The luxury industry is holding strong despite the specter of recession

Inflation and falling incomes of consumers cause them to limit their spending. However, this does not affect the luxury goods industry, which records record results. Last year, the revenue of the Louis Vuitton brand exceeded 20 billion euros for the first time in history.

Luxury goods at a price

The latest data from the Central Statistical Office show that consumers in Poland reduce their spending. In the fourth quarter of 2022, private consumption fell by 1,7 yoy. y/y The same is happening in other countries. However, this does not apply to the luxury goods industry, which is still doing great. This is clearly visible in the recently presented results of LVMH - the world's largest company in the luxury goods industry, which has in its portfolio min. Louis Vuitton, Dior and Hennessey brands.

LVMH Moët Hennessy Louis Vuitton, listed on the Paris Stock Exchange, recorded a record profit of EUR 2022 billion in 14, an increase of EUR 2 billion compared to 2021. The company's revenues increased by as much as 23 percent. – up to EUR 79 billion, of which EUR 38 billion was generated by the Fashion & Leather Goods division. The company has never in the past informed about the detailed results of its individual brands. Now, however, in the report she boasted that the revenue of the Louis Vuitton brand will exceed EUR 20 billion for the first time in history.

Thus, it turns out that despite the specter of recession, LV boutiques were full of customers in 2022. Similar good results were also recorded by Hermes and Kering (owner of the Gucci, Yves Saint Laurent and Balenciaga brands).

The results did not suffer in China either

LVMH managed to keep its sales in China unchanged, despite the restrictions related to the "zero-covid" policy. In the US market, the company increased sales due to the strong dollar. Sales in Europe were also strong. Business achieved a margin of 26,5 percent., which is similar to that of previous years. The company plans to pay its shareholders a dividend of EUR 12 per share, which is EUR 2 more than in 2021.

These data show that The luxury goods market is doing very well. And he is not afraid of spending restrictions by consumers. This market could only be affected by a serious recession, but more and more data indicate that the specter of an economic slowdown on the global market is receding in time. For the luxury goods market, the most important seems to be the good results of the Chinese economy, which is the only major economy in the world to grow faster in 2023 than in the previous one.

You can invest in luxury companies directly (from Macy's to Burberry). You can also use Smart Wallets eToro @LuxuryBrands and @FasionPortfolio.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.