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Seen by analysts as a trailblazer in the luxury market, LVMH’s 2022 earnings suggest that the wealthiest consumers are willing to continue spending through inflation.
Luxury goods giant LVMH reports record revenue and profit for the second year in a row after increasing advertising and promotional spending by 25%.
Revenue in 2022 reached €79bn (£69.4bn) and profit from recurring operations reached €21bn (£18.5bn), both up 23% compared to 2021. Sales increased by 9% in his last three months alone this year.
Total marketing and sales costs increased by 26% to €28.2m (£24.7m), representing 35.6% of revenues. This is an increase of 0.8 points compared to the previous year. According to LVMH, the increase is mainly due to “increased telecommunications investment” and the development of retail networks.
For analysts, LVMH’s earnings are seen as a precursor to the luxury market. GlobalData Apparel Her analyst Louise Deglise-Favre said the results “clearly” show that “luxury shopper purses are immune to high inflation and rising costs of living.” says there is.
All business groups within the company achieved significant revenue growth throughout the year, with the fashion and leather goods sector setting a new record with a revenue increase of 20%. Business applauded the role marketing has played in many leading brands, including Berluti and Celine in fashion, Parfums Christian Dior and Givenchy in perfumes and cosmetics, and Chandon, Hennessy and Belvedere in wines and spirits.
We approach 2023 with confidence, but remain cautious due to the current uncertainties.
Bernard Arnault, LVMH
Flagship designer label Louis Vuitton performed particularly well, surpassing €20 billion (£17.59 billion) in revenue for the first time.
Meanwhile, LVMH-owned beauty retailer Sephora also achieved a “record performance”. The retailer’s online launch in the UK last year attracted enough visitors to crash the website, and there are plans to open a brick-and-mortar store in London’s Westfield in the coming months.
According to Chairman and CEO Bernard Arnault, the business’ performance is evidence of the brand’s “extraordinary appeal” and ability to “create desire” in difficult economic conditions around the world.
“Our growth strategy, based on the complementary nature of our activities and their geographical diversity, promotes innovation and the quality of our creations, the excellence of their distribution, and contributes to the heritage of our Maison. It adds a cultural and historical aspect to it, ”he says.
“We approach 2023 with confidence, but remain vigilant due to the current uncertainties. I look forward to the sturdiness and agility of the team.
For many consumers navigating the ongoing cost of living crisis, luxury purchases are the last thing on their minds. was revealed to be the category in which they plan to reduce the most.
However, brands in this sector have captured only a fraction of the wealthiest consumers, who are more insulated from the macroeconomic storm. In fact, experts warn that a “two-tier” economy will emerge as a result of inflation, with the least wealthy being disproportionately affected.
The latest projections from Retail Economics’ cost-of-living tracker, produced in partnership with HyperJar, show disposable income for the UK’s least wealthy households will fall by 17.2% (£83) in November 2022 compared to the previous year. bottom. People on moderate incomes took a hit of 9.6% and suffered an average loss of £104, while the wealthiest households actually saw their disposable income increase by 0.6% (£28). bottom.
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