Luxury groups show brilliant health

The Covid-19 crisis is just a memory for the luxury sector. The annual results of the market leaders testify to this. Three weeks after LVMH, Kering presented its own on Thursday February 17 – an opportunity to show how its cash machines ran at full speed in 2021. The group owned by the Pinault family thus recorded an increase in activity of 35 %, to 17.6 billion euros. Gucci, its flagship brand, saw its sales jump 31% compared to 2020, particularly at the end of the year, while its turnover amounted to 9.7 billion euros. Saint Laurent, another of its subsidiaries, achieved 2.5 billion euros in turnover, driven by growth of 45%.

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Hermès also appears to be in good health. Scarves, bags and other ready-to-wear pieces designed by Véronique Nichanian and Nadège Vanhee-Cybulski enabled the Parisian firm to record a turnover of 9 billion euros for the year 2021, up by 42% at constant exchange rates and current operating income of 3.5 billion euros, up 78%. A record.

Unsurprisingly, French luxury groups have all benefited from the explosion in sales in the United States and Asia. Because, for lack of international tourists in Europe, it is in Shanghai, Beijing, Tokyo and New York that the big brands find their customers and sell the ranges that they previously sold in Parisian shops or airports.

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This surge in sales increases the profitability of these groups tenfold. The fashion and leather goods brands of the LVMH group generate an operating margin of around 41%. That of Hermès was 39.3% in 2021. Gucci and Saint Laurent are also doing wonderfully: their respective operating margins reached 38% and 28.3%.

A question of “desirability”

The soaring prices of raw materials and operating costs in the sector have in no way affected this profitability. Indeed, most brands have already passed it on to their selling prices. Chanel had launched the label waltz from 2021, three times, with an increase of 10% to 15%. Christian Dior has also followed this path. Under the impetus of its CEO, Pietro Beccari, the brand has extended its ranges to broaden its price spectrum and increased the prices of its handbags by more than 10%. The maneuver hit the mark: Dior crossed the 6 billion euros mark in revenue, according to Citi.

The luxury industry has particularly scrutinized the rise in the prices of noble materials such as gold

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