LVMH powerhouse Louis Vuitton grows in "controlled" fashion in 2018
In 2018, sales for Louis Vuitton “comfortably exceeded €10 billion,” said Bernard Arnault, CEO of LVMH, on the occasion of the publication of the luxury giant’s annual results. Louis Vuitton’s performance was regarded as “exceptional” by Arnault, as the label once more was the driving force of the group’s fashion and leather goods division. The latter, which also includes Christian Dior Couture, Loewe, Loro Piana and Marc Jacobs, generated a revenue of €18.45 billion in 2018, posting a 15% organic growth. Indeed, Louis Vuitton was the powerhouse of the whole LVMH group, whose 2018 revenue reached €46.8 million.
Not even the often-raised spectres of a slow-down in Chinese consumption due to the yuan’s depreciation, and of weakening consumer confidence in the USA, managed to affect Louis Vuitton’s rude health. According to Jean-Jacques Guiony, Group CFO at LVMH, in the third and fourth quarter 2018 business was buoyant in Asia, and especially in mainland China, while US consumption “has been excellent for the entire year.”
“We could undoubtedly do better in terms of revenue, but above all we try to be the most sought-after brand in the world. For example, Louis Vuitton doesn’t do end-of-season sales, and isn’t sold in outlet stores. We could do it, and it would work extremely well, but we have always refused to do so,” said Arnault.
According to Arnault, Louis Vuitton’s success is first of all driven by the quality of its creative teams, led by Virgil Abloh for menswear and by Nicolas Ghesquière, who is also set to launch his own label with backing from LVMH, for womenswear. As well as by the work of the product development teams under Delphine Arnault, who breathe life into the designers’ ideas. Arnault also underlined the impact of the Louis Vuitton monobrand stores, each of them adapted to their own locale. The label will shortly be opening new stores in Sydney, Osaka and London, all with a different look. And to fulfil rising demand, after the opening of a workshop in Sainte-Florence, France, the label plans to open a further four in the course of 2019.
“Louis Vuitton is indeed on the growth path, but it’s a controlled, selective growth, which once again puts a premium on desirability; even if we have designers who generate a lot of buzz on social media, we want our products to be high-quality, durable and timeless,” said Arnault.
Notably, Louis Vuitton’s fashion and leather goods business generated a recurring operating income of €5.943 billion in 2018, up 21% over 2017. A very strong increase, going hand in hand with the positive effect brought by the consolidation of Christian Dior Couture, whose ambition is to become the “most sought-after Haute Couture label in the world.”
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