Sales of Louis Vuitton handbags and the easing of Covid-19 lockdowns around the world helped revenue increase at fashion house LVMH.
In a stellar quarter for the owner of some of the world’s best-known luxury brands, like-for-like sales at the group rose by 84 per cent in the three months through to June, ahead of analysts’ expectations.
Much of the gain was fuelled by demand for fashion and leather goods, particularly at Louis Vuitton, Christian Dior, Fendi, Loewe and Celine, the company said.
Organic revenue in this division jumped 120 per cent in the second quarter from a year earlier and by 40 per cent from the same period in 2019. LVMH benefitted from an easy comparison with 2020 as many shops remained shut last year due to the pandemic.
Demand “remains very strong,” chief financial officer Jean-Jacques Guiony told analysts on a call.
This is the “strongest first-half update ever” for LVMH and will probably prompt earnings upgrades for a company seen as the bellwether of the luxury-goods industry, Luca Solca, an analyst at Sanford C. Bernstein, said in a note to clients.
LVMH was active in the period, presenting a "cruise collection" from Christian Dior at an Athens event attended by celebrities such as Catherine Deneuve and The Queen’s Gambit star Anya Taylor-Joy. It also reopened La Samaritaine, a department shop located on the right bank of Paris that had been shut for more than 15 years.
Profit from recurring operations came in at €7.63 billion ($9.02bn) in the first half. Analysts had expected €6.62bn. Mr Guiony said the operating cost base during the period was flat, compared with 2019, even though sales are “significantly up.” Capital expenditure was also “tightly monitored”, he said.
The “real surprise” came from the outperformance in profitability, Morgan Stanley analysts led by Edouard Aubin wrote in a note after the results.
Looking ahead, Dior is preparing to reopen its shop at 30 Avenue Montaigne in Paris in the second half, LVMH’s director of financial communications, Chris Hollis, said on the analyst call. Tiffany is set to launch a new collection of gold jewellery after an “excellent” first half, with “momentum particularly strong” in Asia and the US, said Mr Hollis.
LVMH is also recording progress with local clients in Europe, although it is not sufficient to offset the lack of tourists in the region, Mr Guiony said. Last month, billionaire LVMH founder Bernard Arnault predicted foreign visitors may not return to Paris within the next year or two.
Mr Guiony said the goal for travel retail business DFS in the second half of this year will be to break even but warned it would be difficult. Activity at luxury hotel brand Belmond is better than last year, notably in the Mediterranean, but overall “it won’t be a fantastic season” because business picked up late compared with normal times.
Demand from Chinese consumers “remains as good it has been for quite some time”, Mr Guiony said. Asia, excluding Japan, represented 38 per cent of LVMH’s total revenue in the first half, followed by a quarter for the US.
Speaking about its mergers and acquisitions strategy, Mr Guiony said absorbing its latest portfolio brand Tiffany will take some time and that the group typically does not proceed with such big takeovers “every other year”.
Last week, LVMH announced a 60 per cent stake purchase in Off-White, the streetwear brand created by Virgil Abloh, who is also in charge of menswear design at Louis Vuitton.
The luxury conglomerate also said earlier this month it would take a minority investment in the new brand of Phoebe Philo, the former cult designer at Celine. The group did not disclose the terms of those deals.
LVMH’s net financial debt increased to €15.27bn at the end of June from €4.24bn at the end of last year after closing the deal to buy Tiffany in January.
Shares in LVMH have rallied by 68 per cent in the past year in Paris.
The%20specs
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Venom
Director: Ruben Fleischer
Cast: Tom Hardy, Michelle Williams, Riz Ahmed
Rating: 1.5/5
Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
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Wicked: For Good
Director: Jon M Chu
Starring: Ariana Grande, Cynthia Erivo, Jonathan Bailey, Jeff Goldblum, Michelle Yeoh, Ethan Slater
Rating: 4/5
SPEC%20SHEET%3A%20APPLE%20M3%20MACBOOK%20AIR%20(13%22)
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THE SPECS
BMW X7 xDrive 50i
Engine: 4.4-litre V8
Transmission: Eight-speed Steptronic transmission
Power: 462hp
Torque: 650Nm
Price: Dh600,000
The specs
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Power: 240hp at 5,500rpm
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FIGHT CARD
From 5.30pm in the following order:
Featherweight
Marcelo Pontes (BRA) v Azouz Anwar (EGY)
Catchweight 90kg
Moustafa Rashid Nada (KSA) v Imad Al Howayeck (LEB)
Welterweight
Mohammed Al Khatib (JOR) v Gimbat Ismailov (RUS)
Flyweight (women)
Lucie Bertaud (FRA) v Kelig Pinson (BEL)
Lightweight
Alexandru Chitoran (BEL) v Regelo Enumerables Jr (PHI)
Catchweight 100kg
Mohamed Ali (EGY) v Marc Vleiger (NED)
Featherweight
James Bishop (AUS) v Mark Valerio (PHI)
Welterweight
Gerson Carvalho (BRA) v Abdelghani Saber (EGY)
Middleweight
Bakhtiyar Abbasov (AZE) v Igor Litoshik (BLR)
Bantamweight:
Fabio Mello (BRA) v Mark Alcoba (PHI)
Welterweight
Ahmed Labban (LEB) v Magomedsultan Magemedsultanov (RUS)
Bantamweight
Trent Girdham (AUS) v Jayson Margallo (PHI)
Lightweight
Usman Nurmagomedov (RUS) v Roman Golovinov (UKR)
Middleweight
Tarek Suleiman (SYR) v Steve Kennedy (AUS)
Lightweight
Dan Moret (USA) v Anton Kuivanen (FIN)
MATCH INFO
Tottenham Hotspur 3 (Son 1', Kane 8' & 16') West Ham United 3 (Balbuena 82', Sanchez og 85', Lanzini 90' 4)
Man of the match Harry Kane
UAE currency: the story behind the money in your pockets
More from Neighbourhood Watch:
Afghanistan Premier League - at a glance
Venue: Sharjah Cricket Stadium
Fixtures:
Tue, Oct 16, 8pm: Kandahar Knights v Kabul Zwanan; Wed, Oct 17, 4pm: Balkh Legends v Nangarhar Leopards; 8pm: Kandahar Knights v Paktia Panthers; Thu, Oct 18, 4pm: Balkh Legends v Kandahar Knights; 8pm: Kabul Zwanan v Paktia Panthers; Fri, Oct 19, 8pm: First semi-final; Sat, Oct 20, 8pm: Second semi-final; Sun, Oct 21, 8pm: final
Table:
1. Balkh Legends 6 5 1 10
2. Paktia Panthers 6 4 2 8
3. Kabul Zwanan 6 3 3 6
4. Nagarhar Leopards 7 2 5 4
5. Kandahar Knights 5 1 4 2
UAE currency: the story behind the money in your pockets
UAE currency: the story behind the money in your pockets
Tips for used car buyers
- Choose cars with GCC specifications
- Get a service history for cars less than five years old
- Don’t go cheap on the inspection
- Check for oil leaks
- Do a Google search on the standard problems for your car model
- Do your due diligence. Get a transfer of ownership done at an official RTA centre
- Check the vehicle’s condition. You don’t want to buy a car that’s a good deal but ends up costing you Dh10,000 in repairs every month
- Validate warranty and service contracts with the relevant agency and and make sure they are valid when ownership is transferred
- If you are planning to sell the car soon, buy one with a good resale value. The two most popular cars in the UAE are black or white in colour and other colours are harder to sell
Tarek Kabrit, chief executive of Seez, and Imad Hammad, chief executive and co-founder of CarSwitch.com
Specs
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Range: 400km
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Five ways to get fit like Craig David (we tried for seven but ran out of time)
Start the week as you mean to go on. So get your training on strong on a Monday.
Train hard, but don’t take it all so seriously that it gets to the point where you’re not having fun and enjoying your friends and your family and going out for nice meals and doing that stuff.
Think about what you’re training or eating a certain way for — don’t, for example, get a six-pack to impress somebody else or lose weight to conform to society’s norms. It’s all nonsense.
Get your priorities right.
And last but not least, you should always, always chill on Sundays.
