LVMH reaches 64.2 billion euro of revenue in 2021. For how long can it grow at this pace?

The question is: For how long can LVMH grow at this pace? It’s a fair question for the French group, which closed 2021 with 64.2 billion euro in sales (also thanks to Tiffany’s performance). Specifically, the question is focused on the “fashion and leather goods” division, which grew more than expected: +51% (sales) in the 4^th quarter of 2021, compared to the same period of 2019. After other luxury groups published their data, expectations for LVMH were high. Yet, the French group broke all records, even increasing the distance to smaller competitors. Forecasts for 2022 can only be positive, also considering the higher prices.

For how long can it grow at this pace?

Let’s start with the main character: the fashion and leather goods division. During the 4^th quarter of 2021, it recorded a 28% organic growth (at constant rates and during the same period), while analysts expected it to be +16%. The division’s revenue for 2021 was of 30.9 billion euro: +47% on 2020 and +42% on 2019. According to analyst, 75% of the group’s operating profits come from the division. UBS estimates that the market quota of the fashion and leather goods of LVMH went from 16% of the total before the pandemic to 21% now. Louis Vuitton and Dior manager to attract wealthy buyers form all over the world, specifically the USA and China.

Total turnover

According to FactSet, LVMH’s revenue during 2021 was of 64.2 billion euro: +44% with Tiffany included, or +36% if we consider organic growth only (on 2020) and +14% on 2019. The number is superior to the 62.5 billion consensus, while net profits, at 12 billion, were also higher than the forecasted 10.9 billion euro. The Financial Times reported the words of LVMH’s owner, Bernard Arnault: “January was one of the most incredible months we ever had”. A very positive premise for 2022, which the company expects to perform at the same level as the year before, as far as revenue growth goes. Arnault, says Reuters, stated that LVMH could further increase prices to protect margins during the current inflationary period.

Read also: