LVMH, the world’s largest luxury conglomerate, revealed its half-year financial report on Monday. The French company said that while its revenue stream proved resilient during the first half of the year, it did fall 27 percent due to the impact of COVID-19. The first two quarters of 2020 saw LVMH’s net profit nosedive by a staggering 84 percent to $612.29 million, mostly thanks to extended boutique closures during the lockdown. That figure is far below the analyst estimates that predicted a more robust recovery, according to the Robb Report.
Upmarket retailers were hit hard by the pandemic after the dramatic drop in wealthy shopper travel. “The month of June was significantly better, and July will certainly see some improvement compared to June,” said the LVMH chief financial officer, Jean-Jacques Guiony, on a conference call. This uptick in sales is mostly due to China’s reopening and was buoyed by the more recent reopening of shops in Europe, though a lack of tourist dollars remains a significant concern for the company.
Guiony pointed out in the conference call that the group’s travel retail business should continue to suffer for several more quarters, and he warned that domestic shopping by Chinese consumers couldn’t offset the near-total absence of purchases by Chinese tourists traveling abroad. However, he did cite another reason for optimism. The extreme circumstances brought on by Covid-19 have encouraged LVMH’s stable of luxury houses to take a fresh approach to e-commerce, as reported by WWD.
Though Louis Vuitton’s sales may have experienced trouble in select categories, the heritage house known for its leather goods remained one of LVMH’s top performers. “Louis Vuitton illustrated its creative force more than ever through its many new products,” according to a spokesperson for LVMH. “The Maison is strengthening its ties with its customers through several digital initiatives and maintained its profitability at an exceptional level.” The other jewel in the LVMH crown, the Christian Dior group, recorded revenue of $21.6 billion during the first half of 2020, a drop of 27 percent.