30/01/2023
LVMH Says No to "Purchasing" - Eliminating Parallel Trading Channels (Purchasing) in the Travel Retail/Duty-free Sector
On January 26th, local time, the global luxury goods giant LVMH Group announced its 2022 financial report data. The data shows that in 2022, LVMH Group's annual sales reached 79.2 billion euros and its operating profit reached 21.1 billion euros, up 23% year-on-year. Despite the influence of geopolitical and economic situation, record achievements were made in 2022.
All business groups have achieved significant organic revenue growth and increased global market share;
Fashion and leather goods business group has made outstanding performance, especially reaching a record level, with organic income increasing by 20%;
Business in Europe, Japan and the United States registered strong growth;
Louis Vuitton's revenue exceeded 20 billion euros for the first time;
The perfume business achieved strong growth, and Dior's Sauvage led again in 2022;
All watch and jewelry brands, especially Tiffany, Bulgari and TAG Heuer, maintain the momentum of continuous innovation;
Sephora sales rebounded significantly and continued to lead in the field of beauty product distribution;
Operating free cash flow exceeds 10 billion euros.
Thanks to the strong demand of local consumers and the recovery of international travel, sales in Europe and the United States have risen sharply. Japanese sales also achieved strong growth, but due to the influence of the pandemic in China, the overall sales performance in Asia was stable.
Wine and spirits business: revenue and income reached a record level
The wine and spirits business achieved a year-on-year growth of 19%, organic growth of 11%, and operating profit increased by 16%, both of which were record-breaking. Driven by the increasing supply pressure caused by continuous demand, champagne sales increased by 6%. The growth momentum in Europe, Japan and emerging markets is particularly strong.
Moët Hennessy benefited from its value creation strategy, and the price increase policy offset the impact of the pandemic in China and the disruption of logistics in the United States at the beginning of the year. Hennessy also strengthened its global portfolio of quality wines by acquiring ——Joseph Phelps Vineyard, one of the most famous wine estates in Napa Valley, California.
Fashion and leather goods business: LV, Dior, Celine, Fendi, Loro Piana, Loewe and Marc Jacobs performed well
The sales of fashion and leather goods business increased by 25% year-on-year, organically increased by 20%, and the operating profit increased by 22%. Many brands performed well.
Louis Vuitton brand revenue exceeded 20 billion euros for the first time; Dior maintained significant growth in all product lines; Celine achieved record sales growth, and brands such as Loewe, Fendi, Loro Piana and Marc Jacobs also performed very well in 2022.
Perfume and cosmetics business: perfume grows strongly.
The perfume and cosmetics business achieved a year-on-year growth of 17% and an organic growth of 10%. Due to the influence of selective distribution policy, operating profit decreased slightly.
Dior has performed very well, and its global leading position has been strengthened. Sauvage perfume has helped it become the world's leading perfume, and the sales of iconic women's perfumes Miss Dior and J'adore continue to grow. Guerlain, driven by the achievements of Abeille Royale skincare products, Aqua Allegoria series and L'Art et la Matière perfume, maintained its sales growth. Givenchy benefited from the strong performance of its perfume to keep growing. Thanks to the expansion of distribution network and the success of new products, Fenty Beauty's revenue has doubled.
Watch and jewelry business: rapid growth
The watch and jewelry business grew rapidly, with revenue increasing by 18% and operating profit increasing by 20%.
Tiffany's performance has set a record, the income of high-end jewelry has doubled, and the brand's new Lock bracelet series and other iconic series launched in North America have achieved great success. Bulgari achieved strong growth in sales, especially in Europe, Japan and the United States. Its iconic Serpenti series, high-end jewelry and high-end watchmaking series are its main growth drivers. Octo Finissimo Ultra watch broke a new record of thin size.
In the field of watchmaking, TAG Heuer has introduced innovative products such as Carrera Plasma, which is an avant-garde combination of watchmaking and laboratory cultivation of diamonds.
Selected retail department: Sephora performed well.
In 2022, the revenue of selected retail business increased by 26% year-on-year, and the operating profit increased by 48%.
With the strong rebound of store activities, Sephora has achieved record performance in revenue and profitability. The growth momentum in North America, Europe, the Middle East and most Southeast Asian countries is strong. DFS was affected by the pandemic in China in 2022, and the revenue of the flagship stores in Hongkong and Macau were affected by the suspension of domestic tourism.
Bernard Arnault, Chairman and CEO of LVMH Group, said in the performance conference call that although the situation of DFS has proved to be challenging, there is still potential for recovery after China relaxed its restrictions.
Full of confidence in 2023
Although the geopolitical and economic environment is still full of uncertainties, January started well, and LVMH Group is full of confidence in continuing to maintain its growth in 2022.
Bernard Arnault said, "China has begun to show signs of recovery. In Macao, the changes are very great. The store is full of passengers and consumption is recovering strongly. "
However, Bernard Arnault also said that China's recovery is still in the "early stage" and there is no guarantee that this accelerated recovery trend will continue.
"The China market started very strongly this year. If the trend of China's opening up this year can continue, then 2023 will be an excellent year, and we will be able to continue to seize the market and increase market share. The Group is full of confidence in the China market," Bernard Arnault said.
Bernard Arnault predicted that tourists from China will not return to China until at least the second half of this year.
"Refuse to keep the brand attractive through purchasing"
Bernard Arnault said in the performance conference call that he rejected and opposed the so-called "parallel export", and some of his peers bought products from foreign markets and then sold them at a discount price in China. Many colleagues adopted this sales channel because of revenue, and made huge revenue in this way during the epidemic, but we avoided this situation.
When referring to the purchasing market, Jean-Jacques Guiony, chief financial officer of LVMH, said, "We decided to cancel the parallel channels in global tourism retail, which was a costly decision because it reduced profitability. But this is the right decision and will keep our brand attractive. "