LVMH’s Latest Sales Figures Suggest the U.S. Luxury Market Could Be Weakening
Luxury goods conglomerate LVMH says that while China’s easing of Covid-19 restrictions have helped business remain steady, the U.S. luxury market has slowed down.
The company—which owns high end brands like Louis Vuitton, Tiffany Christian Dior, and Bulgari—said profits in America fell 1 percent in the second quarter from the prior-year period, CNBC reported. CFO Jean-Jacques Guiony explained that “aspirational customers are not shopping as much as they used to.“
More from Robb Report
Prada's Sales Rose 62% the First Half of 2023, and It Has China to Thank
Pharrell Williams Created Custom Louis Vuitton Outfits for Beyoncé's Detroit Concert
A$AP Rocky Shows Off Pharrell's Louis Vuitton Line in a New Music Video
Guiony said high-end goods from LVMH’s highest priced brands remain strong in the U.S., most likely due to wealthier people who are less vulnerable to factors like inflation, student debt, and the greater economy, according to CNBC. The segment that took the biggest hit was wine and spirits, particularly Cognac. The company said that maintaining inventory was difficult during the pandemic, which made pricing and supply difficult to control.
Another reason given for the poor sales in the U.S. was the depletion of stimulus payments amid Covid-19. “If we assume that that group was benefitting from subsidies during Covid, those come to an end at some point,” Guiony said, according to CNBC.
Guiony also speculated that Americans traveled to Europe for vacations and bought their luxury goods in Paris, Rome, or London. Supporting that assertion was the fact that the company’s Europe sales increased 18 percent in the second quarter, with tourists being responsible for nearly half of that amount. Last year, the company saw the same trend of Europe consuming sales in America.
But again, LVMH has been kept in good shape due to Asia’s booming business. China’s sales rose 24 percent in the first half of the year, though it should be noted prior sales were at base levels due to coronavirus lockdowns, The Financial Times reported.
“Last year, the group was pulled up by the United States because China was slowing down. And this year, the United States is slowing down, yes, but we are drawn by Asia,” Guiony said, according to FT. “This geographical balance is absolutely fundamental.”
Sign up for Robb Report's Newsletter. For the latest news, follow us on Facebook, Twitter, and Instagram.
