LVMH Benefited from COVID-19... Q1 'Earnings Surprise'

Louis Vuitton Moet Hennessy Records 18.6 Trillion KRW in Q1 Sales
Up 30% Year-on-Year
8% Increase Compared to Pre-COVID-19 Pandemic Levels

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] French luxury group Louis Vuitton Moet Hennessy (LVMH) recorded record-breaking performance despite the COVID-19 pandemic. The prolonged pandemic and the halt of overseas travel are interpreted to have triggered a surge in 'revenge consumption' of luxury goods.

On the 13th (local time), according to major foreign media, LVMH announced that its first-quarter sales reached 13.96 billion euros (approximately 18.6 trillion KRW). This represents a 30% increase compared to the same period last year and is 8% higher than the first quarter of 2019, before the COVID-19 pandemic. This result far exceeded the forecast of 12.6 billion euros, which was surveyed by FactSet from analysts.

If this trend continues, LVMH is expected to recover its pre-COVID-19 pandemic performance this year. This means it will overcome the impact of COVID-19 one to two years earlier than initially projected. According to consulting firm Bain, global luxury sales last year amounted to 217 billion euros, a decrease of about 20%. It was expected to take two to three years to recover.

In particular, the group's core fashion and leather goods division recorded sales of 6.74 billion euros. This is a sharp increase of 52% compared to the same period last year and 37% compared to the first quarter of 2019.

By brand, sales growth was prominent in Louis Vuitton and Dior.

By country, sales growth was notable in China and the United States, which are leading the economic recovery.

Major foreign media interpreted this as a change in consumer patterns where, with overseas travel halted due to the COVID-19 pandemic, consumers engaged in 'revenge consumption' by purchasing luxury goods.

Analysts forecast that as countries that have started COVID-19 vaccinations resume economic activities and people have more options to spend money, luxury consumption is also expected to contract.