sales of French luxury giants rise despite war in Ukraine

Despite the war in Ukraine – from which the two groups withdrew in early March – and the detentions in China, the French luxury giants are doing well. The sales of Hermès and LVMH have therefore exceeded analyst expectations for the first quarter of 2022.

For Hermès, Factset and Bloomberg expected a turnover of 2.4 billion euros. Ultimately, 2.765 billion euros in turnover will be realized, an increase of +33% compared to the first quarter of 2021. “In the medium term, despite the economic, geopolitical and monetary uncertainties in the world, the group confirms an ambitious target of turnover growth at constant exchange rates”, the group reported this Thursday, April 14.

As for LVMH, the Bloomberg and Factset consensus estimated revenue at $16.4 billion and $17 billion, respectively. They amounted to 18 billion euros (+29% compared to the first quarter of 2021). The group of 75 “houses” – the first of the CAC 40 to unveil its quarterly results on Tuesday, April 12 – estimates that they “a good start to the year in an environment still disrupted by the health crisis and marked by the dramatic events in Ukraine”.

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As for Hermès, this first quarter was supported by the Americas region, which grew 44% at constant exchange rates. The indicator that Hermès . used as reference “gaining significant momentum at the end of March thanks to very good momentum in the United States,” show the group.

Also note the good performance in Europe excluding France (+44%) and in France (+40%). These two areas “achieving solid growth, particularly in the UK, Germany, Italy and Spain”, according to HermesAsia excluding Japan saw an increase of 20% and Japan of 17%.

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Double-digit growth for nearly all LVMH divisions

For LVMH, which owns the brands Louis Vuitton, Dior, Celine and Moët & Chandon, among others, sales were highest in Asia (excluding Japan), despite the lockdowns in China. They represented 37% of sales in the first quarter, up from 41% the year before. The United States (24% of sales), Europe (14%) France (1%) and the “other markets” (12%) all earn one point.

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For this first trimester “With the exception of Wines and Spirits, which continue to face supply constraints, all businesses posted double-digit sales growth.” emphasizes the group.

Fashion and leather goods, its flagship division, achieved sales of more than 9 billion euros in the first quarter, a growth of 35% compared to the first quarter of 2021. LVMH, which never details the sales of its brands, believes that Louis Vuitton “has an excellent start to the year” and that Dior “continues with a remarkable performance”. Fendi saves “solid progress” and Celine “very strong growth”.

The Watches and Jewelry division achieved a turnover of 2.338 billion euros (+24%) and Tiffany achieved “an excellent start to the year”.

Know perfumes and cosmetics “excellent momentum driven by continued growth in perfume and makeup, particularly in the United States” and achieve a turnover of 1.9 billion euros (+23%).

The Wines and Spirits business of 1.638 billion (+8%) is not progressing as much as the other categories of the group, even if “The champagne business has had an excellent start to the year, with significantly higher volumes, especially in Europe and Japan, and a determined policy of price increases.”

In Selective Retailing (DFS), with sales of 3 billion (+30%), Sephora “an excellent performance over the quarter with a strong rebound in the activity of its stores, whose network was partially closed at the beginning of 2021”.

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The giants full of confidence despite the war in Ukraine and the incarcerations

Hermès was the first luxury group to announce the closure of its stores in Russia in early March. The saddler and leather goods maker has three shops in Moscow employing 60 people. The opening of a fourth store in Saint Petersburg, scheduled for June, has been suspended.

“The impact is not significant for the group”, stated Éric du Halgouët, Chief Financial Officer. “Turnover in Russia represents less than 1% of group turnover” which had no activity in Ukraine. Continue, Hermès “fully respects the law and does not sell to the list of oligarchs” which he believed was passed on to them.

The LVMH group has indicated to follow “with the utmost attention the evolution of the situation in Ukraine and in the region”. The luxury giant announced that it would also close at the beginning of March “temporary” its 124 stores in Russia, where it has 3,500 employees.

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As for the situation in China, Hermès had started the year well “exceptional”, according to Éric du Halgouët, until March, when the first detentions began. Currently, Hermès, which has 26 stores in China, has closed three stores in Shanghai. However, the group says: ” confident “, and emphasizes winning new customers in China.

An opinion shared by LVMH. “We may be affected in the short term, but in the long term we are not concerned,” explains Jean-Jacques Guiony, the group’s financial director. “It will clearly have an impact on business,” he admitted but “we already experienced this two years ago”† LVMH has learned from the experience of 2020 that once health restrictions are lifted, customers will be back to exactly what they were before delivery.

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(with AFP)