Louis Vuitton-owner LVMH makes a comeback (now it's Europe's most valuable company)
Très cool... When your name is so luxurious, it's a mouthful to say: Louis Vuitton Moët Hennessy (aka: LVMH) owns 75 luxe brands, including Dior, Bulgari, and Dom Pérignon. Yesterday, LVMH posted quarterly earnings that were a major glow-up from 2020. And its shares soared to a record.
- ~$17B: Sales jumped 30% from last year, thanks to strong demand from China and the US, where LVMH has been opening more stores.
- ~$360B: LVMH's market cap makes it Europe’s most valuable company, beating out oil giants and banks. It's even worth more than Nestlé (Earth's largest food company).
Still in vogue... When the pandemic hit, big-spending Chinese and American tourists disappeared from Europe's shopping streets — problematic, since a quarter of LVMH's sales come from Europe. While Europe locked down again this year, LVMH proved it could thrive anyway: sales from Asia nearly doubled, while US sales popped 23%.
- LVMH created a mass market for luxury by offering a spectrum of brands with broad pricing, for a broad customer base – not just the mega-rich.
- LVMH’s edge = appealing to the aspirational rich. You can get a Marc Jacobs tote for $185... or a Louis Vuitton purse for $4K. A $35 bottle of Hennessy, or a $200 bottle of Dom — it's all in the LVMH fam.
The "double lookback" is key... Earnings are compared to the year-ago period. We're now in a period where earnings are being compared to 2020 (read: pandemic results). Unless a company was a corona-conomy thriver, its earnings likely look much better in 2021 than in 2020. LVMH sales soared from the quarter that ended around April 2020 — that's not saying much. But when we do a "double lookback" to 2019, we see that LVMH's sales were 8% higher than they were in pre-pandemic times. LVMH passed the "double lookback" test last quarter, proving the strength of its brands.