LVMH announces sales of $37.15 billion for the first half of 2022

LVMH Moet Hennessy Louis Vuitton reported revenue of 36.7 billion euros ($37.15 billion) in the first half, up 28% compared to the first six months of 2021, the French luxury goods group touting “organic growth double-digit revenue” for all of its business groups in the first half and strong growth from Europe, Japan and the United States In addition to “exceptional momentum” in champagne and cognac and “growth fast” in fragrances and skincare, LVMH revealed that Fashion & Leather Goods is delivering a “remarkable performance”, as consumers continue to double their purchases of luxury goods in the wake of the pandemic.

Focusing specifically on its largest division, LVMH revealed that Fashion & Leather Goods generated revenue of 18.1 billion euros ($18.32 billion) in the first half of the year, up 24% (on an organic basis) for the first half, and up 19% (to €9.1 billion) for the second quarter, which ended June 30. In addition to revenue growth, Fashion & Leather Goods reached new “records” of profitability, by LVMH, with current operating income up 33% to 7.51 billion euros for the first half, and its operating margin in percentage of revenue increased by 0.6 points to 41.4%. (A nod to the success of sustained price hikes by Louis Vuitton, Dior, etc., which raised prices 3-7% in the first half, with “no reaction from customers,” according to management. of LVMH.)

In a note following LVMH’s earnings call, Bernstein analyst Luca Solca said margins of more than 40% for fashion and leather goodsare the new normal, thanks in particular to the performance of Dior”, which contributes “significantly” both in terms of turnover and margins, and in addition, “Loewe, Fendi and Celine also significantly improve their margins – most of the brands within the divisions are to achieve a satisfactory level of profitability commensurate with their size, which was not the case in the past.

Reflecting on the “strong progress” of the Fashion & Leather Goods group, LVMH mainly ticked Louis Vuitton, Christian Dior, Fendi, Celine, Loro Piana and Loewe – leaving out the likes of Givenchy. In an apparent effort to meet Louis Vuitton’s demand, LVMH has unveiled the inauguration of two new workshops for its most robust brand in France, including one for precious leathers. As for its other Fashion & Leather Goods leader, Dior, LVMH pointed to “exceptional growth in all product categories”, including “the continued success of [its] Lady Dior bag.”

For its part, LVMH evokes the “success of the iconic Peekaboo bags and Baguette” for Fendi; the planned opening of two new workshops in Italy in H2; and the Fendace capsule collaboration with Versace, which “generated significant media coverage and commercial success, with its best-selling products selling out within days”. He also cited “the strong growth in ready-to-wear” for Celine, as well as the success of new high-end leather goods offerings; and in Marc Jacobs terms, the brand boasted “new momentum” in the first half, according to LVMH, with “an impressive increase in online sales and new stores opening in the United States and in Europe”.

Elsewhere under its umbrella, the group revealed that the Perfumes & Cosmetics division – which recorded organic revenue growth of 13% in the first half, reaching 3.6 billion euros – experienced “excellent momentum in Perfumes” and a rebound in make-up”. LVMH also mentioned the impact of health restrictions in China on the division, in particular, as well as its “intensification of selectivity in distribution” and its practice of “limiting promotions “.

LVMH turnover

The Watches & Jewelry division – which achieved sales of 4.9 billion euros in the first half, with organic growth of 16% – was driven by the success of Tiffany & Co., which “achieved a excellent half-year, still driven by strong momentum in the US”, as well as sales at Bulgari and the watchmaker Tag Heuer. And yet, LVMH noted a “strong rebound from Sephora” and a “recovery of hotel activities”, with baggage handler Rimowa also benefiting from a resumption of travel, “stepp[ing] significantly improved its performance with the reopening of borders around the world. Similarly, Wine & Spirits – which saw revenues reach 3.3 billion euros in the first half (up 14% on an organic basis) – felt a boost thanks to the recovery in travel, the strong demand in the United States and Europe being “led by the reopening of restaurants and the recovery of tourism”. .”

At the regional level, LVMH saw its turnover increase by 24% in the American market in the first half. Sales increased by 47% in Europe, 33% in Japan and 1% in Asia (excluding Japan). In terms of revenue breakdown by region, the group generated 32% of total first-half revenue in the Asian market (compared to 38% in the first half of 2021), followed by 27% of sales in the United States. (vs. 25% in the first half of 2021), 15% in Europe – excluding France (vs. 14% in Q1 2021), 7% in France (vs. 5% in H1 2021), 7% in Japan (same result as in H1 2021), and 12% of “Other Markets” (vs. 11% in H1 2021).

As for the “painful” impact of the Chinese market on the group’s results, LVMH chief financial officer Jean Jacques Guiony said on an earnings call on Tuesday that sales in China, which is facing strict lockdowns in the face of the latest wave of COVID -19, were down “heavy double digits”. While the group saw “some improvement” towards the end of the second quarter, it was “not significant”. Nonetheless, management is confident that the Chinese market will “bounce back” once the health restrictions are lifted thanks to strong underlying demand.

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