Published on 27 Jan. 2022 at 19: 12
LVMH hits hard. Last year, the world leader in luxury (owner of “Echos”) completely erased the air pocket of 2020 linked to the global pandemic. And its financial results are much higher than those displayed in 2019, despite a still tense health context, especially in Asia. A signal which, moreover, confirms the rebound of the world luxury market much faster than expected.
All LVMH indicators are green. Turnover reached a record at 64,2 billion, up by 36% in organic terms over one year (-16% in 2020). Compared to 2019, sales increased by 16%. Current operating income climbed by 36% compared to 2019, to more than 14 billion euros. This brings the operating margin to 25,7%. Net income therefore soared by 68% over two years, reaching 12 Billions of Euro’s. A rare amount for a French group.
“LVMH achieved a remarkable performance in 2021 in a context of gradual exit from the health crisis”, insisted Bernard Arnault, CEO of LVMH, before welcoming “its teams who have been able to maintain the link with our customers despite the crisis and continue to make people dream”.
“2019, it’s almost a distant memory”, completes Jean-Jacques Guiony, the financial director of the world giant. The Fashion and Leather Goods division, with Louis Vuitton, Christian Dior, or Celine panicked the counters (+36% compared to at 2019), passing the course of 31 billion. The profitability of this division, LVMH’s main source of profit, jumped by 75%, generating on its own more than 14 billion in operating income. “Vuitton is more than a fashion brand, it’s a cultural brand that reaches young and mature customers”, points out Bernard Arnault
Asia, the group’s largest market, and the United States were the engines of the rebound, with respective increases of 31% and 25% compared to 2019. In China, sales have almost doubled in two years – Chinese customers, deprived of travel, are now consuming at home. Orphaned by its tourists, Europe remains down 8%, but is recovering in the fourth quarter.
“Across the world, demand has been growing strongly, underlines the financial director. We have lost the tourists. But there was a concentration around the local clientele, in Asia, in the United States, but also in France or in England”.
DFS and the hotel industry are struggling
The wines and spirits division, with Hennessy (+9% compared to 2019) also benefited from these local purchases, especially in the United States and in Asia. In the first half, it was individuals who boosted sales, while the second half of the year was more driven by the reopening of restaurants, cafes and nightclubs. Champagne volumes increased compared to 2019. The situation remains more tense for cognac, due to the natural limitation of supply.
With the integration of Tiffany, sales of watches and jewelry rose by 3.3 billion in 2021 to almost 9 billion. The American jeweler posted “a record in terms of sales and profitability, while its flagship store on 5th Avenue in New York, the first in the world, was closed”, noted Bernard Arnault. It is due to reopen at the end of the year. In the meantime, the brand has reviewed its offer, and called on the stars, Beyoncé and Jay-Z for a global campaign. It remains to renovate the commercial network to finalize the incorporation of this new weapon of the group.
On the other hand, the health situation affected the hotel and travel retail activities with DFS, whose activity remains down by 16%. Very present in Asia, the group was penalized by the zero Covid measures, in Hong Kong, China and Japan. LVMH has suddenly closed several stores.
In this setting, investments, more than 3 billion euros last year, “left again in the second half, after better visibility with the key to hiring. They will resume their cruising speed in 2021”, underlines Jean Jacques Guiony.
In France, LVMH will recruit 14.700 people in 2021. In March, the Dior boutique located on avenue Montaigne in Paris since 1947, will present a new face. A Vuitton workshop will be inaugurated in Vendôme in a month. The R&D center in Champagne is operational, as is Veuve Clicquot’s renovated production tool. “If the economic situation continues as in January, 2022 will be buoyant”, estimated the CEO of LVMH.
Tribute to Virgil Abloh
The group was marked last year by the premature death of Virgil Abloh, the creator of Vuitton’s men’s collections. “2021 will have been a tragic year with the disappearance of Virgil Abloh, whose creative genius I would like to salute”, underlined Bernard Arnault. If he left a great void, this work enthusiast also bequeathed a legacy and a number of projects. “We are still in mourning. We will see later for its replacement, “said the CEO.