Image Source: Zigres/Shutterstock
With record spending in America for 2022, will China follow suit in 2023?
In the wake of the Covid-19 lockdowns, China now plays a larger role than ever in the success or failure of luxury brands such as Louis Vuitton. With that being said, the fashion industry giant has yet to get a solid take on the state of the Chinese market.
For the second year running, the French retail franchise LVMH Moët Hennessy Louis Vuitton has reported record annual sales profits, with an increase of around 1.55% compared to 2021. As a result, Louis Vuitton surpassed a total of €20 billion in sales for the first time ever in 2022.
LVMH has also put out a statement on the progress at Tiffany & Co., the U.S. jewelry brand purchased by LVMH back in 2021. According to the statement, the brand’s profits have doubled since the takeover, making the most expensive takeover in the history of $16 billion seems like a successful business move so far.
LVMH’s overall profit margins remained relatively flat though, despite the 17% growth in annual sales. This is in part due to the fact that the fashion conglomerate chose to up its already multibillion-dollar marketing budget by a third.
In a recent trend, many luxury brands are also spending heavily on marketing and advertising in an attempt to account for pricing increases. Due to global inflation, prices in the luxury brand industry rose by around 8% on average.
American consumers spent the most on luxury goods worldwide over the course of the pandemic and statistics show that this has not slowed since. Sales figures in America for 2022 rose by 7% when compared with the same figures from 2021.
The focus is now fully on China, where Covid-19 restrictions are finally starting to let up. As of this month, sales figures in China are still 40% below what they were in 2019. LVMH is optimistic that with international travel in Beijing and other Chinese cities starting to return to normal, sales will return to normal soon also.
With two years of lockdown savings now at their disposal, an estimated figure of around 1.16 trillion U.S. dollars, LMVH hopes that Chinese customers will now show the same level of spending interest that the Western world did post-lockdown.
Investors believe this to be the case and have slated the designer label industry to be in line for a financial windfall. As a result, stocks in major European luxury companies such as Louis Vuitton and others, have risen by more than 20% already this year.
Shareholders might not want to get too excited just yet though, as a clear indication of the state of the Chinese market’s trajectory remains to be seen. At least this much is true, the next several months will prove to be a vital period, as China’s economy slowly returns to life.
Image Source: Zigres/Shutterstock
With record spending in America for 2022, will China follow suit in 2023?
In the wake of the Covid-19 lockdowns, China now plays a larger role than ever in the success or failure of luxury brands such as Louis Vuitton. With that being said, the fashion industry giant has yet to get a solid take on the state of the Chinese market.
For the second year running, the French retail franchise LVMH Moët Hennessy Louis Vuitton has reported record annual sales profits, with an increase of around 1.55% compared to 2021. As a result, Louis Vuitton surpassed a total of €20 billion in sales for the first time ever in 2022.
LVMH has also put out a statement on the progress at Tiffany & Co., the U.S. jewelry brand purchased by LVMH back in 2021. According to the statement, the brand’s profits have doubled since the takeover, making the most expensive takeover in the history of $16 billion seems like a successful business move so far.
LVMH’s overall profit margins remained relatively flat though, despite the 17% growth in annual sales. This is in part due to the fact that the fashion conglomerate chose to up its already multibillion-dollar marketing budget by a third.
In a recent trend, many luxury brands are also spending heavily on marketing and advertising in an attempt to account for pricing increases. Due to global inflation, prices in the luxury brand industry rose by around 8% on average.
American consumers spent the most on luxury goods worldwide over the course of the pandemic and statistics show that this has not slowed since. Sales figures in America for 2022 rose by 7% when compared with the same figures from 2021.
The focus is now fully on China, where Covid-19 restrictions are finally starting to let up. As of this month, sales figures in China are still 40% below what they were in 2019. LVMH is optimistic that with international travel in Beijing and other Chinese cities starting to return to normal, sales will return to normal soon also.
With two years of lockdown savings now at their disposal, an estimated figure of around 1.16 trillion U.S. dollars, LMVH hopes that Chinese customers will now show the same level of spending interest that the Western world did post-lockdown.
Investors believe this to be the case and have slated the designer label industry to be in line for a financial windfall. As a result, stocks in major European luxury companies such as Louis Vuitton and others, have risen by more than 20% already this year.
Shareholders might not want to get too excited just yet though, as a clear indication of the state of the Chinese market’s trajectory remains to be seen. At least this much is true, the next several months will prove to be a vital period, as China’s economy slowly returns to life.
