The coronavirus pandemic hit LVMH’s (MC.PA) bottom line in 2020, with both its revenue and profit down, but it said it showed “good resilience” in part thanks to strong growth in Asia towards the second half of the year.
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LVMH, which owns brands including Bvlgari, Louis Vuitton and Dior, said its watches and jewellery unit saw its organic revenue decline by 23% in 2020, but the situation improved in Q4, when the decline was 2%.
“Bvlgari was very responsive and quickly capitalised on the strong recovery in China,” the company said.
Its fashion and leather goods business group recorded a decrease in organic revenue of “only 3% in an environment marked by the closure of stores over a period of several months.”
“The second half saw a noteworthy rebound in activity, with double-digit organic revenue growth in both quarters. China recorded a strong recovery in revenue beginning in April and the United States in July,” the firm said.
Its perfumes and cosmetics brands benefited from growth of skincare and online sales, particularly in Asia.
“As far as geographical performance goes, it’s still very much a game of two halves, with a strong recovery in Asia but sales in Europe are still performing under par given the resurgence of the virus,” noted Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
“In China sales ticked up on watch and jewellery sales in particular, as customers once again began ringing the bell of luxury stores and adding their name to waiting lists of coveted goods,” she added.
Overall, the company recorded revenue of €44.7bn (£39.4bn, $54bn) in 2020, down 17%. Profit from recurring operations was €8.3bn in 2020, which was a decline of “only” 28% as per the company, “due to a return to growth in the second half,” which was up 7%.
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“LVMH showed good resilience in 2020 in an economic environment severely disrupted by the serious health crisis that led to the suspension of international travel and the closure of the group’s stores and manufacturing sites in most countries over a period of several months,” it said.
But it noted that it saw a significant improvement in trends in all its activities compared to the first nine months of 2020.
Bernard Arnault, LVMH CEO, said that “in a context that remains uncertain, even with the hope of vaccination giving us a glimpse of an end to the pandemic, we are confident that LVMH is in an excellent position to build upon the recovery for which the world wishes in 2021 and to further strengthen our lead in the global luxury market.”
LVMH said it enters 2021 with “cautious confidence” and believes it “is well-equipped to build upon the hoped-for recovery in 2021 and regain growth momentum for all its businesses.”
“Steering the big LVMH ship through the treacherous waters of 2020 has been far from plain sailing for management, but these results show that the group has weathered the storm admirably,” said Streeter.
“Like all pandemic survivors, the adaption to the shift to online shopping has been crucial for LVMH and here fashion and leather goods put in a ship shape performance,” she added.
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