Consumer desire for luxury goods in post-COVID China has meant good news for LVMH.
The Louis Vuitton owner on Wednesday (April 12) reported a 17% increase in sales for its first quarter, driven in part by a resumption of shopping among Chinese consumers following the lifting of that country’s strict pandemic restrictions.
Speaking during an earnings call, Chief Financial Officer Jean-Jacques Guiony said the company was “extremely optimistic” about its prospects in China for 2023, adding that its first-quarter numbers “bode well for the rest of the year.”
China relaxed its international travel restrictions in January following three years of COVID-related limits. As PYMNTS wrote earlier this year, the move was a welcome one for retailers of high-end products, as Chinese consumers purchased about a third of the world’s luxury goods in the pre-pandemic year 2018.
And the optimism Guiony expressed this week echoed sentiments of LVMH Chairman and CEO Bernard Arnault in January.
“We have every reason to be confident — indeed optimistic — on the Chinese market,” Arnault said. “In Macau, where the Chinese can now travel to, the change is quite spectacular. The stores are full and it’s really come back at a very strong pace.”
Earlier this year, rival luxury brand Hermes reported strong consumer demand for its products in China during the closing quarter of 2022, in spite of the pandemic restrictions. As PYMNTS noted at the time, the beauty and personal care market in China is projected to reach $98 billion this year.
“[We] continued to see strong desirability in China,” Hermès Executive Chairman Axel Dumas said in a February interview with Reuters. “We saw things going very strongly in China with double-digit growth … including in the fourth quarter.”
More recently, cosmetics giant L’Oréal purchased Australian luxury brand Aesop for $2.53 billion, in a bid to grow its presence in the high-end skincare market and expand internationally, particularly in China.
Aesop had generated $537 million in sales in 2022, up 21% from the previous year after accounting for currency fluctuations. The brand also saw double-digit growth in all regions and surpassed expectations in its entry into the Chinese market, which is known for its rapid growth in the beauty sector.
Not every luxury group was as lucky. In February, French company Kering, whose brands include Gucci, Yves St. Laurent and Alexander McQueen, reported it had run into fourth-quarter headwinds due to the COVID restrictions in China.
Sales for Gucci — which account for half the company’s revenue — had fallen 14%, a trend Kering attributed to the lockdowns.
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