The most popular luxury group in the world, LVMH, reported revenues that increased by 23% to a record-breaking €79 billion ($86 billion) in 2022 and earnings that increased by 17% to €14 billion. The luxury industry is counting on China's openness to expand further in 2023 after a year of record sales and earnings despite slowing global GDP.
In 2023, the company's CEO, Bernard Arnault, wants to keep going in that direction, "at the risk of becoming boring." Rivals of LVMH likewise achieved astronomical increases in sales and earnings in 2017. Hermes had a 29 percent increase in sales to €11.6 billion and a 38 percent increase in profits to a record €3.4 billion.
During a challenging period for its flagship brand Gucci, Kering nonetheless managed to grow revenues by 15% to €20 billion, and earnings by 14% to €3.6 billion. With the delivery of 13,221 automobiles, Ferrari also saw sales soar to a new record of €5 billion.
The disruption in China caused by the conclusion of its coronavirus-related travel restrictions and their gradual easing at the end of the year barely affected the 2022 results; LVMH referred to December as an "air pocket." Only Hermes managed to avoid damage.
"There was no drop in traffic in our stores," Hermes chief executive Axel Dumas said. The Asia-Pacific area, excluding Japan, saw a rise in sales of the company of 30.7%.
According to the most recent projection from the International Monetary Fund, China's economy should grow by 5.2% in 2023 as a result of its progressive reopening after it abandoned the final travel restrictions of its zero-COVID policy on January 8.
As a result of the limitations' impact on spending, the reopening of the Chinese economy is being viewed as a potential source of development for 2023. According to UBS analysts, 2023 will be the "year of the Chinese consumer." They note that due to pandemic-related restrictions, Chinese consumers' share of global luxury expenditure dropped to 17% last year from 33% the year before the epidemic.
Before next year, according to LVMH's financial director Jean-Jacques Guiony, it is unlikely that Chinese visitors will return to Europe, where they typically make significant luxury goods purchases. Instead, luxury brands are concentrating on domestic Chinese consumers. "The Chinese clientele is much more important than it was in 2019," Guiony said.
There is no secret that China needs to grow, according to LVMH's Arnault, who also predicted that as soon as the country reopens, the government will likely take action to encourage economic development.
