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August 2, 2021

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Luxury giants see boost from home sales

The luxury sector has flashed back from the COVID-19 pandemic but the crisis is still putting a crimp in travel, a key part of the market.

Industry giants have reported results that show the world’s well-heeled are splurging on luxury goods as sales surpass even pre-pandemic levels.

LVMH — home to Louis Vuitton, Moet, Fendi, and Kenzo brands among others — saw first-half sales climb by 11 percent above their pre-pandemic level to 28.7 billion euros (US$34.1 billion) as it reported a profit of 5.3 billion euros, a whopping 64 percent rise from 2019.

Rival Kering — which owns the Gucci and Balenciaga brands — bested its pre-pandemic level by 8.4 percent with a record 8 billion euros in sales. Hermes reported a 29-percent jump to 4.0 billion euros in sales.

Both recorded profits of more than a billion euros, beating expectations.

The Swiss luxury group Richemont — Cartier, Piaget, and Montblanc — beat its pre-pandemic level in the second quarter by 18 percent, while Italy’s Prada bested 2019 first-half sales by 8 percent.

It is the “upper middle class, the rich and ultra-rich untouched by the crisis” who could not travel or eat out and instead bought luxury goods, said Arnaud Cadart at asset manager Flornoy.

The Chinese, “who represent 35 to 40 percent” of luxury customers, are still crucial, he added.

But while Chinese buyers previously made a lot of their purchases while visiting Europe, they are now making them at home.

In fact, “what was surprising was not so much the recovery in China but the violent rebound in the United States,” remarked Erwan Rambourg a sector analyst and author of “Future Luxe: What’s Ahead for the Business of Luxury.”

Compared with previous crisis recoveries, after the September 11 terror attacks or the 2008 economic crisis for example, “the feeling of guilt, the idea that it is inappropriate to buy luxury goods, disappeared,” Rambourg said.

“There is a young generation in the United States that feels comfortable with luxury purchases,” in particular among the African-American, Hispanic and Asian populations, he explained.


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