CHINA DRAGS LVMH REVENUE, HENNESSY COGNAC Q1 SALES DOWN 18%
By Siulan Law Mathews DipWSET
Credit: David Mathews
The world's leading luxury group LVMH's performance in the first quarter of 2022 was dragged down by sluggish growth in its wine and spirits arm, global sales of its flagship Hennessy Cognac brand, a favourite in China, was down 18 percent due to COVID lockdowns in some major Chinese cities.
The group's wine and spirits sales only managed to grow by 2 percent in the first quarter, having been affected by supply chain issues and the war in Ukraine, on top of slowdown in China.
In an event with its 1,600 suppliers held in Cognac last week, CEO of Hennessy Cognacs, Laurent Boillot, said there is certainly no shortage of challenges over the short term, but the company is determined to rise to the challenges.
“China’s Covid Zero policy has led to a Chinese-style lockdown for the last 50 days in Shanghai and starting in Beijing. However, Hennessy cognacs sell more in the southern provinces, which are currently open,” he said.
“We stopped shipping to Russia, the volumes were reallocated to other countries, particularly in Europe.”
“Then there is rampant inflation. It is a fact, and it’s here to stay,” Boillot added.
Nevertheless, LVMH said its fashion and leather goods division has performed well, presenting “a record” 30 percent growth in the first quarter.
Helped by strong sales and price rises at its biggest brands Louis Vuitton and Dior, LVMH's overall first quarter revenue grew 23 percent to reach a better than expected €18billion (USD18.76b).
The company's share price has, however, declined 21 percent since start of the year, amid selloffs in world markets triggered by worldwide high inflation and interest rate hikes.
LVMH’s Asia segment (excluding Japan) shows a single digit rise of 8 percent, compared to 86 percent growth in the first quarter last year.
Asia was the only region not to see double digit growth in first quarter 2022. The USA grew 26 percent, Japan 30 percent and Europe 45 percent. The end result was that Asia’s share of LVMH’s sales dropped from 41 to 37 percent in the period.
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