In contrast with the most recent predictions by Bain & Company, which call for a drop in the growth of luxury goods consumption to a range of 3 to 2 percent this year from 4 percent in 2014, Hermès and LVMH have both reported an acceleration in their sales of fashion products, probably including footwear, during the second quarter ended June 30. Gucci enjoyed an unexpected turnaround during the quarter (see the Kering story further below).
Particularly strong increases were recorded at their stores in Europe and Japan, where tourists from China and other countries have taken advantage of the drop in the value of the euro and the yen.
Returning to double-digit growth for the first time since 2011, Louis Vuitton, the star brand of LVMH, posted a sales increase of 10 percent in the second quarter as compared to a year ago, double the rate of the first quarter. The jump was due in part to a 5 percent increase in average selling prices since last January, but there were hardly any new store openings. Additional price increase of between 5 and 10 percent were reportedly enacted at Vuitton's stores in Europe and Japan on July 1 to help reduce the gap with retail prices in China to around 30 percent.
The improved performance of Vuitton, whose annual sales are estimated at over €7 billion, allowed LVMH to report a 5 percent organic increase to €5,933 million in the revenues of its Fashion & Leather Goods division for the first half of this year. In terms of euros, divisional sales grew by 18 percent, leading to a 12 percent increase in operating profit to €1,661 million.
As a group, LVMH made an estimated net profit of €1,580 million for the first six months of 2015, up from €1,509 million in the year-ago period, and non-recurring operating earnings rose by 15 percent to €2,955 million. Total revenues increased by 19 percent to €16.7 billion, with 6 percent organic growth over the six-month period, but in the second quarter they went up by 23 percent in euros and by 9 percent on a comparable basis.
Sales accelerated in the second quarter also at Hermès International. On a constant-currency basis, they rose by 9.7 percent in the second quarter, with increases of 6.8 percent in France, 10.9 percent in the rest of Europe, 26.5 percent in Japan, 6.0 percent in the rest of Asia-Pacific and 10.9 percent in the Americas.
The Leather Goods & Saddlery division grew by 13.6 percent. The Ready-to-Wear & Accessories division, which includes Hermès branded shoes, went up by 8.1 percent. Declines were recorded in watches and Other Products, which include John Lobb shoes, but both segments performed a little better than a year ago in the second quarter. The company will publish its financial results on Aug. 28.