PARIS — LVMH Moët Hennessy Louis Vuitton said its revenue soared 29% in the first quarter as the United States and Europe posted double-digit growth, pushing back on fears that the war in Ukraine could weigh on growth and n fuels inflation.
Meanwhile, revenue in Asia continued to grow despite the impact of tougher health restrictions in March, including a drastic lockdown in Shanghai, which forced the group to close between 15% and 25% of its stores in March. China since March 15.
The luxury conglomerate, which owns 75 brands including Louis Vuitton, Dior, Tiffany & Co. and Sephora, said total sales in the three months to March 31 amounted to 18 billion euros, beating an estimate the FactSet consensus of 17.03 billion euros.
This represents a 23% year-over-year increase on a comparable basis, indicating a slight slowdown compared to the fourth quarter of 2021, when organic revenue increased by 27%.
The key fashion and leather goods division posted organic sales growth of 30% in the period, also beating median analyst forecasts. The increase was fueled by Vuitton and Dior, its two flagship brands, as well as “very strong” growth at Céline and “solid” growth at Fendi.
“In the current geopolitical context and given the lingering impact of the pandemic, LVMH remains both vigilant and confident at the start of the year,” the group said in a statement.
“The LVMH group is closely monitoring developments in Ukraine and in the region. Its first priority was to ensure the safety of its employees in Ukraine and to provide them with all necessary financial and operational assistance,” he added.
LVMH announced in early March that it was “temporarily” closing its stores in Russia “given the current circumstances in the region”. The conglomerate is believed to operate around 120 stores in Russia. At the same time, it donated 5 million euros to the International Committee of the Red Cross to help the victims of the conflict in Ukraine.
As part of a series of sanctions against the government of President Vladimir Putin, the United States and the European Union have banned the sale of luxury goods to Russia.
However, the direct impact of the measures is expected to be limited as the importance of Russia and Russian nationals to the luxury sector has diminished over the years and is now “relatively intangible”, according to a recent report from Morgan Stanley. The bank estimated that for companies such as LVMH and Kering, Russians account for around 1% of global sales.
As the first luxury group in the world and the first to publish quarterly sales, LVMH will set the bar for the rest of the sector. Hermès International is due to publish its first-quarter sales on Thursday, followed by Kering on April 21. At the same time, Compagnie Financière Richemont must publish its annual results on May 20.
As annual inflation in the United States hit a four-decade high of 8.5% in March, analysts will also focus on the pricing power of luxury brands. Speaking after the publication of LVMH’s annual results in January, CEO Bernard Arnault said he was confident his brands would offset any increase in production costs.
“We have an advantage over many other companies and other groups, that we can have some flexibility on prices. So, in the face of inflation, we have the means to react, and I think the demand for our products will continue to be strong,” he said. Vuitton, Dior, Tiffany and Bulgari have all introduced price increases since the start of the year.
This story was reported by WWD and originally appeared on WWD.com.
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