over 3 years ago • 2 mins
LVMH, the world’s largest luxury conglomerate, revealed third-quarter sales late last week that were, like, far fancier than analysts had hoped – and the French giant had China to thank 🛍
Ignoring the effects of currency swings, LVMH’s revenue was 12% higher than the same time last year, flying in the face of forecasts for a 1% decline. Chinese consumers typically contribute half the annual growth in global luxury spending, and last quarter they didn’t let a piddling pandemic stand in their way 👜 Instead of traveling to Europe or the US, however, shoppers bought local: LVMH made more selling high-end handbags in China than it did a year ago. The country’s luxury lovers also splashed their cash on liquor brands like Hennessy Cognac – meaning overall revenue at LVMH’s drinks unit declined by just half as much as feared.
LVMH is seen as a bellwether for luxury: an indicator of the entire industry’s health and direction. The company’s stronger-than-expected update – which helped its stock rise 7% on Friday – may now put rivals’ forthcoming updates in a more flattering light 💡 Hermès, home of $300,000 Birkin bags, makes half its sales in Asia, while Gucci owner Kering does a lot of business in China; the companies’ share prices respectively rose 2% and 4% as investors likely anticipated good news to come.
Recent data illustrates how the coronavirus crisis has benefited the rich while further disadvantaging the poor – a so-called “K-shaped recovery” that’s attracting the attention of policymakers and investors alike 👀 European luxury stocks are, on average, up almost 30% over the last six months, buoyed by well-heeled spending – while the region’s stocks overall have risen only 20% as some mass-market companies suffer from more reserved customer spending.
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