China proved a standout market in every product category for luxury-goods retail group LVMH in the first half year.
While sales in Europe and the Americas suffered from long drawn-out disruption due to Covid-19, there were signs of a recovery in Mainland China.
LVMH group sales fell by 27 per cent to €18.4 billion during the half and by 38 per cent in the second quarter.
“Asia has seen a marked improvement in trends, with a strong rebound in China in particular,” the company noted in its results filing, noting the trend was particularly notable in the second quarter.
Profit from recurring operations amounted to €1.671 billion euros for the first half of 2020 and operating margin stood at 9 per cent. “The profitability of Louis Vuitton, Christian Dior and Moet Hennessy remained at a high level,” the company said.
“LVMH showed exceptional resilience to the serious health crisis the world experienced in the first half of 2020,” added Bernard Arnault, LVMH’s chairman and CEO. “Our maisons have shown remarkable agility in implementing measures to adapt their costs and accelerate the growth of online sales.”
LVMH’s flagship fashion & leather-goods business group reported a 24-per-cent decline in organic sales for the half year, but China recorded “a very strong recovery in revenue in the second quarter”.
Sales of perfumes & cosmetics fell by 29 per cent, with the company’s larger brands showing good resistance despite an overall decline in the makeup market. In China, LVMH singled out the Fresh skincare brand as enjoying strong momentum.
Sales of watches & jewellery fell by 39 per cent in the first half of 2020. “Confronted in January with the decline of the Chinese market, then with the closure of other markets from mid-March, Bulgari quickly took advantage of the recovery in China in the second quarter,” the company reported.
However, watch brands TAG Heuer and Hublot were hit by declining orders from retailers due to lockdowns.
In the company’s selective retailing division, sales were down by 33 per cent. Sephora showed good resistance during the pandemic, the brand growing market share in its main markets, in part due to a solid omnichannel strategy. However the DFS travel-retail business saw sales decline in most destinations due to the suspension of international travel.
The wines & spirits business group saw sales decline by 23 per cent in the first half.