LVMH’s first-half profits soar as the company recovers from the pandemic.
LVMH, the world’s largest luxury goods company, reported Monday that sales and profitability rebounded in the first half of 2021, following a pandemic-induced decline the previous year.
LVMH, which owns Moet and Louis Vuitton, said its first-half profit had increased significantly from the previous year and was far ahead of the first half of 2020, which was hampered by global lockdowns.
“Despite being in the midst of a worldwide crisis, LVMH has had an outstanding half-year and is reaping the rewards of continuing to innovate and invest in its businesses throughout the pandemic,” said chief executive Bernard Arnault in a statement.
“In the current situation, as we emerge from the health crisis and see a worldwide economic recovery, I believe that LVMH is in a fantastic position to continue to develop and further consolidate our dominance in the global luxury market in 2021,” he continued.
From January to June, the group’s bottom-line net profit jumped to 5.3 billion euros ($6.3 billion). This is a ten-fold increase over the same period a year ago, and a 62-percent increase over the first half of 2019.
Revenues increased by 53% year over year in the first half, above analysts’ estimates.
The underlying profit, or operating profit, increased by fourfold to 7.6 billion euros.
“After a severely disrupted year in 2020 due to the global pandemic, the first half of this year indicates a return to robust growth momentum,” the firm stated in a statement.
The group’s fashion and leather goods businesses, including Louis Vuitton, Christian Dior, Fendi, Loewe, and Celine, saw high sales.
In terms of geography, Asia and the United States outperformed Europe, but a look at the business side revealed that Tiffany, a US jeweler, was successfully integrated.
“The pandemic belt-tightening is done, and LVMH’s clients have been splurging on the little things in a post-crisis splurge,” Hargreaves Lansdown analyst Susannah Streeter said.
“Some groomed eyebrows had been raised at the eye-watering debt pile produced by the acquisition of Tiffany’s, particularly given the heated disagreement over the price tag,” she said.
However, according to Streeter, the brand has done well.
Finally, the analyst stated that “corks were popping at the wine and spirits arm, with sales growth of 12% compared to 2019,” as champagne and cognac regained favor.