LVMH achieved sales revenue of $2.07 billion in Perfumes & Cosmetics in the first quarter, up 30% year-on-year. In Asia, revenue grew only 8% compared to 86% in the same period last year due to the impact of restrictions on the COVID-19 outbreak in March. Jean-Jacques Guiony, the chief financial officer of LVMH, said he was confident of medium- to long-term demand in China.
On April 12, French luxury giant LVMH released its first-quarter 2022 results.
LVMH achieved sales revenue of $19.5 billion in the first quarter, up 30% year-on-year. However, due to the impact of the epidemic closed-off management and store closures, revenue in Asia grew by only 8%, compared to 86% in the same period last year.
“The company is off to a good start in 2022 despite the ongoing impact of the situation in Ukraine and the epidemic crisis.”
The financial report showed that the group achieved revenue operating income of $19.6 billion in the first quarter, an increase of 29% year-on-year compared to the same period in 2021. Asia also continued to grow during the quarter despite the tightening of health restrictions in China in March.
In terms of business, the segment of LVMH, Perfumes & Cosmetics, achieved sales of $2.07 billion in the first quarter of 2022, with organic growth of 17% year-on-year. The financial report specifically praised the contribution of brands such as Dior, Guerlain, Givenchy and Make Up For Ever to the segment.
Among them, Dior achieved good performance in fragrance, cosmetics and skincare. Especially driven by the U.S. market, Dior’s market share gained strongly.
Firstly, fragrances represented by classic scents such as Miss Dior, Sauvage and J ‘Adore continued to perform well. Secondly, in cosmetics, the relaunch of Forever fluidfoundation and the emergence of Dior Addict lipstick improved sales growth. In addition, Dior performed well in the skincare lines Prestige and Capture Totale.
On May 17, 2021, Dior officially announced young Chinese actor and singer Wang Junkai(Karry Wang) as the endorsement of the DIOR China Sauvage fragrance series. Wang Junkai enjoys 81.468 million followers on the Chinese social platform Weibo. Under his post on Dior endorsement, there are more than 270,000 comments, 1 million retweets and 489 thousand likes.
Meanwhile, Guerlain is also gaining momentum with the fragrance. This is mainly due to the launch of the new Aqua Allegoria collection and the new boutique fragrance l’Artet la Matière. In addition, the AbeilleRoyale skincare line also contributed to the brand’s performance.
In addition to beauty brands, the LVMH Group also owns boutique retail businesses such as Sephora and DFS Global Duty-Free.
In the boutique retail business, organic revenue growth was 24% in the first quarter of 2022 compared to the same period in 2021, achieving sales of $3.32 billion. In particular, Sephora delivered an excellent performance in this quarter driven by the recovery in Fragrances and Cosmetics. Sephora stores performed steadily in the northern U.S., France and the Middle East. However, the traffic was declining in Sephora China stores impacted by health restrictions.
Revenue at DFS increased in this quarter, but at a lower incoming due to continued weakness in international travel.
In terms of regions, the revenue in the U.S., Japan and Europe all recorded double-digit growth in the first quarter of 2022, up 26%, 30% and 45%, respectively. In Asia, revenue grew only 8% compared to 86% in the same period last year due to the impact of restrictions on the COVID-19 outbreak in March.
In a conference call with analysts on Tuesday, Jean-Jacques Guiony, the chief financial officer of LVMH, said he was confident of medium- to long-term demand in China once the situation returns to normal. Growth has been hampered by the impact of the epidemic including the closed-off management in Shanghai, which forced the group to close 15% to 25% of its stores in mainland China since March 15. He added that the Chinese government has previously demonstrated its response to control the outbreak quickly (especially in 2020). And he didn’t think the current situation is any worse than it was then. He predicts that the blockade in Shanghai will be eased relatively soon. China has proven its ability to take very strong and broad measures to contain the outbreak in a fairly short period of time, and we believe that China’s major luxury markets will rebound as quickly as they have in the past.
Analysts at Citibank said, “It may be worthwhile to look to the Chinese market in the second quarter.” Citibank plans to maintain a Buy rating on the group’s stock.