By Carol Ryan 

For an industry traditionally dependent on tourism and consumer optimism, many luxury brands have done surprisingly well during the pandemic. A caveat is that shoppers will soon have more choice about where to spend their cash.

The world's biggest luxury company, LVMH Moët Hennessy Louis Vuitton, said late Tuesday that sales increased by a remarkable 30% in the three months through March compared with the same period of 2020, stripping out the impact of exchange-rate and portfolio changes. That isn't just the effect of the pandemic sweeping across the world early last year: LVMH also said its first-quarter sales were up 8% on the same apples-for-apples basis versus the same period of pandemic-free 2019.

The numbers, which easily beat analysts' forecasts, lifted the Paris-listed stock 3% Wednesday morning. The relatively modest reaction follows steep gains in recent months that have made the owner of Louis Vuitton and Christian Dior Europe's most valuable listed company, a position long occupied by Swiss food giant Nestlé.

LVMH has been well managed during the crisis. It took advantage of strong demand for its goods in Asia, where sales increased by 86% in the first quarter. The business renegotiated rents in its stricken travel-retail unit and spent on marketing when rivals trimmed back.

But it also got a boost from consumers' lack of options. The closure of hotels, expensive restaurants and a slump in international travel meant wealthy shoppers have been forced to consume goods rather than services. Management said parts of the business also benefited from fiscal stimulus: Americans spent lavishly on its cognac and champagne brands, contributing to 23% overall growth in the U.S. during the first quarter.

There is still plenty of pent-up cash. The U.S. savings rate was 13.6% in February, compared with 8.3% in the same month of last year, according to the Bureau of Economic Analysis. Lockdowns have also pushed up Europe's savings rates. The risk for fancy handbags is that shoppers will have more choice about how to part with that cash as economies reopen.

Europe's top luxury companies, LVMH, Kering, Hermès and Compagnie Financière Richemont, have defied dire predictions a year ago that the industry would take a long time to recover. The issue for new investors is that the stocks are at records at a time when other industries may start revving up. Luxury brands are currently enjoying more than their fair share of consumers' wallets.

Write to Carol Ryan at


(END) Dow Jones Newswires

April 14, 2021 08:56 ET (12:56 GMT)

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