Visual China.
Blue Whale financial reporter Shao Yuting.
On January 28, Forbes' real-time billionaire list showed that Bernard Arnault, chairman and CEO of luxury goods giant LVMH Group, has replaced Elon Musk as the world's richest man again.
According to the data, the Arnault family's net worth increased by $23.6 billion on January 26 to $207.8 billion, surpassing Musk's assets worth $204.5 billion. Amazon founder Bezos ranked third, with a net worth of $181.3 billion.
On January 26, LVMH Group released its financial report, and the overall performance maintained growth, and LVMH's share price rose by more than 13% on the same day, a 15-year high, with a market value of $388.8 billion, once reversing the trend of the first three weeks. Although the performance is still growing, the overall growth rate of LVMH has slowed significantly. In 2023, LVMH is making frequent adjustments in its number one market, Asia, how can luxury brands tell a new story?
LVMH's performance grows, and Bernard regains the richest man.
Previously, the Bernard Arnault family had been ranked third in the world in the wealth list until December 2022, after becoming the world's richest man for the first time with $188 billion, Bernard and Musk's asset rankings have been showing a trend of catching up with each other, and the two take turns to be the richest man.
On January 26, Tesla and LVMH released their financial reports on the same day. According to the financial report, in 2023, Tesla's revenue will increase by 1879%；Non-GAAP net income decreased 23% and fourth-quarter revenue was lower than expected. On the same day, Tesla's stock price plummeted by 1213%, and the market value evaporated by $80 billion overnight. As of the 26th**, Tesla closed at 183$25, with a total market capitalization of $582.5 billion.
In 2023, LVMH's sales revenue increased by 9% year-on-year to 86.2 billion euros; Net income rose by 8 percent to 15.2 billion euros. The excellent financial performance has put Bernard back on the throne of the richest man.
In 1984, after graduating from the University of Bernard, who was born in France, he joined the fashion industry, and successively acquired the long-term loss-making textile company Bosak Group and Dior in the trough, and then bought a large number of LVMH's ** and became the helm of the company.
After the financial crisis, Bernard once again acquired the jewellery and watch brands Chaumet and TAG Heuer. Today, the LVMH Group brings together 75 renowned brands, including Louis Vuitton, Dior, Tiffany & Co., Sephora, Givenchy and Marc Jacobs, covering fashion, leather goods, perfumes, cosmetics, watches, jewelry and liquor.
2023 has been an extraordinary year for the 75-year-old Bernard. In April, Musk's assets plummeted, and Bernard became the richest man in the world, and in September, Bernard was investigated on suspicion of money laundering, causing controversy.
Just before the earnings report, Bernard nominated his two sons to become board members, which was seen by the market as a precursor to the start of the succession battle. However, in 2022, LVMH agreed to extend the age limit for the position of CEO from 75 to 80 years old, and Bernard, who is now 75 years old, may continue to lead the LVMH Group for the next five years.
In the eyes of analysts, LVMH still needs to be vigilant. Deutsche Bank analysts said demand for luxury goods was slowing, but affluent consumers with greater spending power supported the sector's growth. Barclays analysts had earlier expected the luxury sector to grow by 5% this year, down from 9% last year and double-digit growth in the previous two years. Barron analysts believe that lower consumer demand in the United States may still have an impact on LVMH sales growth.
Leather bags and jewelry can't be sold, but cosmetics are bucking the trend.
In the context of the slowdown of the global economic development, luxury consumption has "subsided", and the overall market is in a slowdown trend.
On January 12, British luxury brand Burberry released its unaudited results for the third quarter of fiscal year 2024. In the 13 weeks to 30 December 2023, Burberry's retail revenue increased by **2% to 7% year-on-year0.6 billion pounds (about 64.4 billion pounds.)$5.9 billion), or 7% at constant exchange rates. As a result, Burberry's share price fell 12% on the day, the biggest drop since 2012, and its market value hit a three-year low.
Coincidentally, Citi analysts pointed out that Kering's core brand Gucci is still in a transitional phase, and other brands such as Saint Laurent and BV have not yet improved their competitiveness and are at risk of profitability pressure in 2024. In the first three weeks of 2024, Kering's share price has accumulated by nearly 11%, and its market value has decreased by 6.3 billion euros to 43.1 billion euros.
As a luxury empire group, LVMH's revenue growth will slow down significantly in 2023.
In 2021 and 2022, LVMH's sales increased by % and in 2023 by just 8%. In particular, in the third quarter of 2023, sales increased by only 1% year-on-year, and organic revenue increased by 9% year-over-year, well below the 17% year-over-year growth rate in the previous two quarters and analysts112% growth is expected. Fortunately, in the fourth quarter, thanks to the holiday season consumption boom, sales increased by 5% year-on-year5% to 23.9 billion euros.
The LVMH Group's business is divided into five divisions: Wine, Fashion & Leather Goods, Watches & Jewellery, Perfumes & Cosmetics, and Boutique Retail. In terms of business, the wine business declined, the fashion and leather goods, watches and jewellery divisions slowed down, while the boutique retail business achieved a significant increase.
In 2023, LVMH's alcohol business revenue was 660.2 billion euros, down 4% year-on-year. Sales in the core Fashion and Leather Goods division increased by 14 percent year-on-year, while sales in the Watches and Jewelry division increased by only 7 percent. The customer base in this field is dominated by high-net-worth individuals, who were once considered to have stronger growth pressure and trans-cyclical attributes, but now their growth is also declining.
The brightest performance was in the cosmetics business. In 2023, sales increased by 11% in the Perfumes & Cosmetics segment and 25% in the Boutique Retail segment, which includes Sephora and DFS Travel Retail, with Sephora performing strongly.
I'm often told why you're only achieving 8% or 9%? I find that the 8% growth rate is already quite good, and I hope we don't exceed that number. LVMH Chairman Bernard said in the earnings conference that the luxury industry is showing a very high growth rate and needs to put on the brakes a little. He'd rather slow down than push to keep accelerating.
Efforts to develop the Chinese beauty market.
Regionally, the Asian market (excluding Japan) continues to be the main force for LVMH. At the end of the reporting period, LVMH had a total of 6,097 points of sale worldwide, a net increase of 433 over the previous year, of which 2,003 were located in the Asian market.
In 2023, the Asian market (excluding Japan) contributed the highest revenue of 2670.7 billion euros, representing 31% of the Group's revenue, up 1% compared to 2022; The United States and Europe each contributed 2153.8 billion euros, accounting for 25% of the Group's revenue, of which the proportion of revenue in the United States decreased by 2 percentage points and Europe increased by 1 percentage point; Japan's revenue was 60EUR 3.1 billion, or 7 percent, compared to 12 percent in the rest of the world.
In China, LVMH is looking to improve its performance by opening more stores, and Bernard said that its Maison's stores in China are extremely effective. Jean-Jacques Guiony, chief financial officer of LVMH, revealed that the revenue contribution of Chinese customers in the European market has recovered to 70% of 2019 levels, but the proportion of business from tourists has declined. This means that the tour groups that used to sweep luxury stores have not yet fully returned, and the purchasing power is mainly from within China.
Therefore, in the past two years, LVMH Group has considered opening more stores in China, focusing on the Chinese market, and beauty is a breakthrough.
In 2023, LVMH will make frequent personnel changes in the Perfume & Beauty segment.
In March, LVMH appointed Stephane Rinderknech as chairman and chief executive officer of its beauty division, responsible for 15 beauty brands, including Guerlain, Fresh Silk, Benefit, Mecophi and Palma. During his 19 years at L'Oréal, he was responsible for L'Oréal's overseas markets in the Americas and Asia Pacific.
Among them, Waters di Parma has appointed Giulio Bergamaschi as its new CEO. Prior to joining LVMH, Giulio was Global President of L'Oréal's Biotherm brand and was General Manager of International Product Development at L'Oréal China's Consumer Products Division. In the announcement of his appointment, LVMH commented on Giulio, saying, "He has worked in strategic markets in China, and his international market insight and category knowledge are key assets of Pour la Fae di Parma. At the same time, he pointed out that the appointment is intended to explore China's strategic market.
In July, foreign media reported that LVMH planned to find a new leader for Sephora China to lead the next growth phase. He also said that Sephora believes that the Chinese market is the core of achieving the goal of global annual sales of 20 billion euros within five years.
In January 2024, Chen Bing, General Manager of Sephora Greater China, will leave the company to directly manage the business in Greater China during the transition period, with Alia Gogi, President of Sephora Asia, who began her career in China and served as Senior Vice President of Commodities at Sephora China. "China is the largest market in Asia, and we are always looking forward to providing Chinese consumers with more unique products, trends and delightful shopping experiences. ”