'Reopening Draws Crowds of Chinese Customers'... Louis Vuitton Surprises with 17% Growth in Q1

Benefiting from China's Reopening... 14% Sales Increase in Q1

Europe's largest company by market capitalization, Louis Vuitton Moet Hennessy (LVMH), posted a surprise first-quarter performance that far exceeded market expectations despite recession forecasts.

On the 12th (local time), LVMH announced in its earnings report that first-quarter sales reached 21.035 billion euros (approximately 30 trillion won), a 17% increase compared to the same period last year (18 billion euros). This is more than twice the market expectation of 8%.

By business segment, sales in the fashion and leather goods sector, including Louis Vuitton and Dior, grew by 18%, while the perfume and cosmetics sector and the watches and jewelry sector each grew by 11%.

The wine and spirits sector, which had struggled last year due to global supply chain disruptions, saw a 3% increase in sales thanks to the reopening of regions and increased travel. Sales in certain retail sectors surged 30%, supported by the expansion of Sephora stores in North America, Europe, and the Middle East.

During the same period, sales increased by 34% in Japan, 14% in Asia excluding Japan, and 8% in the United States.

[Image source=Reuters Yonhap News]

LVMH showed solid performance despite concerns over a deepening recession due to high-intensity tightening and banking crises. The consumption capacity of high-income groups remains robust, and due to the industry’s characteristics of being less affected by economic cycles, price increases were more prominent compared to other consumer goods.

Above all, the reopening of China, a major luxury consumption market, brought significant benefits. The Wall Street Journal (WSJ) evaluated that sales surged as Asian consumers’ postponed spending power soared following the end of China’s zero-COVID policy.

Jean-Jacques Guiony, LVMH’s Chief Financial Officer (CFO), said, "Sales in China have increased significantly," and added, "The sales outlook for the remainder of this year is also positive."

The high-end consumer goods industry has relied on Chinese domestic and overseas consumption for decades, but suffered a major blow as Chinese consumption collapsed until last year due to the COVID-19 pandemic.

CFO Guiony stated that Chinese customers have been returning to LVMH stores this year and online sales are also increasing. He added that while cosmetics sales will take more time to recover to previous levels, he expects strong sales of clothing and jewelry within mainland China.

Regarding sales generated by Chinese travelers outside China, he predicted that Chinese consumers will first head to Hong Kong, Macau, South Korea, and Japan, with a larger influx to Europe expected somewhat later.

This content was produced with the assistance of AI translation services.