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It has been a busy year for luxury stocks in 2021, especially due to a turbulent Chinese economy : regulations, shortages or Covid-19 have impacted the major luxury markets. What can we expect for 2022 ?
The major luxury groups have had an eventful year in 2021. LVMH, Kering and Hermès, to name a few as they are very popular in China, have sometimes experienced declines of more than 5% in the space of a few stock market sessions during the year. With the many external twists and turns impacting the stock markets, it is necessary for these luxury powers to establish a firm strategy to avoid plummeting in 2022.
Let’s take the cases individually : from January to November 2021, Kering is in decent shape with a 12% increase. LVMH also shows a nice rise of 35%. However, the prize goes to Hermès, with an increase of 81% over the first eleven months of the year. The results, especially those of the third quarter, have greatly reassured investors.
Hermès had indeed increased its sales by 31% in the third quarter, with revenues equaling $2.37 billion at the end of September. LVMH, showed clear progress in many sectors : fashion and leather goods recorded an increase of 57%, 49% for watches and jewelry and 30% on wines and spirits, all in the first 9 months of the year. Kering, however, was impacted by the high exposure of Gucci, the group’s flagship brand, which grew by only 3.8% in the third quarter of 2021, a figure below expectations.
Nevertheless, on the big picture, concerns do remain for 2022, especially in the Chinese market. The country is considering a possible redistribution of wealth, in addition to a threat of new taxes on luxury goods from abroad. In addition, the emergence of the new Omicron variant, straight from South Africa, should be taken into account, which could increase the uncertainty of possible new sanitary measures. As an example, on the last Friday of November, the day of Black Friday, Hermès, LVMH and Kering all fell by 3%, 6% and 7.5% respectively.
Hermès : Continuing the positive momentum
After Hermès’ strong performance in 2021, sales are expected to benefit from strong deliveries due to sustained demand. The group’s capacity is expected to increase as early as 2022, with a new leather goods facility in the Eure region.
Hermès is expected to grow by 12% in 2022, with sales expected to exceed €10 billion. It is also worth noting that the Hermès share is valued at 18.2 times its sales and 72.5 times its profits. Expectations are therefore high.
LVMH : lucrative diversification ?
With sales spread evenly across the globe, LVMH is ensuring a consistent diversification strategy over the medium and long term. After the acquisition of Tiffany in January 2021 and part of the late Virgil Abloh’s Off-White in August 2021, the world’s leading luxury goods company is moving into several areas to expand their audience.
LVMH is expected to grow 11% in revenue over 2022 to €68 billion. LVMH’s stock market valuation is 5.8 times sales and 32.8 times earnings.
High expectations for Kering
Kering remains a thorny issue. While the group has recently been in the news following rumors of a merger with Richemont, it is necessary for François-Henri Pinault’s brand to compensate for the light results of 2021, particularly with Gucci, in order to reassure the stock market.
With a stock market valuation of Kering shares at 5.16 times sales and 26.8 times earnings, Kering offers a nice discount of nearly 20% to its rival LVMH. The luxury group’s sales are expected to grow by 10% over 2022, to reach 18.5 billion euros.
Lire aussi > LVMH CONTINUES TO GROW ON THE STOCK MARKET
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It has been a busy year for luxury stocks in 2021, especially due to a turbulent Chinese economy : regulations, shortages or Covid-19 have impacted the major luxury markets. What can we expect for 2022 ?
The major luxury groups have had an eventful year in 2021. LVMH, Kering and Hermès, to name a few as they are very popular in China, have sometimes experienced declines of more than 5% in the space of a few stock market sessions during the year. With the many external twists and turns impacting the stock markets, it is necessary for these luxury powers to establish a firm strategy to avoid plummeting in 2022.
Let’s take the cases individually : from January to November 2021, Kering is in decent shape with a 12% increase. LVMH also shows a nice rise of 35%. However, the prize goes to Hermès, with an increase of 81% over the first eleven months of the year. The results, especially those of the third quarter, have greatly reassured investors.
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It has been a busy year for luxury stocks in 2021, especially due to a turbulent Chinese economy : regulations, shortages or Covid-19 have impacted the major luxury markets. What can we expect for 2022 ?
The major luxury groups have had an eventful year in 2021. LVMH, Kering and Hermès, to name a few as they are very popular in China, have sometimes experienced declines of more than 5% in the space of a few stock market sessions during the year. With the many external twists and turns impacting the stock markets, it is necessary for these luxury powers to establish a firm strategy to avoid plummeting in 2022.
Let’s take the cases individually : from January to November 2021, Kering is in decent shape with a 12% increase. LVMH also shows a nice rise of 35%. However, the prize goes to Hermès, with an increase of 81% over the first eleven months of the year. The results, especially those of the third quarter, have greatly reassured investors.
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