LVMH up 15% in the first half of 2023
Yesterday, Tuesday 25 July, the leading luxury goods group announced its results for the first half of 2023. All the businesses achieved double-digit organic sales growth over the half-year, with the exception of Wines and Spirits (-4%), which was impacted by the significant organic decline in cognac and spirits sales (-11%). Group sales amounted to 42.2 billion euros at the end of June.
By Cristina D’Agostino26 juillet 2023
The first half of 2023 was a good one for world luxury leader LVMH, whose sales rose by +15% to 42.2 billion euros (+17% on an organic basis), driven by strong performances in Europe (+22%) and Asia excluding Japan (+23%). Sales in Japan rose sharply by 31%, partly due to the weakness of the yen, which led to lower prices than in neighboring countries, particularly China. Jean-Jacques Guiony, Chief Financial Officer of LVMH, underlined at the online presentation of the results "the gradual implementation of a price increase in Japan". The upturn in sales in Asia offset weak growth in sales in the United States of +3%, particularly marked in the second quarter of 2023 with a -1% decline in sales impacted by the economic environment in the United States and particularly noticeable in the spirits sector, hampered by a massive effect of restocking by distributors.
Travel retail in Asia did not really progress. On this point, Jean-Jacques Guiony commented: "Sales in the luxury sector via the Daigou trend and parallel sales are a bad option because they lead to a discount trend in China and other markets. And that has an impact on the business." As for Duty-Free sales locations, an increase in airport shops has been gradually installed due to more attractive rents and a sales environment more in line with the Group's high standards.
The businesses that achieved the greatest growth compared with the same period in 2022 were fashion and leather goods (+17% in reported growth) to €21.1 billion and selective distribution (+26%) totaling €8.3 billion, including Sephora, DFS, and Le Bon Marché. Sephora performed particularly well, gaining market share in the United States, Europe, and the Middle East. Business at DFS recovered particularly strongly thanks to the reopening of borders.
Watches and jewelry grew by +11% (+13% organic) to €5.4 billion, with a more significant increase in sales in the second quarter of +14%. Sales in this sector "came under slight pressure in the United States but performed well in Asia, thanks in particular to Chinese customers. However, the increase in purchases by the latter is not as strong in watches and jewelry as it is in fashion and leather goods", explained Jean-Jacques Guiony.
Profit from recurring operations for the first half of 2023 was €11,574 million, up 13%. The recurring operating margin was 27.4% of sales. The group share of net profit was €8,481 million, up 30%.
Bernard Arnault, Chairman and CEO of LVMH, commented: "LVMH achieved an excellent performance in a half-year still marked by economic and geopolitical uncertainties. Our Houses have continued to inspire thanks to their strong creative momentum and the excellence of their distribution, as demonstrated by the enthusiasm surrounding Pharrell Williams' first fashion show for Louis Vuitton and the reopening of Tiffany & Co's New York "Landmark" (...)".
On this point, it is worth highlighting the group's increased marketing spend in the first half of the year, mainly due to spectacular shows by the group's flagship brands, and in particular, the Louis Vuitton fashion show on the Pont Neuf in Paris, which attracted more than 1.1 billion views on social networks, an all-time record. Real estate investments were also announced in major city centers, enabling better financial performance compared with rental income. Investments in operating inventories, particularly in fine jewelry, also had an impact on free cash flow from operations, which fell by half (-2.2 billion euros) overall and now stands at 1.8 billion euros in the first half of 2023, compared with 4.0 billion euros in the same period of 2022.
Share the post
Bluebell Capital invests in Kering, a strong signal facing LVMH?
Bluebell Capital quietly enters Kering’s capital, triggering speculations about a possible merger with Richemont and potentially challenging LVMH’s dominance in the luxury sector.
By Eva Morletto
Be notified of the latest publications and analyses