LVMH and Kering continue to grow, despite Chinese economic downturn

The post-pandemic recovery has definitely been confirmed by the latest figures for Q3 202 which show exceptional growth for luxury groups such as LVMH, Kering and Hermès.

Yet will the disappointing evolution of Chinese GDP to 4.9% in July and August, the cost rise of raw materials, the real estate crisis worsened by the giant Evergrande’s downfall, and even the several announcements by Chinese government officials regarding inequalities impact the luxury industry? Arthur Jurus, Senior Strategist at the ODDO BHF bank explains: “Indeed there has been a drop in equity prices, including for luxury groups, at the announcement of China’s GDP on October 18, but the trend remains positive. LVMH, Kering and Hermes equity have globally been growing from 35% to 40% over the past two years. Hermes’ specificity in terms of stock performance is to have grown by 46% in 2021, Richemont by 37% and LVMH by 30%. By comparison, the European financial stock markets have reached 17% growth since the beginning of the year. Globally, the luxury sector is doing very well. The correction in stock markets is due to the fact that they are flow markets.”

LVMH results over the last nine months of 2021 all point to the same direction with 44.2 billion euros of revenue, an organic growth of +40% vs 2020 and +11% vs 2019. The Kering results, issued on October 19 total 12.23 billion euros over the first nine months, growing by 36.6% vs 2020 and +9% in organic growth vs 2019.