Business & Investment

Prosperous Louis Vuitton offset the decline in sales of luxury group LVMH By Reuters

© Reuters.Louis Vuitton store in Paris

Sarah White and Sylvia Aloisi

Paris (Reuters)-Rapid growth in LVMH fashion brands like Louis Vuitton, especially in China, has helped mitigate the effects of the coronavirus pandemic, which is squeezing the earnings of the French luxury group.

LVMH, which completed a $ 15.8 billion acquisition of US jeweler Tiffany during a pandemic, appears to have been hit by governments around the world that forced retailers to close stores during the blockade.

The decline in overseas travel has also robbed luxury companies of tourism revenue.

However, some companies have recovered due to the improvement of China’s background, which is one of the world’s largest luxury fashion markets and relaxed COVID-19 measures by the second half of 2020.

LVMH’s fashion and leather goods business, home to other brands such as Louis Vuitton handbags and Christian Dior, performed better than analysts expected in the fourth quarter, with sales up 18% year-on-year on a comparative basis. did. Louis Vuitton is the Group’s largest profitable driver.

This was a third-quarter improvement, with similar sales, which removed the effects of acquisitions and foreign exchange, were already up 12%.

“A strong beat should take LVMH’s share price home and dry it,” Bernstein analyst Luka Solka said in a memo.

LVMH Financial Chief Jean-Jacques Guiony said in a conference call that the launch of a new product planned before the pandemic helped the brand, such as the Vuitton handbag named after the Pont Neuf bridge in Paris.

LVMH-Sets the tone of a luxury rival like Gucci owns Kering (PA :) Along with Revenue-While some small peers are cutting, they’re catching up with marketing spending, and despite the crisis, hosting catwalk shows in cities like Shanghai helps Guiony said it was.

“When no one was talking, Louis Vuitton and Dior were in the spotlight of their customers,” he added.

LVMH billionaire boss Bernard Arnault said in a statement that the group is well-suited to build on market recovery.

Guiony said China’s outlook at a time when new regulations to combat the resurrection of COVID-19 cases are at risk of overshadowing the Lunar New Year festival in mid-February, which is usually a major shopping highlight. He said that the outlook was uncertain.

LVMH also owns spirits brands such as Hennessy Cognac and operates a struggling airport duty-free shop.

The French company went on to trade Tiffany during the pandemic, but ended up renegotiating the price slightly downwards. LVMH is currently betting on expanding its influence on jewelery, a resilient area of ​​the luxury business.

From October to December, LVMH Group-wide sales were € 14.3 billion, as expected.

Overall, LVMH revenues reached € 44.65 billion, down 16% year-on-year on a similar basis.

LVMH’s net income reached € 4.7 billion ($ 5.71 billion), down 34% year-on-year. On the other hand, recurring profit, or profit before interest and taxes, fell by 28%, well above analysts’ expectations.

The group said it would offer a dividend payout ratio of € 6 per share, including an interim dividend of € 2 per share paid in December, for its 2020 results.

During the COVID-19 crisis, last year’s dividend was reduced to € 4.80.

($ 1 = 0.8228 euros)

Prosperous Louis Vuitton offset the decline in sales of luxury group LVMH By Reuters Prosperous Louis Vuitton offset the decline in sales of luxury group LVMH By Reuters

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