Luxury goods giant LVMH, best known for brands like Louis Vuitton, Dior and Tiffany, reported a 10% surge in sales for the fourth quarter on Thursday (Jan. 25), outpacing the previous quarter. The momentum was fueled by robust demand, notably from Chinese consumers, who favored its high-end fashion items during the crucial year-end period.
According to LVMH CEO Bernard Arnault, products at the highest tier have the highest global demand, with haute couture items from labels like Christian Dior leading the way.
Chief Financial Officer Jean-Jacques Guiony reported that Louis Vuitton enjoyed an upswing from wealthy Chinese consumers in Europe, hitting 70% of the pre-pandemic levels of 2019.
While the conglomerate observed resilient luxury goods shoppers, it also gained momentum in its “selective retailing” segment, courtesy of Sephora.
The selective retailing segment, with Sephora and duty-free airport mainstay DFS, strong growth was mainly driven by “exceptional” momentum at Sephora, according to Arnault, particularly from Sephora’s partnership with Kohl’s. Revenue in this segment saw the highest increase across the conglomerate, surging by 25% to nearly €18 billion.
Arnault was content with LVMH’s growth rate and conveyed a high level of confidence in the outlook for 2024.
The company achieved sales of nearly $26 billion in the last quarter of the year.
While Arnault highlighted the partnership as a key asset to its selective retailing performance, Kohl’s has also found the partnership to be beneficial.
In November, the department store mentioned that the collaboration was great for sales, and it is expected to generate $2 billion in revenue by the year 2025.
“The partnership with Sephora is phenomenal,” said Kohl’s CEO Tom Kingsbury said on an earnings call Nov. 21. “And we really feel that the numbers we put out there will be achievable in the near future.”
During the quarter, Kohl’s saw a total beauty sales increase of over 70%.
Read more: Sephora Keeps Kohl’s Registers Ringing as Other Categories Weaken
Luxury goods conglomerates like LVMH and Richemont, the proprietor of Cartier, have demonstrated resilience in the face of a downturn in consumer spending.
According to a PYMNTS report, Richemont announced a sales increase of 8% year over year for the quarter ending on Dec. 31, reaching $6.1 billion. The growth was propelled by demand in China, Hong Kong and Macau, increasing 25%, along with 18% growth in Japan.
Despite facing challenges in the U.S. market, Richemont saw an increase in sales, bucking the overall slowdown witnessed by industry counterparts in the region and mitigating a decline in Europe.
Richemont’s focus on the higher-priced hard luxury sector shielded it from a downturn in aspirational and middle-class consumer spending, a factor that hurt luxury sales at other firms.
Conversely, competitors targeting lower price points, like Burberry in the U.K., encountered difficulties. The British brand attributed its lackluster financial performance to a decline in luxury sales during the holiday season.
Read more: Richemont’s Sales Soar on Strong Demand in China and Japan
“We are continuing to deliver the transition to our new modern British luxury creative expression for Burberry which started appearing in our stores in early autumn,” Jonathan Akeroyd, CEO, said in a Friday (Jan. 12).
Read more: Is the Luxury Slowdown Normalization or Inflation?
Neiman Marcus, facing the luxury market slowdown, saw a small drop in holiday sales compared to last year. Even with challenges in the upscale market and careful shoppers, the company was happy with the results, considering the impact of widespread retail promotions on profit margins.
While certain consumers have cut back on luxury spending, brands like Hugo Boss have chosen to focused on attracting millennials and Generation Z shoppers are reaping the rewards.
“We ended 2023 on a high note, making it a record year for Hugo Boss,” CEO Daniel Grieder said on Jan. 16. “The double-digit top and bottom-line improvements in the final quarter are all the more remarkable considering the current challenging global market environment.”
Read more: Hugo Boss’ Digital Sales Up by 26% in Q4 as It Targets Gen Z and Millennials
“Our performance in 2023 illustrates the exceptional appeal of our Maisons and their ability to spark desire, despite a year affected by economic and geopolitical challenges,” Arnault said in a press release.
“Our growth strategy, based on the complementary nature of our businesses, as well as their geographic diversity, encourages innovation, high-quality design and retail excellence, and adds a cultural and historical dimension thanks to the heritage of our Maisons.”
LVMH Moët Hennessy Louis Vuitton reported revenue of €86.2 billion in 2023, reflecting 13% organic growth compared to 2022. All business groups reported organic revenue growth, except for Wines & Spirits, which faced challenges due to a high basis of comparison and high inventory levels. Europe, Japan, and the rest of Asia achieved double-digit organic growth. In the fourth quarter, organic revenue growth was 10%.
Profit from recurring operations stood at €22.8 billion for 2023, an increase of 8%. The operating margin remained stable compared to 2022. Group share of net profit amounted to €15.2 billion, up 8%.
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