LVMH Achieves Stunning Growth for the First Half of 2021
The French conglomerate outperformed forecasts that were set for the Group and continues to seize market share.
The world’s largest luxury group, LVMH Moët Hennessy Louis Vuitton exceeded expectations to achieve record growth for the first half of 2021.
Across the board, the conglomerate’s organic revenue grew by 53 per cent compared to 2020 and 11 per cent compared to 2019. The revenue for the company for the past six months stood at €28.7 billion.
The stellar achievement of the company was attributed to the surging sales figures during the second quarter of 2021. LVMH mentioned in a press release of its performance that, “This performance reflects accelerated growth in the second quarter of 2021, which saw organic revenue increase by 14% compared to 8% in the first quarter.” With this, the company is steadily growing its market share and edging out some of its competitors such as Kering Group, Chanel and Richemont.
As the economy begins to restart again, more consumers are willing to spend luxuriantly on designer clothes and accessories. This coupled with pent up demand from the travel restrictions has fuelled the growing sales figures. In particular, LVMH’s fashion and leather goods division reported organic growth of 81 per cent compared to 2020, and 38 per cent compared to 2019. According to LVMH’s press statement, Louis Vuitton has achieved an “exceptional level” of profits while its label mates, Christian Dior, Celine, Fendi and Loewe also performed above expectations.
In the watches and jewellery division, LVMH saw a rebound in interest for its stores as restrictions began to ease. Compared to its figures in 2019, the company recorded a 5 per cent growth. The major event for the division would be the acquisition of US jeweller Tiffany & Co. for a staggering US$15.8 billion. Tiffany joins the company’s wide portfolio of brands that includes Bvlgari, TAG Heuer and Chaumet.
The major acquisition of Tiffany also started the ball rolling for LVMH to look for other possible candidates but it will take an “opportunistic” approach to smaller investments. In the past year alone, it has bought a 50 per cent equity stake in Jay-Z’s champagne Maison Armand de Brignac; a minority stake in star designer Phoebe Philo’s upcoming namesake brand; 60 per cent stake in Virgil Abloh’s luxury streetwear label Off-While.
The slew of investments does show that the conglomerate was not adversely affected by the pandemic, in fact, the conglomerate even reopened the iconic La Samaritaine department store in Paris. In fact, its CEO Bernard Arnault was briefly the richest man in the world. Its robust growth even beat forecasts by UBS (69 per cent) and Bloomberg (72 per cent), according to WWD.
Shares of the company increased more than 70 per cent since June 2020 and this enabled the conglomerate to be the largest European company on market value.
In sharing what’s to come for the company Arnault said, “Within the current context, as we emerge from the health crisis and see a recovery in the global economy, I believe that LVMH is in an excellent position to continue to grow and further strengthen our lead in the global luxury market in 2021.”
To say that 2020 was an annus horribilis would be an understatement because the ravages of the pandemic have affected the entire economy. For the luxury industry, where its products are income elastic, a major setback like the pandemic has caused many companies to suffer losses and rethink their business strategy. To that end, it will be interesting to see how LVMH will continue to perform in the second half of 2021.
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