In January, LVMH chief executive officer Bernard Arnault spoke of “green shoots” in China, pointing to stores in Macau packed with mainland Chinese tourists. His comments helped extend a rally in luxury stocks, as brands have grown increasingly confident that the sector’s second-biggest market after the US will rebound quickly now that it’s fully reopened for the first time since 2020. With LVMH results this week, investors will be looking for confirmation that Chinese consumer spending has continued to surge. Watch too for any comments LVMH executives make about where that spending is happening; will Louis Vuitton and Dior stores in Paris see an influx of Chinese tourists this summer, or will they need to wait until the winter holidays, or even 2024?
The answers to these questions must also be weighed against a potential slowdown in the US, which carried many luxury brands during the days of Zero Covid. Will fast growth in China and other emerging markets be enough to compensate for sluggish demand in America?
As for LVMH’s individual brands, the multi-billion-dollar question is how LVMH intends to further grow Louis Vuitton, which crossed €20 billion in revenue last year. At that scale, it’s a rare collaboration, marketing stunt or it bag that can move the needle on its own; adding a few billion (or tens of billions) to the top line requires a global, coordinated effort (the Yayoi Kusama project is one recent example). Aside from the appointment of international celebrity and mogul Pharrell Williams to lead Louis Vuitton Men’s creative, we don’t yet have much insight into how the brand’s next phase will play out. Of course, the other benefit of being the biggest is that LVMH has more options to keep up with shifting consumer attitudes about logos or tailoring, such as by leaning into the “quiet luxury” side of its portfolio, including Loro Piana.
What Else to Watch for This Week
Monday
Easter Monday holiday (UK, EU)
Tuesday
Eurozone reports February retail sales
Wednesday
LVMH, Rent the Runway report first-quarter results
US reports March inflation rate
Thursday
Fast Retailing reports results
Friday
Coachella festival begins
US reports March retail sales
Saturday
NBA Playoffs begin
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Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholders’ documentation guaranteeing BoF’s complete editorial independence.
