Champagne and handbags: A revival in luxury sales in Asia, U.S. drives revenue at LVMH

April 14, 2021, 1:57 PM UTC

A taste for luxury in Asia and the U.S. helped LVMH’s sales rebound sharply in the first quarter, indicating a bright spot in the global economy despite the pandemic-driven gloom.

Shares in the luxury goods group surged after the firm surpassed expectations by recording revenue of €14 billion ($16.8 billion) in the first quarter, up 32% from the corresponding period in 2020. Notably, revenue was 8% higher than in the first quarter of 2019, suggesting that consumers are seeking out luxury buys despite uncertain times.

At around 10 a.m. ET, the stock was up 2.2% at €607.80.

Sales in Asia, excluding Japan, were an eye-watering 86% higher than a year ago, underpinned by greater demand in China. The U.S., where a huge stimulus plan is underway, registered a 23% revenue increase.

LVMH’s flagship fashion and leather goods business had the strongest results, which the company attributed to “strong creativity” across its brands and the success of Louis Vuitton’s Capucines and Christian Dior’s Lady Dior handbags. Others in LVMH’s large stable of top-range brands also fared well, including Fendi, Loro Piana, Celine, Loewe, and Marc Jacobs.

Recently acquired Tiffany & Co. reported a strong start to the year. In an online briefing, chief financial officer Jean-Jacques Guiony said LVMH does not intend to make any further acquisitions until the U.S. jeweler becomes fully integrated.

LVMH’s wine and spirits business also enjoyed strong revenue growth in the first quarter of 2021, rising 36% compared with the same period in 2020 and 17% versus that of 2019. Champagne volumes were up 22% compared with the first quarter of 2020, while sales of Hennessy cognac increased by 28%.

“Its two most important divisions delivered very strong growth, which will ultimately lead to big profit upgrades,” analysts at Bank of America said in a research note.

LVMH’s first quarter highlights why it’s a stock to own, they added.

Analysts at Berenberg also recommended buying LVMH shares. “LVMH remains the highest-quality name in the space, with unparalleled scale, best-in-class execution, and unique diversification. LVMH is a long-term winner,” they said in a research note.

LVMH’s fragrances business benefited from continued growth in online sales, offsetting the near standstill in international travel. Dior fragrances, notably Sauvage, Miss Dior, and the new J’Adore Infinissime, did well.

In Europe, where lockdowns and the lack of tourist footfall continue, sales were down 9% year on year. Sales at airport outlets also suffered.

While acknowledging that the outlook is still somewhat uncertain, LVMH said it is well equipped to build on the hoped for recovery in 2021 and to regain growth momentum across all its businesses.