Thriving Louis Vuitton Offsets Drop in Sales at Luxury Group LVMH

Fashion

January 26th, 6:40pm

Asharq Al-Awsat

The logo of Louis Vuitton is seen on a handbag at a Louis Vuitton store in Bordeaux. (Reuters)

Booming sales at LVMH's fashion brands like Louis Vuitton, particularly in China, helped to cushion the impact of the coronavirus pandemic, which hit revenues at the French luxury group. LVMH, which closed a $15.8 billion acquisition of US jeweler Tiffany in the middle of the pandemic, has like rivals taken a hit as governments the world over forced retailers to close shops during lockdowns. Declining international travel has also deprived luxury goods companies of tourist revenues. But an improving backdrop in China, one of the world's biggest markets for luxury fashions and which had eased COVID-19 measures by the second half of 2020, has helped some companies to rebound. LVMH's fashion and leather goods business, home to Vuitton handbags and other brands like Christian Dior, performed better than analysts expected in the fourth quarter, with sales rising 18% year-on-year on a comparable basis. Louis Vuitton is the group's biggest revenue driver. That was an improvement on the third quarter, when like-for-like sales, which strips out acquisitions and currency effects, were already up 12%. "The strong beat should get LVMH's share price home and dry," Berstein analyst Luca Solca said in a note. Overall group sales for the October to December period came in at 14.3 billion euros, in line with forecasts. "In a context that remains uncertain, even with the hope of vaccination giving us a glimpse of an end to the pandemic, we are confident that LVMH is in an excellent position to build upon the recovery," LVMH boss Bernard Arnault said in a statement. LVMH also owns spirits brands, like Hennessy cognac, and operates airport duty free shops, which have struggled. The French company went ahead with its Tiffany deal during the pandemic, but ended up renegotiating the price tag slightly downwards. LVMH is now betting on growing its clout in jewelry, a resilient area of the luxury goods business. For 2020 as a whole, LVMH's revenues reached 44.65 billion euros, falling 16% from a year earlier on a like-for-like basis, which strips out acquisitions and currency effects. LVMH's net profit reached 4.7 billion euros ($5.71 billion), down 34% on a year earlier. The group said it would propose a dividend payout against 2020 results of 6 euros per share, including a 2 euros per share interim dividend paid in December. It had cut its dividend last year to 4.80 euros during the COVID-19 crisis.

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