LVMH: the profit machine that keeps on growing
The French luxury giant LVMH reported another quarter of strong growth. Despite the fears about the slowdown in luxury spending, LVMH grew rapidly in Europe, Japan and Asia. The growth was driven by the two biggest business segments: Fashion & Leather Goods and Selective Retailing (Sephora).
Fashion Goods segment reported +14% organic growth with a profit margin of almost 40%. This is quite remarkable given the 40+ billion € size of the business.
Sephora, on the other hand, grew by +25%. It has the smallest profit margin within the LVMH family, a 7,8% profit margin. Sephora has been growing rapidly throughout the post-pandemic period of high inflation. The robust performance of Sephora was illustrated by the fact that despite the 25% growth rate of the company, it was also able to increase its profits by +76%.
The Wines & Spirits segment was the only business segment within LVMH that saw revenues decline during 2023.
Illustrative of the profitability of the luxury conglomerate, if LVMH operating profit would be a retailer, it a top 50 retailer in the world.
There is only less than 50 retailers in the world that can generate more revenue than LVMH generates operating profit.
Spectacular growth with extreme profitability
Illustrative of the strength of the LVMH ecosystem is the combination of growth and profitability that the company has generated. Usually, companies either grow rapidly or are phenomenally profitable. LVMH has been both.
Since 2018, LVMH has grown its revenues by +84%. And this is for a company that had revenues of 46,8 billion € in 2018. At the same time, Gross and Operating profits have grown faster (+90% and +129%).
All of the business segments have grown 25+%, and the biggest of Fashion & Leather Goods has grown by +128%.