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Rebound In International Travel Helps LVMH Dazzle At The Full Year

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LVMH Moet Hennessy Louis Vuitton SE (EPA:MC)’s revenue rose 17% to EUR79.2bn for the year on an organic basis, reflecting double digit increases in all product areas. The group’s biggest division, Fashion & Leather Goods saw a 20% increase in revenue to EUR38.6bn, which was a record. Brands including Louis Vuitton and Christian Dior performed well.

The next biggest division, Selective Retailing saw a 17% jump in revenue, reflecting a “strong” rebound in Sephora stores. Further investment in the brand’s online offering was made.

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The group hired 39,000 people in the year, with 15,000 in France.

Profit from recurring operations was up 23% to EUR17.2bn.

January has “started well” for LVMH and the group said it’s confident in its ability to grow in the new financial year.

LVMH intends to propose a dividend of EUR12 per share in April.

LVMH's Earnings

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown:

“LVMH is the jewel in luxury’s crown. Bernard Arnault’s empire has seen its valuation swell over 200% in the last five years, and momentum doesn’t appear to be running out. A particularly bright spot was group’s biggest division, Fashion & Leather Goods seeing a 20% increase in revenue, which was a record.

 

A lot of this is down to LVMH’s highly dependable customer base. The ultra-wealthy aren’t put off by economic ups and downs, and inflation is unlikely to dent their spending habits. The margins up for grabs on high-end fashion and accessories is therefore eyewatering and so the virtuous cycle of design, marketing and sales can continue.

News that the USA’s economy slowed less than expected in the last quarter also means more shoppers are due to be slinging Louis Vuitton bags over their shoulders than expected.

Therein lies LVMH’s true strength. Its customers might be resilient but the likes of Louis Vuitton and Christian Dior have enjoyed genuine artistic superiority in recent quarters.

The group’s also benefitting from the return of travellers as borders reopen, especially China. This doesn’t just help domestic markets improve, tourism spending is also highly important. There aren’t many businesses that can weather the recent economic and market storms as stylishly as LVMH, and long may that continue.

LVMH bears will point out the group demands a relatively hefty valuation, which of course increases risk.”