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%.
Agentic artificial intelligence (AI) promises to improve operational efficiencies and the customer experience offered by enterprises.
The advanced technology is finding applications in loan underwriting and fraud detection, and now it’s moving across borders.
TerraPay Co-Founder and Chief Operating Officer Ram Sundaram told PYMNTS as part of the “What’s Next in Payments” series focused on exploring AI’s use in banking and by FinTechs that automated decision making and streamlined processes will continue to transform global money movement, especially as faster payments gain ground in cross-border transactions. That’s the inexorable trend, but as Sundaram put it, there’s still room, and a necessity, to have some human interaction in the mix.
In terms of global fund flows, TerraPay’s single connection ties more than 3.7 billion mobile wallets together across 200 sending and 144 receiving countries, touching 7.5 billion bank accounts. As one might imagine, coordinating and enabling the transactions is complex.
“Obviously, in the best-case scenario, everything goes smoothly, but when things are not going smoothly, that’s when the customer queries come in,” Sundaram said.
It’s no easy task to find out straight away where a transaction is, as analysts and representatives at the company have to look at logs and query partner systems.
“A lot of that work is done manually,” said Sundaram, who added that the agents “know the corridors and the markets that they are working in, but it still takes some time.”
TerraPay is using AI models with machine learning to bolster customer support and automate tasks as financial institutions (TerraPay’s client base) send payments in real time, and those payments are processed into local markets’ beneficiary banks.
“We still don’t trust [AI models] to let them respond to the customer straight away, but we can do the analysis, and then that gets reviewed by an agent who decides if [information] is accurate or not and then sends it off,” Sundaram said.
The same principles are guiding AI models and company practices to improve technical and security operations, analyzing and categorizing anomalous transactions and automating integrations with partner firms.
“Compliance is an issue where there is a lot of review needed of the alerts, and we are using [AI models] to speed up those processes,” Sundaram said.
Asked by PYMNTS about how agentic AI can be harnessed, he said: “In financial services, you can’t take chances on technology like this, which has the freedom to go wrong. You have to be careful about making sure that it’s 100% reliable before we can let things run entirely by automation.”
Agentic AI also remains pricey. For example, OpenAI is charging $20,000 a month for its specialized agents. However, Sundaram said the industry will become commoditized quickly, which will lower prices, and some open-source offerings are capable.
“There’s a fire hose of news about breakthroughs and new ideas and new ways of doing things that are coming out on a daily basis,” he said.
Data underpins it all, and Sundaram told PYMNTS that no matter what the application, the information fed into the models must be clean. Most organizations have a range of data sitting in different intra-company silos, and those silos need to come down.
In addition, the data must be structured so that it is accessible and can be synthesized by the models. Many firms may have more than 1,000 software-as-a-service (SaaS) resources to which they are subscribed but are not accurately tracked or monitored.
“Every database is separated, each one sitting somewhere else,” he said.
The days of stitching together those separate SaaS offerings to run an enterprise are ending, he said, and we’re headed to a future when data is collected in one place.
AI models and agentic AI “are extensions of what we’ve always valued at TerraPay, which means building the most efficient infrastructure possible in order to make sure that transactions are processed safely, quickly and affordably,” Sundaram told PYMNTS. “We see AI and [AI models] as powerful tools that help us scale all this very quickly while making sure we build more and more efficiency into the system.”
