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Dior, Fendi frenzy helps luxury group LVMH extend its reach

SILVIA ALOISI and MIMOSA SPENCER

SURGING sales of fashion lines and handbags by Dior, Fendi and Louis Vuitton powered LVMH’s revenues in the second quarter as coronavirus restrictions eased around the world and the luxury goods group edged out some rivals to grow its market share.

The luxury goods industry is recovering from the health crisis, which shut down global travel and temporarily closed stores. The end of COVID-19 lockdowns across much of Europe is reviving demand in the region after a strong Chinese rebound.

LVMH, the world’s biggest luxury goods group, has benefited more than most, using its heft to spend on marketing and social media campaigns when some of its smaller rivals are still struggling to get back on their feet.

The conglomerate said on Monday that its biggest revenue driver, Vuitton, as well as fashion brands Dior, Fendi, Loewe and Celine had posted record sales and profitability in the first half of 2021 and increased their market share.

Dior, for example, ramped the number of “pop-up” temporary shops in resorts, which travellers are returning to, the company said.

Overall sales at the LVMH, which also owns champagne and cosmetics labels, rose by 84% year-on-year in the second quarter on a like-for-like basis, which strips out currency swings, and stood at 14.7 billion euros ($17.36 billion).

That beat an analyst consensus forecast for 69% growth cited by UBS but in line with HSBC estimates. It was also 14% above pre-pandemic, 2019 levels.

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Operating profit in the first six months of this year more than quadrupled compared with a year ago, beating expectations among analysts polled by Refinitiv.

Shares in LVMH have surged by more than 70% since June last year, making the group the biggest European company by market value and allowing boss Bernard Arnault to briefly overtake Amazon founder Jeff Bezos as the richest man in the world.

Fresh from its $15.8 billion acquisition of U.S. jeweller Tiffany, completed in January, LVMH has also made the most of its crisis comeback to invest in labels.

Last week, LVMH said it would buy a 60% stake in Off-White, a streetwear label founded by Vuitton menswear designer Virgil Abloh, while expanding Abloh’s role within the group to launch new brands.

LVMH also took a minority stake in a new clothing and accessories label being launched by the former Celine star designer Phoebe Philo, and raised its holding in Italian shoemaker Tod’s to 10%.

Revenues had dropped 16% last year, when the pandemic triggered global lockdowns and international travel ground to a halt.

LVMH’s retailing division, which includes beauty chain Sephora and also duty-free group DFS, has suffered more than its other businesses, although it clawed back some ground in the second quarter.

By The African Mirror

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