Off a record year in 2018, in which it logged €46.8 billion in revenue, luxury giant LVMH Moët Hennessy Louis Vuitton (LVMH) released their 2019 first half results on July 24. Despite other luxury retailers suffering the effects of a slowing economy in China, LVMH recorded an 12 percent increase in overall organic growth year-over-year, reporting €25.1 billion in revenue in the first half of 2019, setting the group up for another record year.
In terms of business group, revenue for both Wine and Spirits and Perfumes and Cosmetics grew appreciably in the Chinese market in the first half of this year. According to Bernard Arnault, Chairman and CEO of LVMH, “LVMH has made an excellent start to the year. These results once again illustrate the effectiveness of our strategy and the exceptional desirability of our Maisons, whose products transcend time… Despite buoyant demand, we will continue to manage costs and remain vigilant into the second half of the year. We are therefore entering the second half of the year with confidence and count on the talent of our teams and their shared entrepreneurial passion to further increase, once again in 2019, our leadership in the world of high-quality products.”
Chinese demand has responded well to efforts by the Wines and Spirits group to boost product quality, average price, and investment — particularly in global marketing strategies aimed at converting into higher sales volume. “The Seven Worlds of Hennessy X.O,” a short film directed by Sir Ridley Scott for LVMH’s signature cognac Hennessy X.O, translated well in Asian markets.
As noted in the LVMH financial report, “Demand remained very strong in the United States and in Asia, particularly China, which reaffirmed its status as the second-largest market for the Wines & Spirits business group.” Profit from recurring operations reached €772 million, marking a 6 percent increase compared to the same period last year. LVMH will strategically increase investment in the Chinese market to keep on top of momentum.
Demand for LVMH’s Perfumes and Cosmetics group was on a positive track in the first half of the year despite fierce competition. This was led by gains in Asia — again, specifically China — with organic revenue growth of 9 percent driven by sales of flagship brands. A notable mention of accelerated growth in China came with the performance of Givenchy make-up, and Benefit continued to expand its Benefit Brow Collection, which included the addition of brow bars in the region.
Fresh’s iconic lines Rose, Black Tea, and Lotus saw sturdy performance, while Acqua di Parma opened the first of its stores in China. Guerlain — which launched its localized Cha Ling linein China three years ago — “experienced remarkable growth” propelled by both its skincare and make-up lines in China.
Despite the successful first half, Arnault is wise to remain vigilant in the second half of 2019. There is a Chinese economic slowdown, Hong Kong’s uncertain future as a luxury shopping destination, and an ugly trade war between China and the United States to contend with, all with the potential to affect the supply and consumption of luxury goods. Innovative marketing and new product lines may not be enough this year to maintain LVMH’s record revenues while increasing market share.