Whatâs Going On Here?Luxury conglomerate LVMH reported better-than-expected quarterly earnings earlier this week, as shoppers emerged, pale and blinking, into the humble lifestyle they once knew. What Does This Mean?There werenât exactly many benefits to lockdown, but the money plenty of us saved up was certainly one of them. And it looks like fashionistas wasted no time making good use of it last quarter: LVMHâs organic revenue from its fashion and leather goods segment climbed 24% compared to the same time last year. And since the segment contributes almost half of LVMHâs total sales, that helped push overall revenue up by 20%. That means the company has made more money in the first nine months of this year than it did during the same period in a pandemic-free 2019. There was one hiccup, though: LVMH warned that increased shipping costs will hurt its profit going forward. Why Should I Care?For markets: Luxury is back in fashion.
The pandemic took a serious toll on the luxury industry: itâs hard for shoppers to justify a Louis Vuitton handbag when thereâs so much uncertainty ahead, after all. These results, then, are an encouraging sign that the industryâs back on track, which might be why investors sent LVMHâs stock up 3%. And given that they look to the conglomerate for clues about other luxury companies, theyâre suddenly feeling a lot more confident about Hermèsâ and Gucci-owner Keringâs updates later this month. That might be why they sent those companiesâ shares up too.
The bigger picture: Equality isnât the enemy.
Investors were especially keen to know how LVMH has been doing in China: theyâve been worried that the companyâs second-biggest marketâs efforts toward âcommon prosperityâ mightâve been impacting how the 1% spend their money. But LVMH said that it hasnât noticed any changes in shoppersâ behavior so far, which might â temporarily, at least â help put investorsâ minds at rest. | 