The luxury sector performs well on the Paris stock exchange

Since the announcement of the easing of sanitary measures in China, the LVMH share jumped by +2.43% to 690 euros at the beginning of the week on the Paris stock exchange. Meanwhile, on Tuesday, the Kering group's share price was 479.95 euros, whereas on Friday 23 December, before the Christmas festivities, the share price was around 472 euros.

Eva Morletto

By Eva Morletto28 décembre 2022

Despite the pandemic, sales recorded by luxury brands in China remain solid (Shutterstock)

The same upward dynamic also applies to Hermès International, which closed on 23 December at 1439.50 euros per share and opened on 27 December at 1470.50 euros. The figures confirm the importance of the opening signals of the Chinese market for the premium brands. Moreover, the entire sector has improved its financial performance following the Chinese decision to lift the mandatory quarantine for all travellers entering the country from 8 January 2023.
However, the confidence that investors have regained is likely to be tarnished once again by the sharp rise in Covid-19 infections in China and the saturation of hospital facilities.
But despite the pandemic, sales recorded by luxury brands in China remain solid. LVMH achieved sales of nearly 20 billion euros in the third quarter of 2022. Group sales in 2021 were €64.2 billion, while the global forecast for 2022 is now €79 billion.
For Kering, the future is also very positive. The group in the hands of the Pinault family ended 2021 with a turnover of 17.6 billion euros. The third quarter of this year saw sales of €5.1 billion, which is 23% higher than last year on a reported basis.
The closure of China and the sanctions that have crippled the Russian market have pushed the big brands to invest more in other markets, such as the US, Europe and Japan.

The success of the major groups despite the difficult geopolitical situation can also be explained by the diversification of the stakes. LVMH has been able to rely on innovation strategies (the "Inside LVMH" programme, the LVMH Luxury Lab incubator), environmental strategies (the "Life 360" programme) and on price increases in highly competitive activities such as fine jewellery.

According to the consultancy firm Bain & Company, the global luxury market, all sectors combined (from fashion to hotels, from prestigious wines to cars) will have posted a +21% jump in turnover by 2022, to 1384 billion euros. This growth is expected to continue in the coming years, with an increase of up to 60% by 2030.

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