The mechanics started again. Despite the crisis still going through tourism, the luxury sector has recovered. On Monday July 26 and Tuesday July 27, LVMH and Kering announced sharply higher results for the first half of 2021. Bernard Arnault’s group generated sales of € 28.7 billion (+ 56% compared to the same period of 2020), when the one held by the family of François Pinault garnered 8 billion (+ 54.1%).
The two groups benefited from the boom in sales outside Europe, with a performance of + 60% for LVMH in the United States and of + 86% in Asia, against respectively + 236% and + 53% for Kering. Burberry is also very successful across the Atlantic. As for the Italian Prada, despite the closure of 17% of its stores in the world, its sales have jumped by 60%, in particular thanks to the Chinese market.
On the Old Continent, that’s another story. “ The recovery is more gradual there ”, analyzes the management of LVMH. The European market is still handicapped by the absence of tourists, especially Chinese, in the metropolises, whose shops they usually rob. In fact, the majority of the 800,000 people who have pushed through the doors of the Samaritaine since its inauguration by LVMH on June 23 are French people curious to rediscover this Parisian address, and not the silver tourists expected. “ But the sales are there ”, ensures LVMH.
Influx of new money
The success of the big luxury brands is mainly due to their strike force abroad, especially in China, where they operate powerful store networks and, more than ever, sell online. Bags from Louis Vuitton and Dior, the two main brands of LVMH, were therefore popular: the fashion and leather goods division posted an 81% jump in its activity. At Kering, sales of Gucci grew by 50%, those of Yves Saint Laurent by 58% and those of Bottega Veneta by 45%. Hermès is also in good health. The Parisian brand unveiled on Friday July 30 that its activity was up 77% over the first six months of 2021.
After being offered the American jeweler Tiffany, for more than 13 billion euros, in January, Bernard Arnault is again in the maneuver
Even compared to 2019, the reference used to compare the activity with that recorded before the Covid-19 crisis and the annus horribilis of 2020, the figures are in line. This boom (+ 11% for LVMH, + 8.4% for Kering and + 33% for Hermès, compared to the first half of 2019) enabled the three groups to improve their profitability. LVMH posted an operating margin of 26.6% at the end of June, up 5.5 points compared to 2019. Kering’s reached 27.8%, up 10.1 points. Finally, Hermès surpasses its rivals, with a profitability of 41%, against 22% at the end of June 2020.
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