Luxury Goods Are in High Demand Amidst Pandemic Recovery
LVMH Sales Surge in First Quarter
The European luxury goods company LVMH Moët Hennessy Louis Vuitton (LVMUY) saw its sales rebound during the first quarter of the year. Q1 sales surged 30% year-over-year and were 8% higher than during the first three months of 2019. The strong results are being driven by shoppers in the US and China—two countries where pandemic-related shutdowns have been eased.
LVMH is seen as a bellwether for the entire luxury industry and an important part of the European economy. The company’s first quarter results lifted its stock price to an all-time high yesterday. With a market value of more than $359 billion (or €300 billion) LVMH is Europe’s most valuable company, eclipsing Nestlé (NSRGY) and Roche (RHHBY).
LVMH Sees Growth in the US and China
LVMH sells products which appeal to consumers of different ages and incomes. It owns 75 brands including Louis Vuitton and Moët Hennessy. The company’s array of holdings enables it to sell everything from $3,000 leather bags to $25 bottles of Cognac.
LVMH’s recent expansion in the US and China as well as its focus on ecommerce has helped it weather the pandemic. These initiatives have made the company less dependent on Europe, which was hit hard by the pandemic and is recovering more slowly than some other parts of the world. Because of vaccine rollout delays, new lockdowns have recently been enforced in France, Italy, and other parts of Europe.
These trends have impacted sales for LVMH. First quarter sales in Asia, excluding Japan, were up 86% year-over-year. In the US, sales increased 23%. In contrast, sales in Europe are down 9% year-over-year.
LVMH Looks Ahead
As the global economy gradually begins to bounce back from the pandemic, LVMH is the first major luxury goods company to report recovering sales in some regions. Investors hope to see similar results from other luxury goods companies.
Earlier this week, LVMH’s Dior brand unveiled a new ready-to-wear fall collection in front of a large audience in Shanghai. Meanwhile Tiffany & Co., the US jewelry retailer which LVMH recently acquired, is off to a strong start in 2021. Tiffany & Co. has raised prices for some of its products and is working on improving its merchandising, distribution, and marketing. The past year has been challenging for LVMH and the rest of the luxury goods industry, but some parts of the company’s business are beginning to return to normal.
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