LVMH shares surged after the luxury giant bounced back from the depths of the pandemic as customers snapped up items ranging from Christian Dior couture to Hennessy cognac.
Revenue last year totalled €64.2bn, the Paris-based company said, topping the previous record set in 2019, before Covid-19 lockdowns closed stores and kept shoppers stuck at home.
The shares rose as much as 6% in Paris, lifting LVMH’s market value by more than €18bn to about €368bn.
The performance of the luxury giant, led by billionaire Bernard Arnault, exemplifies the V-shaped recovery experienced by much of the industry, as wealthy customers rushed back to boutiques. The pace of the rebound was underpinned by recovering economies and soaring asset prices.
As the dominant purveyor of luxury goods, LVMH benefited from its range of products, from €1,000 Louis Vuitton Tattoo boots to Tiffany engagement rings. Organic revenue for its main fashion and leather goods division, which includes Celine and Loewe on top of Louis Vuitton, jumped 42% from 2019 levels.
LVMH’s selective retail category, which includes Sephora and duty-free unit DFS, and the perfumes and cosmetics group are the only two divisions that have yet to see sales match 2019 levels amid a subdued flow of Asian tourists to European capitals.
LVMH chief executive Bernard Arnault warned that international travel may not return before next year or 2024. Tiffany, which joined the group a year ago, had a “remarkable” performance despite the brand’s flagship store on New York’s Fifth Avenue being closed for refurbishment.
Mr Arnault said the group would be “reasonable,” and “respect” its customers when it comes to potential product price increases. But he acknowledged some of the group’s products have pricing power, citing a special watch called the Nautilus launched by Tiffany and Patek Philippe with 170 pieces.
Some luxury-goods maker such as Chanel have increased prices for their iconic bags by a margin far outpacing inflation rates over the past two years, prompting customers to complain.
LVMH will be “opportunistic” when it comes to M&A, Arnault said, adding he is in no hurry to proceed with a major deal.
The debt levels since Tiffany’s $16bn (€14bn) acquisition have gone down, standing at €9.6bn at the end of last year. UBS analysts led by Zuzanna Pusz estimate the group will have up to €80bn in M&A firepower by next year.
“Just about any deal is open to them, if the potential targets are willing to sell,” Bernstein analyst Luca Solca said.
Mr Arnault said the group he controls does strategic reviews of assets but sales of brands tend to be “marginal” moves. LVMH is still grieving following the death of Virgil Abloh, the designer who led Louis Vuitton menswear and who passed away in November from cancer at the age of 41, the billionaire added.