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How luxury is defying pandemic gloom

Brands like Louis Vuitton and Dior are registering growth while the world continues to battle another wave of covid-19

A model wearing a creation by designer Maria Grazia Chiuri for Dior ahead of her Fall/Winter 2021 collection presentation in a digital format during March's Paris Fashion week. (REUTERS)

Surging sales at Louis Vuitton and Dior powered a strong rebound at French luxury group LVMH in the first part of 2021, as thriving demand in Asia and the United States offset the drag from new coronavirus lockdowns in much of Europe.

Overall revenues at the conglomerate, owner of more than 70 brands ranging from Moet & Chandon champagne to Guerlain cosmetics, returned to growth in the first quarter at a much faster pace than expected by analysts.

Restrictions to fight the covid-19 pandemic hit major markets such as China hard a year ago, but luxury customers have begun buying more online, and across much of Asia, stores have been open since last spring, driving a sharp recovery.

LVMH said like-for-like sales, which strip out the effect of currency changes and its acquisition of US jeweller Tiffany, rose by 30% in the three months to March to 14 billion euros ($16.70 billion).

That was nearly double an analyst consensus forecast for 17% growth cited by UBS. Compared with pre-pandemic levels and the first quarter of 2019, like-for-like sales were up 8%.

Sales in Asia, excluding Japan, were up 86% from year-ago levels, contrasting with a 9% drop in Europe in the period.

LVMH's revenues had dropped by 16% last year as a freeze in international tourism triggered by the pandemic added to the pain of store closures for the luxury goods industry.

LVMH's airports duty free business is still struggling.

But its fashion and leather goods division, which houses mega-brand Louis Vuitton and which accounts for nearly half of LVMH's revenues, recorded a 52% increase in like-for-like sales, again way above analysts forecasts of a 27% rise.

LVMH said Vuitton, known for its handbags, had launched new products in the first quarter and that its e-commerce business had performed well.

The watches and jewellery division's sales rose by 138% when including acquisitions and exchange rate effects, benefiting from the consolidation of Tiffany.

LVMH completed the $15.8 billion acquisition in early January after a legal battle.

According to Bloomberg, LVMH’s sales may indicate how well major fashion houses have been able to sustain demand outside of places like mainland China, which has emerged from the pandemic and reopened shops. With catwalks having gone virtual for most of the past year, Dior and Vuitton have tried to entice customers by showcasing collections in sumptuous locales through platforms such as Instagram.

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