Bernard Arnault likes to repeat himself. "Let a brand make 8% to 9% growth, 10% max. That's fine with me," the CEO of LVMH said several times, speaking to the financial analysts at the luxury group's annual results presentation on Thursday, January 25. All were awaiting the publication of its financial performance to gauge the health of the luxury sector, particularly in the last quarter of 2023, after initial signs of a slowdown in the preceding months.
LVMH reassured them: Its sales grew by 9 % in 2023, reaching €86.2 billion, over 50% of which came from its fashion brands. The last three months of 2023 recorded organic growth of 10%, Arnault boasted. His CFO, Jean-Jacques Guiony, emphasized how the business had entered a phase of "normalization" over the second half of 2023. "Over the last 10 years, LVMH's organic growth has averaged 9.1%," Guiony also pointed out.
This reminder was pointed. In October 2023, the financial community was shocked by the slowdown in sales growth in the third quarter (+9%), after a jump of 17% in the first half of 2023. At the time, LVMH share value plunged. But at the opening of trading on Friday, January 26, it gained 8%. Financial analysts at Barclays said they were "reassured" and those at Bernstein were enthusiastic that the sector's "big winner" was able to "maintain its operating margin at 26.5%, despite an increase in its marketing investments." Net income stood at €15.2 billion – a new record.
However, like many of its competitors, the world's number one is facing a shift in the market. "The party of the last three years is over, as we know, from the middle of 2023," pointed out Olivier Abtan, associate director of AlixPartners, a firm specializing in the luxury and consumer goods sectors. In the United States, LVMH sales grew by 4% in 2023, after 15% in 2022 and 25% in 2021, post-Covid. In Europe, "we've been coming back down to earth since the end of 2023," said Guiony, commenting on sales up 13%, after a 35% jump in 2022 thanks to the influx of American tourists.
Reworked staff
And since Beijing lifted its lockdown measures, Chinese travelers are back in the luxury giant's boutiques, but in a different way. They go mainly to Macao, Hong Kong and Japan. In Europe, they travel solo, "less in groups" than before, said Guiony. And while they are spending more, Louis Vuitton sales in Europe to Chinese consumers are still "3% below 2019 levels," LVMH said. In Asia (excluding Japan), business is picking up again, at +18%, after a year of no growth in 2022.
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