Luxury company LVMH Moët Hennessy Louis Vuitton LVMUY -4.60% SE reported higher sales and profit for the first half of the year as free-spending shoppers in Europe and the U.S. more than offset Covid-19-related disruption in China.
The world’s largest luxury group by revenue said Tuesday that overall sales increased 28% year-over-year to €36.7 billion, equivalent to $37.1 billion, in the six months to June 30. Profit in the period rose 34% to €10.2 billion.
LVMH Chief Executive Bernard Arnault said the Paris-based company had made an excellent start to the year “but that given the current geopolitical and health situation, we will remain vigilant.”
Luxury companies are riding a postpandemic boom that has so far shown no sign of slowing despite various challenges to the global economy such as rising inflation, logistical blockages and the war in Ukraine. While these problems are causing headaches for mainstream retailers whose customers are feeling the squeeze, the wealthy consumer base to which luxury brands cater has so far continued to spend freely.
LVMH, whose brand stable includes Christian Dior, Louis Vuitton and Tiffany, reported a rise in sales at all its divisions. Growth was strongest in the fashion and leather goods unit, the company’s biggest, where first-half sales rose 31% year-over-year to €18.1 billion.
Overall sales in Europe increased 47% and U.S. revenues gained 24%, though sales in Asia grew just 1% owing to strict lockdowns in Shanghai and other cities in China—the world’s largest luxury market.
Jean Jacques Guiony, LVMH’s chief financial officer, said on an earnings call that sales in China had declined by “heavy double digits,” without disclosing a number.
“This is painful,” Mr. Guiony said, referring to the slump in China, with little clarity as to when the China market will normalize. While the lockdowns in China have largely been lifted, consumers in some areas still face restrictions when it comes to accessing shopping malls, and the risk of further lockdowns remains.
However, LVMH is confident that Chinese sales will rebound strongly once conditions allow, Mr. Guiony said, with the supply-chain issues that affected the country earlier in the year already resolved.
Chinese lockdowns have also hit LVMH’s luxury peers.
Compagnie Financière Richemont SA, whose brands include Cartier and Dunhill, said earlier this month that its sales in China fell 37% in the three months to June, while Burberry Group PLC said its China sales dropped 35% in the same quarter.
Write to Trefor Moss at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
