DThe pandemic is not over yet, because LVMH once again achieved record results. The French luxury goods group announced its amazing performance in the second quarter and first half of this year on Monday evening. The strong sales in Asia and the United States and the “gradual recovery” in Europe have allowed the company to be confident that it has more than 80 brands from Louis Vuitton and Christian Dior to Tiffany and Bulgari to Hennessy and Veuve Clicquot. You can watch the second semester. Look.
Although other companies are now looking forward to achieving double-digit growth compared to the previous year, compared to 2019, LVMH has also achieved this goal. The record turnover of 28.7 billion euros in the first half of the year was not only more than half of the previous year. The 2020 lock-up period is weak, but it is also 11% higher than the 2019 level. On the Paris Stock Exchange, LVMH’s valuation is as high as 340 billion euros, higher than any other European company, and its stock price rose on Tuesday.
According to LVMH’s major shareholder and CEO Bernard Arnault, maintaining innovation and investment in the crisis is now bearing fruit. A few weeks ago, the redesign of the traditional Parisian department store La Samaritaine on the Seine was proof. The group now has the ability to increase its weight as a world market leader.
Rely on cooperation
Chief Financial Officer Jean-Jacques Guiony added that there are currently no major acquisitions planned; the acquisition of American jewelry manufacturer Tiffany six months ago, the integration is progressing smoothly and must be dealt with first, especially the net debt has more than tripled to 15 billion euros . However, Guiony said that small-scale “opportunistic acquisitions” are conceivable.
LVMH is not currently making large-scale acquisitions, but relying on cooperation. For example, they help strengthen the digital presence, which aims to make up for the decline in shopping mall sales related to the pandemic better than recently. For example, the perfume chain Sephora has established a “strategic partnership” with Zalando, which will be launched in Germany at the end of this year. Watch manufacturer TAG Heuer collaborated with Porsche to release a luxury timepiece called Carrera Porsche.
LVMH takes a selective approach to digital platforms: LVMH ignores external electronic platforms when guaranteeing the sales and profits of leather goods and fashion items; the chief financial officer explained that because the commission is too high, it is stuck there; on the contrary, it is better to design electronics separately exist. In other areas, “expanding through its own physical stores is too costly”, the group sees the future of cooperation with external parties.
Louis Vuitton core brand
In the first half of the year, the core brand Louis Vuitton once again proved to be the most important source of sales and profit margins. Compared with the same period in 2020, the revenue of the leather goods business unit and various fashion companies increased by 81%, reaching nearly 14 billion euros. Compared with 2019 before the pandemic, excluding acquisitions, an increase of 38%. As a result, the operating profit of LVMH’s leather products and fashion business is no less than 5.6 billion euros-an increase of three-quarters compared to 2019.
The group’s net profit was 5.3 billion euros, 10 times that of 2020 and still 62% higher than 2019. In addition to Louis Vuitton, brands such as Christian Dior, Givenchy, Fendi, Loewe and Celine are particularly prominent-marginal brands. After that, there was nothing for a long time. In the first half of 2021, the group’s second largest source of profit was spirits and wine, with operating profit of 924 million euros, an increase of one-fifth over 2019.
But in Bernard Arnault’s realm, not everything is shining: As the airport’s tourism business remains weak, the retail trade of duty-free and other items that passengers like to buy before boarding is affected. After all, the retail business has broken through losses and generated an operating profit of 131 million euros. Guiony reports that cosmetics is still in crisis. On the other hand, watches and jewelry have once again become bright spots. For example, Tiffany has attracted attention by designing engagement rings for men in heterosexual and gay relationships. Sales in this area are 70% higher than the previous year and 5% higher than 2019.
LVMH will pay shareholders an interim dividend of 3 euros per share. This is easy for the company, especially since it earned 11 million euros in debt in the first half of this year due to the negative interest rates of the European Central Bank. Last year LVMH had to spend 46 million euros on interest.
