Bernard Arnault likes to repeat himself. “Whether a brand achieves 8% to 9% growth, 10% max. I am going very well “, argued the CEO of LVMH several times to financial analysts during the presentation of the luxury group’s annual results on Thursday January 25. Everyone was waiting for the publication of its financial performance to gauge the health of this industry, particularly during the last quarter of 2023, after first signs of running out of steam in the previous months.
LVMH reassured them of its health: its sales increased by 9% in 2023, reaching 86.2 billion euros, more than 50% of which was thanks to its fashion brands. The last three months of 2023 recorded organic growth of 10%, welcomed Mr. Arnault, before his financial director, Jean-Jacques Guiony, underlined how the activity has entered a phase of “normalization in the second part of 2023”. “Over the last ten years, LVMH’s organic growth has been on average 9.1%”also argued Jean-Jacques Guiony.
This historical reminder is not accidental. In October 2023, the financial community was concerned about the slowdown in turnover growth in the third quarter (+ 9%), after a jump of 17% in the first half of 2023. LVMH shares then plummeted on the stock market. from Paris. At the opening of the session, Friday January 26, the action gained 8%. Barclays financial analysts say “reassured” and those of Bernstein are enthusiastic about “this big winner in the sector” able to “maintain its operating margin at 26.5%, despite an increase in its marketing investments”. Net profit amounted to 15.2 billion euros. A new record.
However, like other of its competitors, the world number one is facing a certain change in the market. “The party of the last three years is over, as we know, since the middle of 2023”, recalls Olivier Abtan, associate director of the AlixPartners firm, specialist in the luxury and consumer goods sectors. In the United States, LVMH sales increased by 4% in 2023, after 15% in 2022 and 25% in 2021, post-Covid-19. In Europe, “we’ve been coming back to earth since the end of 2023”agreed Jean-Jacques Guiony, commenting on sales up 13%, after a jump of 35% in 2022 thanks to the influx of American tourists.
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And since Beijing lifted containment measures, Chinese travelers have returned to the luxury giant’s boutiques, but differently. They mainly go to Macao, Hong Kong and Japan; in Europe, they come solo, “less in groups”, assures Mr. Guiony. And if they would spend more, Louis Vuitton’s sales in Europe to Chinese consumers are still “30% lower than the 2019 level”, specifies LVMH. In Asia (excluding Japan), activity is restarting, at +18%, after a year of no growth in 2022.
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