Paris Stock Exchange shuns LVMH despite good half-year results

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With sales jumping by 15% in the first half of 2023 to 42.2 billion euros and net profit of 8.48 billion euros in the first half (+30%), LVMH was raising even more stratospheric expectations and the share suffered a -5% fall (to 808E), dragging down the CAC40 (down to 7,270).

All business activities are reporting significant growth, with the exception of wines and spirits.

 

The luxury group with 75 exceptional Houses is benefiting from the upturn in business in China, offsetting the sharp slowdown in the US market.

 

However, the luxury giant’s share price fell by 5% at around 2.05pm on Wednesday – the worst drop on the CAC 40, which fell sharply as a result (-1.94%) – due to concerns about its sales in the United States and profit-taking after a strong start to the year.

 

Excellent performance

 

Between January and June, the LVMH group recorded a 15% increase in sales to €42.2 billion.

 

In the second quarter, organic sales growth was 17% compared to the same period in 2022, in line with trends in the first quarter.

 

Net profit climbed by 30% compared with the same period in 2022, to 8.48 billion euros in the first half.

 

Chairman and CEO Bernard Arnault expressed his satisfaction with this excellent performance, despite “a first half still marked by economic and geopolitical uncertainties“.

 

He added, “Our Houses have continued to make people dream, thanks to their strong creative momentum and the excellence of their distribution.”

 

Profit from recurring operations for the first half of 2023 rose by 13% to €11,574 million.

 

The current operating margin was 27.4% of sales. Net profit, Group share, rose by 30% to 8,481 million euros.

 

Fashion and leather goods in force

 

While almost all of the Group’s businesses are enjoying strong sales growth, the fashion and leather goods division – alongside selective retailing – posted the biggest increase.

 

According to the Group’s press release, the fashion and leather goods business alone recorded sales of €21 billion (+17%).

 

The Group emphasises the “remarkable performance” of the fashion and leather goods business, “in particular for Louis Vuitton, Christian Dior, Céline, Loro Piana, Loewe and all the other brands, which are gaining market share everywhere”.

 

To illustrate his point, the group’s CEO mentioned Pharrell Williams’ very first collection for Louis Vuitton Homme, presented in the very heart of Paris on the Pont Neuf – generating more than 1.1 billion views on social networks – which aroused immense enthusiasm internationally.

 

However, LVMH is not disclosing the financial performance of each of these brands.

 

Business in the Selective Retailing division (Sephora, Le Bon Marché, La Samaritaine, etc.) jumped by 26% to €8.35 billion.

 

Although the Group did not give figures for Sephora, it did point out that the beauty specialist performed extremely well, continuing its geographical expansion with the recent opening of its very first shop in the UK.

 

Sales of watches and jewellery rose by 11% to 5.4 billion euros.

 

In this business, the Group noted remarkable growth in Haute Joaillerie, as well as the strong creative momentum of all the Watches and Jewellery brands, particularly Tiffany, Bulgari and TAG Heuer.

 

Tiffany enjoyed excellent momentum with the exceptionally successful reopening of its New York flagship store, the “Landmark”.

 

Perfumes and Cosmetics recorded organic sales growth of 13% in the first half of 2023, thanks to a strong drive for innovation combined with a highly selective distribution policy.

 

Parfums Christian Dior is the driving force here, thanks to sales of its Sauvage, J’Adore and Miss Dior fragrances.

 

Only the wines and spirits division disappointed, with sales down by 4% to €3.1 billion. Hennessy Cognac is said to have been a victim of the unfavourable “economic environment in the United States” and “the still high level of stocks held by retailers”.

 

On the other hand, while cognac is struggling, champagne is bubbling with joy, buoyed by a skilfully executed value strategy.

 

Recovery of the Chinese market and international flights

 

The good surprise of the first half of the year was the upturn in the Chinese luxury goods market and duty-free sales.

 

The influx of travellers to the flagship destinations of Hong Kong and Macao has benefited DFS, the duty-free circuit of the Group’s Selective Retailing division.

 

As the LVMH group points out in its press release, “It is in Asia, Korea and Japan that [Chinese consumers] travel, not in Europe and the United States. Today, they still have difficulty obtaining visas”.

 

For Jean-Jacques Guiony, LVMH’s Chief Financial Officer, “last year we had a slowdown in China and we were pulled along by the United States. This year, it’s more or less the opposite”.

 

Geographically, sales rose by 29% in Japan, 34% in Asia excluding Japan and 19% in Europe (compared to 24% in the first quarter). However, this represents a reduction on previous rates.

 

In the United States, sales of fashion and leather goods have been hit by inflation.

 

Until now, the strong dollar has encouraged many American customers to buy their luxury goods abroad. However, economic pressure is increasing in their country as inflation soars and covid savings and financial support from the pandemic era dry up.

 

LVMH also points out that sales in second-tier US cities (such as Austin, Detroit, Columbus…), where luxury groups had previously enjoyed strong growth, are now under severe pressure.

 

While the trend for luxury brands (Hermès, Gucci, etc.) to open shops in second- or third-tier cities in the United States is slowing, it is nonetheless on the up in China, with destinations such as Chongqing and Chengdu among the most dynamic at the moment.

 

Asia excluding Japan accounted for 33% of first-half sales, the United States 24% and Europe 23%.

 

 

Read also >Rémy Cointreau records a record year

 

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With sales jumping by 15% in the first half of 2023 to 42.2 billion euros and net profit of 8.48 billion euros in the first half (+30%), LVMH was raising even more stratospheric expectations and the share suffered a -5% fall (to 808E), dragging down the CAC40 (down to 7,270).

 

All business activities are reporting significant growth, with the exception of wines and spirits.

 

The luxury group with 75 exceptional Houses is benefiting from the upturn in business in China, offsetting the sharp slowdown in the US market.

 

However, the luxury giant’s share price fell by 5% at around 2.05pm on Wednesday – the worst drop on the CAC 40, which fell sharply as a result (-1.94%) – due to concerns about its sales in the United States and profit-taking after a strong start to the year.

 

Excellent performance

 

Between January and June, the LVMH group recorded a 15% increase in sales to €42.2 billion.

 

In the second quarter, organic sales growth was 17% compared to the same period in 2022, in line with trends in the first quarter.

 

Net profit climbed by 30% compared with the same period in 2022, to 8.48 billion euros in the first half.

 

Chairman and CEO Bernard Arnault expressed his satisfaction with this excellent performance, despite “a first half still marked by economic and geopolitical uncertainties“.

 

He added, “Our Houses have continued to make people dream, thanks to their strong creative momentum and the excellence of their distribution.”

 

Profit from recurring operations for the first half of 2023 rose by 13% to €11,574 million.

 

The current operating margin was 27.4% of sales. Net profit, Group share, rose by 30% to 8,481 million euros.

 

Fashion and leather goods in force

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With sales jumping by 15% in the first half of 2023 to 42.2 billion euros and net profit of 8.48 billion euros in the first half (+30%), LVMH was raising even more stratospheric expectations and the share suffered a -5% fall (to 808E), dragging down the CAC40 (down to 7,270).

 

All business activities are reporting significant growth, with the exception of wines and spirits.

 

The luxury group with 75 exceptional Houses is benefiting from the upturn in business in China, offsetting the sharp slowdown in the US market.

 

However, the luxury giant’s share price fell by 5% at around 2.05pm on Wednesday – the worst drop on the CAC 40, which fell sharply as a result (-1.94%) – due to concerns about its sales in the United States and profit-taking after a strong start to the year.

 

Excellent performance

 

Between January and June, the LVMH group recorded a 15% increase in sales to €42.2 billion.

 

In the second quarter, organic sales growth was 17% compared to the same period in 2022, in line with trends in the first quarter.

 

Net profit climbed by 30% compared with the same period in 2022, to 8.48 billion euros in the first half.

 

Chairman and CEO Bernard Arnault expressed his satisfaction with this excellent performance, despite “a first half still marked by economic and geopolitical uncertainties“.

 

He added, “Our Houses have continued to make people dream, thanks to their strong creative momentum and the excellence of their distribution.”

 

Profit from recurring operations for the first half of 2023 rose by 13% to €11,574 million.

 

The current operating margin was 27.4% of sales. Net profit, Group share, rose by 30% to 8,481 million euros.

 

Fashion and leather goods in force

 

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Picture of Victor Gosselin
Victor Gosselin
Victor Gosselin is a journalist specializing in luxury, HR, tech, retail, and editorial consulting. A graduate of EIML Paris, he has been working in the luxury industry for 9 years. Fond of fashion, Asia, history, and long format, this ex-Welcome To The Jungle and Time To Disrupt likes to analyze the news from a sociological and cultural angle.

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