“The pandemic belt tightening is over and LVMH (EPA:MC)’s customers have been splashing out on the little luxuries in a post crisis splurge. Organic half year revenue growth jumped by 53% compared to 2020, and crucially by 11% compared to 2019 levels to reach €28.7 billion.
Q2 2021 hedge fund letters, conferences and more
As vaccination rates increased during the second quarter of 2021 and confidence in the economic recovery took hold, wallets were unzipped with a vengeance. Fashion and leather goods were in demand with big spenders pushing revenue growth up by a record 81% compared to the same period last year, and by 38% compared to pre-pandemic levels in 2019.
The Creative Leadership At LVMH
The surge in spending on the latest styles is testament to the creative leadership at LVMH’s core brands of Louis Vuitton and Christian Dior. This isn’t just testament to the group’s online strength but the 24 carat cachet the brands clearly hold over well-heeled shoppers. Even when socialising opportunities have been more limited, its core clientele have shown they still want to reward themselves with high end treats. There had been some groomed eyebrows raised at the eye watering debt pile raised by the acquisition of Tiffany’s, particularly given the bitter spat over the price tag. Although it’s still very early days, it’s so far so good, with the brand performing well since its integration, while organic profits from recurring operations in jewellery and watches was up 122% compared to the first half of 2019.
The corks were also popping at the wine and spirits arm, with revenue growth of 12% compared to 2019. Customers are back in a celebratory mood with champagne sales rising 10% compared to the same period pre-pandemic, with the party spirit particularly prevalent in Europe and the United States.
Given that the global travel industry still hasn’t rebounded, these buoyant sales figures indicate a bubbling up of luxury domestic consumption. There is a risk it’s simply due to pent up demand, which could wane as the novelty of leaving lockdowns behind recedes. But once international tourists become captive customers in capital city boutiques and airport shopping malls once more, they should help LVMH should stay on this smooth road of recovery.’’
Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown
About Hargreaves Lansdown
Over 1.6 million clients trust us with £132.9 billion (as at 30 April 2021), making us the UK’s largest digital wealth management service. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month.
