The pandemic is not over yet, since LVMH is already achieving record results.

The French luxury group presented surprisingly good results for the second quarter and the first half of this year on Monday evening.

Strong sales in Asia and the United States as well as a “gradual recovery” in Europe make it possible for the company, with its more than 80 brands from Louis Vuitton and Christian Dior to Tiffany and Bulgari to Hennessy and Veuve Clicquot, with full confidence in the second semester can look.

Christian Schubert

Business correspondent in Paris.

  • Follow I follow

While other companies are looking forward to double-digit growth rates compared to the previous year these days, LVMH also achieved this compared to 2019. The record turnover of 28.7 billion euros in the first half of the year was not only a good half above the weak lockdown year 2020, but also 11 percent above the level of 2019. A positive reaction from investors is expected on the stock exchange today, Tuesday, for the company valued at 340 billion euros - more than any other in Europe.

According to LVMH major shareholder and CEO Bernard Arnault, the maintenance of innovations and investments in the crisis is now bearing fruit.

The rededication of the traditional Parisian department store on the Seine, La Samaritaine, a few weeks ago is just proof of this.

The group is now in a position to increase its weight as the world market leader.

Relies on cooperation

Major acquisitions are not planned for the time being, added CFO Jean-Jacques Guiony;

The purchase of the American jewelry manufacturer Tiffany six months ago, the integration of which is going well, must first be coped with, especially since the net debt has more than tripled to a good 15 billion euros.

But small “opportunistic acquisitions” are conceivable, said Guiony.

Instead of large takeovers, LVMH is currently relying on cooperations. They help, for example, to strengthen the digital presence, which is supposed to compensate for the pandemic-related declines in sales in shopping malls even better than was the case recently. The perfumery chain Sephora, for example, has launched a “strategic partnership” with Zalando, which is due to start in Germany at the end of the year. The watch manufacturer TAG Heuer cooperates with Porsche and has released a luxury timepiece called the Carrera Porsche.

LVMH takes a selective approach to digital platforms: LVMH ignores external electronic platforms when it comes to guaranteeing sales and profits for leather goods and fashion items;

because too high a commission got stuck there, explains the CFO;

Instead, it is better to design the electronic presence alone.

In other areas, "where expansion through its own physical stores is too costly," the group sees the future in cooperation with external parties.

Core brand Louis Vuitton

In the first half of the year, the core brand Louis Vuitton once again proved to be the most important source of sales and margins. The business sector of leather goods and the various fashion houses increased its revenues compared to the same period in 2020 by 81 percent to almost 14 billion euros. Compared to the pre-pandemic year 2019, that was - taking acquisitions out of the equation - an increase of 38 percent. As a result, LVMH was able to generate no less than 5.6 billion euros in operating profit with leather goods and fashion - three quarters more than in 2019.

The group-wide net profit came out at 5.3 billion euros, ten times as much in 2020 and still 62 percent above the level of 2019. In addition to Louis Vuitton, the brands Christian Dior, Givenchy, Fendi, Loewe and Celine are particularly high-margin brands. After that, nothing comes for a long time. The second largest profit maker in the group in the first half of 2021 was spirits and wines with an operating profit of 924 million euros, a fifth more than in 2019.

But not everything shines in the realm of Bernard Arnault: Because the travel business at the airports is still weak, the retail trade with duty-free and other items that passengers like to grab before boarding suffers. After all, the retail business has broken out of the red and generated an operating profit of 131 million euros. Make-Up is still in crisis, reports Guiony. Watches and jewelry, on the other hand, are again a bright spot. Tiffany, for example, has drawn attention to herself through engagement rings for men in straight and homosexual relationships. Sales in this area are a good 70 percent above the previous year and 5 percent above 2019.

LVMH will pay the shareholders an interim dividend of EUR 3 per share. This is easy for the company, not least because it earned 11 million euros on its debts in the first half of the year because of the negative interest rates from the European Central Bank. Last year LVMH had to spend 46 million euros on interest.