There’s no recession in Luxury, with global groups´ sales booming. Unstable markets, surging inflation and gathering economic gloom have proven no barrier to demand for luxury watches, jewellery and cars. The +19% leap in sales reported last quarter by LVMH, the owner of Louis Vuitton and Christian Dior Couture, suggests that luxury remains immune to the crises.
The sector has sailed above stock market turbulence, lockdowns in China and soaring inflation in recent months, buoyed by its wealthy customer base even as retailers of mass-market clothing and accessories suffered weakening demand. These are a few numbers for leading players in the first half of 2022:
LVMH, the world’s leading luxury group, recorded revenue of €36.7 billion in the first half of 2022, up 28% compared to the same period in 2021. All business groups achieved double-digit organic revenue growth over the period.
Kering (BALENCIAGA, Gucci, Saint Laurent) reported €9.9 billion in revenue for the first half of 2022, up 23% compared to the first six months of 2021.
Hermès reported consolidated revenue of €5.4 billion in the first half of 2022, up 29% compared to the same period in 2021.
Good financial news for the luxury carmakers: Ferrari lifts 2022 forecasts after Q2 financial record results (Q3 results will be released in early November). The initial public offering of Porsche benefited from the luxury cachet of the brand, whose market value surpassed that of its parent, Volkswagen AG, after the listing.
Not only the top line but the bottom line is delivering great numbers as well. Unlike mass-market retailers, luxury conglomerates can transfer cost increases to the retail price. Luxury brands, including LVMH, have historically raised prices at around 2.5 times the rate of inflation, according to UBS.
While Chinese tourists took advantage of lower prices in Europe in the pre-pandemic era, it’s Americans with strong dollars and Europeans who are doing the buying now.
Luxury is one of the most resilient categories during recessions and economic downturns, with recoveries that are dramatically faster and stronger than non-luxury sectors. Now, the question is whether this proven for high-end brands´ resilience will remain during Q4 2022 turbulences.
I am convinced that the “Dream Brands” managed by Luxury Groups will continue beating the market over the long run. What is your perspective?
People are queuing at the Louis Vuitton boutique in Dubai Mall.
