LVMH weathers the Covid storm
Louis Vuitton Moët Hennessy (LVMH) have recorded revenue of €44.7bn in 2020, down 17% on 2019.
The luxury goods group also revealed a dip in profits from recurring operations which amounted to €8.3bn in 2020, down 28% on 2019.
There was positive news to highlight, as the group saw an organic revenue decline of only 3% in Q4 along with fashion and leather goods up 18%, revealing a significant improvement compared to the first nine months of the year.
Bernard Arnault, Chairman and Chief Executive Officer of LVMH, said: “LVMH showed remarkable resilience against the unprecedented health crisis the world experienced in 2020. Our priority has been to protect the health and safety of our employees and our clients and we have provided direct support in the fight against the pandemic. Our Maisons have shown great agility and creative energy in continuing to bring to life our customers’ dreams through a unique digital experience thereby further strengthening their desirability. Our focus on dynamic innovation was accompanied by strong commitments to the environment, sustainability and inclusion.
“We are starting 2021 with the pleasure of welcoming the iconic jewelry Maison Tiffany and its teams to our Group. 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 for which the world wishes in 2021 and to further strengthen our lead in the global luxury market.”
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown said: “Steering the big LVMH ship through the treacherous waters of 2020 has been far from plain sailing for management, but these results show that the group has weathered the storm admirably. The coronavirus ripped through sales in the first half of the year, as global travel plummeted and its high-end boutiques and manufacturing sites across the world were forced to close. That pushed organic revenue down 16% compared to 2019. But discerning shoppers dipped their toes back into the luxury market once restrictions began to ease and sales staged quite a recovery.
“Like all pandemic survivors, the adaption to the shift to online shopping has been crucial for LVMH and here fashion and leather goods put in a ship shape performance. As traditional catwalk shows were scrubbed off the schedule due to Covid, big names like Louis Vuitton adapted quickly to showing and selling new creations on digital platforms instead, helping the sector reach double digit growth in the second half of the year.
“As far as geographical performance goes, it’s still very much a game of two halves, with a strong recovery in Asia but sales in Europe are still performing under par given the resurgence of the virus. In China sales ticked up on watch and jewellery sales in particular, as customers once again began ringing the bell of luxury stores and adding their name to waiting lists of coveted goods. After a bitter spat over the price of the acquisition, LVMH is now welcoming Tiffany with open arms, heralding the prestigious arrival of the American jeweller to its luxury stable of brands.
“LVMH also resisted the temptation of going big on promotions in the perfume and cosmetics sector which has suffered particularly badly due to the fall in international traveller numbers and closure of lucrative airport concessions. By being selective in its distribution and not offloading unsold stock to the Chinese parallel market, it should help the group retain the cachet it needs to keep its luxury image with a price tag to match.
“Given the rolling lockdowns across Europe and the United States due to ongoing infection rates, LVMH still has some way to go before it manages to navigate away from the dangerous currents of the coronavirus. But it has shown resilience, and a nimble approach to tapping new digital streams.
“The fact that the group’s core consumers are from higher income brackets with significant buying power, should also help it cope with any more inclement weather in the months to come.’’