With stores and production sites closed and travel halted, the second quarter of 2020 was a tough time for luxury brands. The industry’s two biggest, strongest conglomerates were suddenly looking at double-digit declines: LVMH saw a 38% drop in comparable sales, Kering a 43.7% drop (even Gucci did poorly). That was despite some growth in online sales as consumers shopped from home, and a rebound in China, which had largely recovered from the pandemic by then. It wouldn’t be surprising to see more of the same in Q3, but things seem to be starting to turn around already.
That’s at least true for LVMH, which on Thursday was the first big luxury firm to report earnings from the last three months. Revenue was down only 7% — a major improvement compared to last quarter’s 38% decline — thanks in large part to the company’s fashion division, the only one that actually saw positive sales growth: a 12% increase, to be exact.
With most stores only just beginning to open and tourism still nowhere near normal, that LVMH fashion has already returned to double-digit growth is pretty huge.
The company doesn’t break down the numbers for individual brands, but it did say that Louis Vuitton and Christian Dior, its usual cash cows, rebounded particularly strongly. At Louis Vuitton, it described “strong commercial and creative momentum for all businesses and market share gains,” calling out a new Since 1854 pattern on accessories, as well as the artist collaborations on its Capucines bag, as being particularly successful. At Dior, the new Bobby bag — promoted via a massive (and, some might have argued, insensitively timed) influencer campaign — proved popular. It also made the controversial choice to hold an in-person runway show.
Because they make up much smaller portions of revenue, LVMH is even more vague about the brands that aren’t Vuitton or Dior, which it literally just refers to as “other brands.” Though, it did call out three as having shown “big improvement” during Q3: Fendi (which recently appointed Kim Jones its creative director), Loewe and Celine. News-wise, the company highlighted Matthew Williams’ debut collection for Givenchy, which it said was “well-received” (which we’d say is pretty generous).
China’s aforementioned rebound was also likely a big contributor to the fashion division’s success. Overall, the company saw a 13% increase in sales in Asia in Q3.
As we mentioned, the company’s other categories didn’t fare nearly as well as fashion in terms of growth. Perfume & Cosmetics, which encompasses its fashion brands’ beauty extensions as well as standalone beauty labels like Guerlain and Make Up Forever, saw revenue decline 16%. The most interesting news there — at least to us — was the launch of Fenty Skin: Executives simply described that debut as a “promising start.”
Let’s not forget LVMH is also embroiled in a lawsuit with Tiffany & Co. The company didn’t offer any significant updates on that. A trial is scheduled for Jan. 5, 2021.
Will the other luxury company’s show LVMH’s apparent resilience? We’ll have to wait and see.