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Asia Set to Take a Greater Role in LVMH’s Growth Moving Forward
LVMH celebrated another record year in 2022 as the conglomerate announced total revenue of €79.2 billion, which is a 23 per cent increase compared to 2021. The net profit was up 17 per cent, hitting €14.1 billion for the same comparative period. While the growth for the entire year was in double digits, its fourth-quarter sales only grew by 9 per cent, which is the time since 2020 but still above the consensus forecast of a 6 to 7 per cent rise according to analysts.
The owner of the world’s most luxurious brands, like Louis Vuitton, Dior and Tiffany & Co., cited that despite the ongoing economic and geopolitical challenges, it can “create desire”. But looking at the results more deeply, one would notice that the acceleration LVMH used to have has slowed down over the past quarters. Many of its sales are intrinsically linked to China’s economy and policies. Stringent Covid-19 lockdown and quarantine measures have impacted luxury sales across the brands. This is reflected in the drop in organic revenues in Asia — which fell 8 per cent in the three months to 31 December.
LVMH reported that sales in other key markets like Europe, Japan and North America had “strong growth in business” as international travel resumed. In particular, Europe saw a 22 per cent increase while across the Atlantic, the US only grew by 7 per cent. Jean-Jacques Guiony, chief finance officer of LVMH, explained that the stronger US dollar prompted many buyers to flock to Europe, where they make their purchases.
Across the different groups, CEO and Chairman Bernard Arnault made a point to highlight that its fashion and leather group remained to be the core of its business. Louis Vuitton’s revenue surpassed €20 billion for the first time, while Celine doubled to more than €2 billion under creative director Hedi Slimane’s helm. At Dior, its products continue to be popular among buyers and the fashion show presentations are a source of inspiration for many.
At the watches and jewellery maisons, it saw revenue growth of 18 per cent in 2022 while profit from recurring operations was up 20 per cent. At the forefront is Tiffany & Co., which saw its High Jewellery revenue doubled, and other products like the Lock bracelet collection enjoyed great success in the US. Bvlgari’s High Jewellery and High Watchmaking collection continue to be its main drivers, such as the Serpenti line and the record-breaking Octo Finissimo Ultra. Elsewhere, TAG Heuer’s newly launched Carrera Plasma ushered in a new era of watchmaking with the addition of lab-grown diamonds and Hublot was in the spotlight as the official timekeeper for the prestigious 2022 Football World Cup in Qatar.
- READ MORE: LVMH’s Q3 Financial Results Beats Estimates
Change of Guards
Aside from the spectacular growth, the LVMH group also underwent several shifts in its management level. Long-time CEO of Louis Vuitton Michael Burke has stepped down to take up the advisor role within the group, while Pietro Beccari, CEO of Dior, will be his successor. In turn, Louis Vuitton’s executive president for product Delphine Arnault, the eldest child of Bernard Arnault, will become CEO at Dior.
The changes within the family-owned conglomerate signal a need for continual renewal, which Bernard Arnault explained, “In a large company, as in any human organisation, you have to evolve. I think it’s very bad to keep a form of organisation [that] leads to a spirit of routine.”
Despite this significant shakeup, Bernard Arnault has shot down the rumours of his stepping down as CEO and Chairman. LVMH’s board of directors had agreed to extend the retirement age to 80 years old — in line with France’s new policy.
A Focus in Asia
Based on the financial results, Asia’s share of sales is one of the smallest but the group is recentring its effort into the region. The world’s largest luxury group announced new brand ambassadors to its Maisons over the past months like BTS’ Jimin at Dior Men, Big Bang’s Taeyang at Givenchy, Park Bogum at Celine, NewJeans’ Hyein at Louis Vuitton, and Lee Minho at Fendi.
These appointments tell of LVMH’s new area of focus — Asia. A report by Morgan Stanley estimated that South Koreans’ total spending on luxury goods grew by 24 per cent to US$16.8 billion. The country has outspent major powerhouses like the US and China, making it the largest consumer of luxury goods. It makes sense that the group is investing more resources into the region, with spin-off shows and special showcases to capture a larger market share. Hence, the spade of new Asian ambassadors at the various Maisons is to capitalise on the rise of Asian idols, particularly South Korean celebrities.
- READ MORE: LVMH Doubles Down on Menswear Market in Asia
However, one would be remiss to ignore the potential that China holds despite not having the highest appetite for luxury consumption. The Middle Kingdom is the world’s second-largest economy, and many sectors depend on this enormous country for growth. It is an open secret that the Chinese economy has been slowing over the past two years, which could partly be due to the strict zero-Covid policies that the government had been enforcing but it has inevitably hurt the economy.
The Chinese government understands the need to revitalise the country so it has lifted the ban on international travel and scrapped the need for quarantine. With travel now possible, businesses like LVMH hope it would help to make up for the falling sales number from the West as soaring inflation and geopolitical challenges dampen consumer sentiments.
“I’m quite confident that the Chinese leaders being very shrewd, they will surely take advantage of the period that is starting to revitalise Chinese growth. If this is the case — and we’ve seen signs of it in January — then we have every reason to be confident, even optimistic, about the Chinese market,” Bernard Arnault shared with analysts at the release of the 2022 financial results.
In addition, international travellers from China will likely choose destinations nearby the country like Singapore, Thailand and South Korea. Therefore, more emphasis would be made in the region to engage with Chinese customers continuously. Countries in the West will likely see international tourists return in the second half of 2023.
“The Group will pursue its brand development focused strategy, underpinned by continued innovation and investment as well as a constant quest for desirability and quality in its products and their distribution,” the press release for the 2022 financial results concluded.
“Driven by the agility of its teams, their entrepreneurial spirit and its well diversified presence across businesses and geographic areas in which its customers are located, LVMH enters 2023 with confidence and once again, sets an objective of reinforcing its global leadership position in luxury goods.”
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Sunday, February 5, 2023
LUXUO Travelogue: Monte-Carlo, Where Money and Magic Collide
Among the great 19th-century grande dame hotels that are sprinkled across the capitals and resorts of Europe, the Hôtel de Paris has a special place: the sugar plum in a frothy Belle Époque confection.
It feels enchanted — a palace built for sensory delight in a fairy-tale principality that decided to dedicate itself to hosting and entertaining the elite of the day. Just standing in the Opéra de Monte-Carlo between Hôtel de Paris and its famous Yacht Club quickens the pulse. But to be a guest — that’s a real treat, especially now that a five-year, €215 million renovation has been completed, punctuated by the opening of the huge and beautiful rooftop Princess Grace Suite and, this month, the even larger Prince Rainier III Suite.
The great pleasure of palaces like the Hôtel de Paris is that they make one feel special. Life’s cares fade away and one’s existence becomes, for a duration, charmed. Magic happens: even my flight to Nice was an unexpected joy, surrounded as I was by the 58 members of the Treorchy Male Choir, who entertained fellow passengers with their repertoire, including the beautiful Michelle Yeoh who was a seat away from me, from take-off to landing. Why were they flying to the Côte d’Azur to perform at the Hôtel de Paris, at a not-so-casual summer night soirée hosted by a tech billionaire who did not want to be mentioned. I knew on the flight that I was going to love my stay.
In the mid-19th century, the House of Grimaldi had a very public financial meltdown. Prince Charles III turned to tourism entrepreneur François Blanc, who’d had great success with his legal gaming grounds and hotels in Bad Homburg, and invited him to co-create a luxury-magnet destination within a destination. In 1863, on a plateau used for cultivating olives, lemons and oranges, rose the new Monte-Carlo, still today the most famous trinity in tourism. A luxury stay alongside an opera and an elite gaming ground. “Best in the world”, as 007 once said.
While Monégasques were, and still are, forbidden from being seen at legal gaming grounds (this was built to give them an income, not to endanger them), Europe’s nobility, aristocracy and obscenely rich came flocking. For the opera, for the superstar chefs, the boat shows, the decadent stays, and the games! You can still see the clock that reminded guests to go back to their villas and hotels along the coast, for at first there was nowhere to stay in Monaco until the Hôtel de Paris was built. All guests of the hotel have free entry to the glorious, gilded hotel halls, the Thermes Marins spa and the Monte-Carlo Beach Club, for all are part and parcel, and together they saved and enriched the principality.
You need to be blessed with good luck to have a good time here. In the entrance of the marble-floored, stucco-ceilinged lobby, now entirely refurbished but still, aficionados say, with its original soul intact, stands a bronze equestrian statue of Louis XIV. The shiny right knee of the horse is a testament to the thousands of hands that have rubbed it to give them luck, the luck of Monaco. Guests can, and do, spend millions in a week. “They come here to indulge and treat themselves,” the VIP guest relations manager tells me as she points at a boulevard of Guccis, Pradas and Loro Pianas, “so it’s a thrill, they’ll be shopping from today till next Thursday.” And then there’s the Monaco Grand Prix. To the left of the hotel’s entrance is a wrought-iron lift that allows access to a subterranean tunnel to the world’s most sought-after jewellers so that guests can still reach it when the Grand Prix has turned the streets into a racetrack. Outside the hotel’s Rotunda wing are scented gardens where, during the race, ringside seats for lunch cost €500 per person.
Though much decoratively has changed, its ambience has not. It feels historic, privileged and, above all, calm — the sort of calm that comes from every whim being answered. It smacks of Princess Grace, of course, but also of Churchill, who came every winter and kept a parakeet in his suite, Onassis and Callas, Sinatra, Cary Grant, Rita Hayworth and Errol Flynn, who celebrated his wedding in the Salle Empire with a cake that weighed 77lbs. To the right of the lobby is Le Louis XV, the three-Michelin-starred domain, since 1987, of Alain Ducasse.
The Belle Époque murals depict the wife and sweethearts of the king, but the rather odd circular light fitting and the beige leather armchairs are new; I took against their matching rectangular stools for handbags: they reminded me of cardboard boxes. But I was not eating there. I dined in Omer, a new restaurant also by Ducasse on the ground floor of Rotunda. It feels a little bland for my rather adventurous taste buds, but the Mediterranean dishes are anything but. Behind the lobby, back-of-house courtyards have been opened up and lined with soaring palm trees to become Le Patio, an open walkway that leads directly to another luxury shopping centre, One Monte-Carlo. You can see the attraction for the super rich: hotels, restaurants, shops, a marina, and a gaming ground are now all but a designer handbag’s swing from one another. All these buildings belong to the part government-owned Société des Bains de Mer. The Société’s portfolio also includes the Thermes Marins, accessed from the Hôtel de Paris by a marble-walled tunnel. Here I wimped out of a cryotherapy session, which is apparently frightfully good for you but requires being swathed in protective bandages and standing for three minutes in a booth set at -166F (-110C). Instead, I chose a La Prairie facial and a wonderful hour in the hair salon at the hands of a master stylist. Caviar, of course, was served every 27 minutes in between all that.
All 207 rooms and suites have also been renovated. They are soothing, classic/modern spaces that have balconies or terraces on to the Opéra de Monte-Carlo. In the case of the ravishing new signature suites, Princess Grace and Prince Rainier III, they have all of the above, plus the best views in Monaco, plus rooftop infinity pools. In the Princess Grace Suite, in particular, I really felt her presence. She would surely have approved of it, right down to the film about her life made with the help of her family, the recreation of her study and the garden planted with her favourite roses.
Thank God for my new haircut and glowing skin. A drink before dinner in the American Bar with its live band is a must, and one should at least try to look the part and mingle with the couture-clad lovelies idly scrolling through their diamond-encrusted iPhones. The following day, I came across a friend’s parents from New York’s Upper East, both choreographers who were assembling a group of eighteen ballerinas for rehearsal before dinner. “What do you think?” I asked them. “Oh very posh. It’s not like home, that’s for sure.” And therein lies the magic.
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