What does “luxury” mean to you? Is it the highest quality products, the highest status, and exceptional in-store experiences? While this traditional definition still holds true for many, consumer preferences are evolving, and with them, the concept of luxury is changing. Currently, there is a noticeable decline in demand for "old" luxury.
Luxury goods giant LVMH reported a modest drop in revenue and a significant decline in profits for the first six months of the year, as cost-conscious buyers held off from spending on high-end fashion. For those interested in the financial health of luxury brands, using a stock screener can provide valuable insights into their performance and potential investment opportunities.
For the first half of the year, the group’s net income fell 14% to €7.26 billion ($7.88 billion), while revenue decreased 1% to €41.68 billion, indicating a lack of growth.
The results of the luxury industry leader have been eagerly awaited after Burberry, Hugo Boss, Swatch Group and Richemont reported last week sharp drops in sales.
Burberry and Hugo Boss saw significant sales declines in Asia and the Americas, with Burberry’s sales in Asia Pacific and the Americas both dropping 23%, and Hugo Boss sales falling around 3% in both regions, according to preliminary earnings.
Similarly, Cartier parent Richemont reported a 27% drop in China sales this year, while the Swatch Group, which owns brands like Omega, Tissot, and Longines, reported an 11% overall decline in sales, with significant decreases in China.
Despite these figures, Bernard Arnault, LVMH’s chief executive and one of the world's wealthiest individuals, remained unworried. "The results for the first half of the year reflect LVMH's remarkable resilience and the responsiveness of its teams in a climate of economic and geopolitical uncertainty," he said in a statement.
In the three months to June, revenue fell 1% to €20.1 billion, disappointing analysts who had expected a 3% increase. Excluding Japan, sales in Asia, one of the company’s strongest markets, fell 14% in the second quarter. Although LVMH didn’t provide a full breakdown of its figures, it reported sales growth in Europe, the United States, and Japan.
LVMH said that, in an uncertain geopolitical and economic environment, the group remains confident of its business and will maintain a strategy focused on continuously enhancing the desirability of its brands.
This article was written in cooperation with TradingView