Whatās Going On Here?Luxury conglomerate LVMH reported better-than-expected quarterly earnings earlier this week, as shoppers emerged, pale and blinking, into the humble lifestyle they once knew. What Does This Mean?There werenāt exactly many benefits to lockdown, but the money plenty of us saved up was certainly one of them. And it looks like fashionistas wasted no time making good use of it last quarter: LVMHās organic revenue from its fashion and leather goods segment climbed 24% compared to the same time last year. And since the segment contributes almost half of LVMHās total sales, that helped push overall revenue up by 20%. That means the company has made more money in the first nine months of this year than it did during the same period in a pandemic-free 2019. There was one hiccup, though: LVMH warned that increased shipping costs will hurt its profit going forward. Why Should I Care?For markets: Luxury is back in fashion.
The pandemic took a serious toll on the luxury industry: itās hard for shoppers to justify a Louis Vuitton handbag when thereās so much uncertainty ahead, after all. These results, then, are an encouraging sign that the industryās back on track, which might be why investors sent LVMHās stock up 3%. And given that they look to the conglomerate for clues about other luxury companies, theyāre suddenly feeling a lot more confident about HermĆØsā and Gucci-owner Keringās updates later this month. That might be why they sent those companiesā shares up too.
The bigger picture: Equality isnāt the enemy.
Investors were especially keen to know how LVMH has been doing in China: theyāve been worried that the companyās second-biggest marketās efforts toward ācommon prosperityā mightāve been impacting how the 1% spend their money. But LVMH said that it hasnāt noticed any changes in shoppersā behavior so far, which might ā temporarily, at least ā help put investorsā minds at rest. | 