxury goods industry as a whole. Other luxury brands like Hermes and Kering are expected to report their first-quarter sales in the coming weeks.
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