HomeEconomyDespite very high inflation, luxury continues to skyrocket

Despite very high inflation, luxury continues to skyrocket

Thanks to a clientele little affected by inflation, luxury giants such as LVMH, Kering and Hermès posted double-digit increases in sales in the third quarter.

Higher still: The luxury sector again posted considerably higher results for the third quarter, but all eyes are already on 2023, where inflation and the energy crisis could slow progress.

Thanks to a clientele little affected by inflation, luxury giants such as LVMH, Kering and Hermès posted double-digit sales growth in the third quarter, ignoring health restrictions in China, one of their main markets, and rising costs.

+19% for LVMH

The world number one in luxury achieved €19.75 billion in sales in the third quarter, up 19% at comparable exchange rates.

Stronger brands like Louis Vuitton still increased their selling prices at 2.5 times inflation, according to UBS.

Hermès forecasts for 2023 “a price increase of between 5 and 10% where we were this year around 4% and previous years around 2%”, according to CFO Éric du Halgouët.

The saddler leather maker “has no signs of slowing down at the moment in all (of its) markets,” according to its CFO.

“Let’s be patient”

“Luxury is not immune to recession,” also underlines HSBC, which forecasts “a slowdown in growth in the fourth quarter of this year and next.”

UBS also anticipates that “inflation and the cost of living crisis will hit consumers hardest and luxury goods customers may not be spared.”

China could, however, “come to the rescue” of the luxury sector with a rebound in sales in 2023 after a year 2022 affected by confinements, according to analysts at HSBC.

The latter also believe that “brands are this time better prepared for the recession” (than in 2008-2009) with, in particular, “a better understanding of their consumers thanks to the strong concentration they have had on their local customers during the last two years.”

Same patience and long-term vision with competitor LVMH.

Author: Frederic Bianchi with AFP
Source: BFM TV

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