Last week, LVMH’s earnings report showed the company bucking the trend of slowing luxury sales. CEO Bernard Arnault said he expects the U.S. election this year to further boost the company’s revenue. Don’t forget to subscribe to the Glossy Podcast for interviews with fashion industry leaders and Week in Review episodes, and the Glossy Beauty Podcast for interviews from the beauty industry. –Danny Parisi, sr. fashion reporter
LVMH breaks the luxury slowdown trend
The last few months have been hard on the luxury market, with major companies like Kering and Saks Fifth Avenue struggling with lowered demand for luxury goods from consumers around the world.
But LVMH finally bucked that trend with its latest earnings report released on Thursday. It reported revenue of over $93 billion for 2023, beating analyst estimates. That’s an increase of 13% over the year prior, with a 14% boost in the fashion and leather goods segment.
During the earnings call, CEO Bernard Arnault praised many of the designers of LVMH’s brands, particularly Pharrell Williams who started as the creative director for the company’s best-performing brand, Louis Vuitton, last year. He said he’s happy with the growth across the group and seemed unperturbed by the slowdown currently affecting much of the sector.
“So I’m not going to dwell too long on all the brands because there are many that are successful,” Arnault said. “Great success for Celine driven by Hedi Slimane that is now topping €2 billion [or $2.2 billion] in sales. Also for Loewe. Fendi is continuing to grow from strength to strength, and Loro Piana is posting very high growth rates. To my mind, it’s overly high. We need to put the brakes on a bit because I’m often told about growth rates, ‘Why are you only delivering 8-9%?’ Well, I find that’s pretty good. And I hope that we won’t exceed that. I’d rather grow slow than push.”
Arnault also spoke confidently about the company’s prospects for 2024, citing several new initiatives coming up like Louis Vuitton’s reinvention of its watch category. Interestingly, he also said the upcoming U.S. election may present a good opportunity for LVMH and luxury, in general.
“We expect a positive impact in the U.S. from the coming election,” Arnault said. “Every time there’s an election in the U.S., the market is more dynamic. So we expect the U.S. market to be more dynamic in 2024 than it was in 2023.”
That dynamism needs to come back for the U.S. luxury market to recover. LVMH chief financial officer Jean Jacques Guiony noted that the U.S. was among the hardest-hit markets for LVMH last year.
“The United States had a challenging year,” he said on the call. “It ended up well enough, better than it started. Q2 and Q3 had little growth, but there was some acceleration in Q4, and that’s not just because of Sephora, even though Sephora enjoyed significant growth.”
Arnault said he’s confident that the demand will return. Whether that only holds true for LVMH or extends to the rest of the luxury category remains to be seen.
“I expect to continue the growth that was achieved in 2023,” Arnault said. “The market went through a [rough] period, and we’ll see during the course of the year the effect of the interest rates decline that will kick in.”