Hermès, LVMH, Kering, L’Oréal…:l’incroyable bonne santé des géants du luxe français

LVMH a réalisé un bénéfice net de 6,5 milliards d

The year 2022 could not have started better for French luxury. The main heavyweights in the sector are recording spectacular results in the first half. From Hermès to Kering via L’Oréal… Everyone is seeing a jump in their net profit thanks to an increase in sales compared to 2021, a year already marked by the return of consumers. Despite a difficult current environment, undermined by inflation, supply disruptions and repeated lockdowns in China where sales are falling, luxury continues to show unwavering serenity and faces the rest of the year with confidence.

Starting with the number one in the world, LVMH, for which the year 2022 is announced, by the way, under the best auspices. The French group announced last Tuesday that it had obtained a net profit of 6,500 million euros in the first half, 23% more than in the same period of 2021, whose performance had already been described as Registration “. Sales of Bernard Arnault’s group amounted to 36.7 billion euros between January and June, 28% more, driven by the flagship Fashion and Leather Goods division (Louis Vuitton, Dior, Celine, etc.) which bills only 18 billion euros (+31%). ).

A success that LVMH owes in part to the strong increase in its sales in Europe and the United States. Indeed, the recent lifting of health restrictions in Europe has allowed foreign tourists, especially Americans, to return to the territory. Especially since the weakness of the euro, which is stagnating almost at par with the dollar, is particularly advantageous for this clientele.

In the United States, it is the national population that explains this increase in sales. American customers are the ones who spend the most, since the appearance of the movementmesocial and social nts that allow new customer segments access to luxury consumption »analyzes Joëlle de Montgolfier, vice president of the studies and research division for the luxury sector within the Bain & Company cabinet. From now on, the advertising campaigns of the big luxury brands are aimed at these new segments, especially the African-American population, which is slowly gaining access to this luxury market; help create a clientele that did not exist before », She continues. In addition, the boom in online sales also allows regions or areas of the American territory, which do not have points of sale, to access them.

Despite falling sales, China remains attractive

The dynamism of the European and American markets allowed luxury goods, in particular LVMH, to compensate for the lower sales growth in Asia, more specifically in China, which was still under sanitary restrictions in the second quarter. True to its “zero-Covid” strategy », the country has multiplied confinements at the first warning of an epidemic outbreak, particularly in important places for the luxury sector such as Beijing and Shanghai. Kering makes the same observation. The luxury group announced last Wednesday that it had obtained a net profit of 1,988 million euros, 34% more in one year. Its sales thus totaled between January and June 9,930 million euros, 23% more in a year, thanks to its Gucci brand, which alone concentrates 5,173 million euros in sales (+15%). It benefited from increases in activity in Western Europe, Japan and the United States, which offset the stark impact of lockdowns in China » linked to Covid-19, according to a press release from the group.

Despite this drop in sales, the Chinese market remains essential for luxury brands that continue to invest there, explains Kering CFO Jean-Marc Duplaix in an interview with journalists. For Gucci, it is a key market, which retains intact long-term potential », He explained. Joëlle de Montgolfier agrees: Although there are uncertainties in the short term, in the long term the Chinese market remains a locomotive of the luxury market, because it is a growing population with an ever-increasing standard of living and a strong appetite for luxury products. When the Chinese market reopens, with the lifting of health restrictions, consumers will be able to buy in China again, but also travel and spend outside their country. Therefore, the long-term signals are quite good, in the absence, of course, of new geopolitical events. ».

On the Hermès side, there is also some optimism regarding Chinese consumers. The director of the French group also welcomed the good resistance of the luxury group in Asia despite the health context in China. There was a drop in April, but a very strong rebound in June ». We are not far from compensating for the drop (…) At the end of the first half, we are positive in China »he assured, rejoicing that Hermès knows an exceptional semester ». The group’s net profit reached 1,640 million euros in the first half, 39.7% more year-on-year, thanks to the increase in sales in all regions, according to a press release published this Friday. Sales of the leather goods manufacturer for saddlers amounted to 5.475 million euros, 29% more than in the first half of 2021. The French luxury giant even plans to continue the acceleration of hiring (…) in the second half of the year to strengthen all the home businesses », said Axel Dumas, announcing that five new leather goods should see the light of day within five years.

As for L’Oréal, whose net profit reached €3.2 billion, up 36.4% thanks to a 20.9% increase in sales in one year, the group can rely on online sales, which they now account for 60% of their turnover in China, compared to 50% before. Nicolas Hieronimus, general manager of the group, said this to himself convinced that China is going to have a good second half: they have dominatedme better and better covid, no inflation, low unemployment, prosperity policy ».

Luxury, impervious to the consequences of inflation

In fact, luxury seems to ignore the current problems around the world, starting with the war in Ukraine. The damage was ultimately quite moderate and limited to Russia and the Ukraine. », comments Joëlle de Montgolfier. And if the players in the sector have seen the cost of raw materials skyrocket due to inflation and supply problems, the particularity of luxury offers them the possibility of transferring this increase to their sales prices in an almost equivalent way. As a general rule, people who have the ability to buy luxury are not the most sensitive to price increases. »explains the specialist who needs luxury is historically very resistant to crises ». However, she wonders: If inflation leads to a recession, particularly in the United States, will the luxury sector be able to stay out of a drop in consumption? » Especially since in the United States, the new emerging clientele, particularly that of young workers, are less settled and could restrict this item of spending.

However, Bain & Company expects the sector to continue its strong momentum through the rest of the year. It is early to make projections, as there are still great uncertainties, but we expect the market to grow throughout the year. The least optimistic scenario foresees a growth that will range between 5 and 10% with respect to 2021 compared to 10 and 15% if the increase in sales in Europe and the United States is maintained and those in China pick up. Either way, it should be a good year. »concludes Joëlle de Montgolfier.

(with AFP)