The big luxury brands continue to shine despite the economic situation
Lovers of Swiss Rolex, Zenith or Patek watches will have to wait. Just like Hermès bags or Cartier rings. In fact, the waiting list to buy these luxury products is getting longer and longer. LVMH, parent company of Louis Vuitton, Dior and other Hublot brands, the Kering group, holding company of Gucci, Balenciaga and Saint Laurent, and the house of Hermès are struggling to meet silver consumer demand.
This is shown by the publication of the half-year results of the most important luxury groups. During this period, their activity increased sharply, even if the brands suffered from the containment measures taken in China, particularly in Shanghai and Beijing, to combat the spread of Covid-19. Sales of the Swiss Richemont, which owns Cartier and Van Cleef & Arpels, fell 37% between April and June.
Britain’s Burberry and Italy’s Prada suffered similarly. Kering also regrets the closure of more than a third of Gucci’s Chinese stores, the largest of its subsidiaries, from April to May. So much so that the brand’s sales rose just 4% in the second quarter. For its part, although also affected, LVMH managed to limit the break (+1% in the first six months of 2022 in Asia ex Japan).
Despite this new crisis in the Middle Kingdom, the turnover of the luxury tenors increased at the end of the first half: + 21% for LVMH to 36.7 billion euros, of which 18.1 billion through its fashion brands; +16% for Kering to 9.9 billion euros, including +8% for Gucci and +34% for Saint Laurent; + 23% for Hermès to 5.5 billion euros. The L’Oréal Group, manufacturer of luxury cosmetics and hygiene products, recorded gains ” terrific ” and “balanced”argued Thursday, July 28, Nicolas Hieronimus, its CEO (+ 13.9%, to 18.36 billion euros).
Rising operating costs
In fact, the big manufacturers of luxury goods have found their customers in Europe. The Americans are back in Paris. Many have crossed the Atlantic to buy cheaper given the weak euro. Others have untied their wallets in the United States. And their appetites haven’t faltered despite the price hike, said Jean-Jacques Guiony, LVMH’s chief financial officer, who confirms the group has moved its labels in a number of ways “3% to 7%”. At Gucci, whose Kering aims to bring sales to over 15 billion in five years, the so-called “elevation” strategy has also hit the mark. The companies assure that these price increases had no effect on sales volumes.
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