(with new details)
by Mimosa Spencer
PARIS, Jan 27 (Reuters) – LVMH LVMH.PA said on Thursday it expects continued strong growth this year after benefiting from an acceleration in sales growth in the fourth quarter of last year thanks the rebound in demand for fashion and accessories.
The world number one in luxury, which owns the brands Dior, Louis Vuitton, Sephora and Hennessy, among others, achieved a turnover of 20.04 billion euros in the last three months of 2021, up 27% in organic data.
Its “Fashion and Leather Goods” division, the largest, posted a 28% jump in sales over the period at constant scope and exchange rates, while financial analysts were forecasting organic growth of 16% on average.
Compared to the corresponding quarter of 2019, before the coronavirus crisis, the growth in turnover for this activity reached 51% in October-December, specifies LVMH.
All divisions of the group recorded double-digit organic growth compared to the fourth quarter of 2020, the best performance being for selective distribution, which includes the Sephora brand, with a jump of 30%.
“After above-expected releases from competitors like Burberry, Prada and Richemont this month, expectations were high for results. This release did not disappoint, even against high expectations,” commented Christopher Rossbach, manager of the World Stars Global Equity Fund and chief investment officer of J. Stern & Co.
THE UNITED STATES HAS BECOME THE GROUP’S LEADING MARKET
LVMH, which also owns the jeweler Tiffany, specified that the United States was now its first market with 26% of global sales in 2021, a development which should be an advantage this year according to analysts.
CEO Bernard Arnault said on a conference call that he expects strong demand to continue in 2022, stressing that the group has some “flexibility” in terms of pricing in the current inflationary environment.
Over the whole of 2021, LVMH achieved sales of 64.2 billion euros, up 44% in published data and 36% on an organic basis. Its current operating profit, at 17.15 billion euros, jumped 107% compared to 2020 and increased by 49% compared to 2019.
The current operating margin thus stands at 26.7% in 2021 compared to 18.6% in 2020 and 21.4% in 2019. It reached 41.5% for the “Fashion and Leather Goods” division, which generated nearly half of the group’s annual turnover. Analyst estimates put it at around 40%.
The annual net income group share increased by 68%, to 12.04 billion euros, an unprecedented amount in the history of the group. It had fallen 34% in 2020, as the first half of the year was heavily affected by the impact of the pandemic.
The board of directors will propose to the general meeting the payment of a dividend of 10 euros, against six euros paid for 2020.
On the stock market, the LVMH share, at 694 euros at the close on Thursday, has fallen 4.5% since January 1 after gaining 42.3% in 2021. On January 5, it recorded a record at 758.50 euros.
(Mimosa Spencer report, French version Marc Angrand, edited by Sophie Louet and Tangi Salaün)