End of the year to mark full recovery for luxury brands

Louis Vuitton store Paris

World’s largest luxury groups announced last week better than expected results, most of them posting double digit growth. The best results were registered by LVMH, owner of Louis Vuitton and Dior, followed by Gucci Group and Richemont. From a geographical perspective, US, Japan and Western Europe have produced less favourable results with modest increases in sales, at the very opposite being Asia, especially China and South America. Unanimously, the results have highlighted that the best performing outlets have been those directly operated.

Richemont and Gucci Group attribute their positive results to restructuring – store closures as well as a better fine tuned control of the stocks. Internet sales have also contributed to the positive results of the brands in this first half of the year.

Another conclusion which emerges from the financial results announced by the groups is the fact that consumers are much more price sensitive than they used to, before the financial crisis and they are looking for quality products. That is why, leather accessories – shoes, bags, small leather accessories, continue to outperform apparel. As for design, the winning brands have been those which have drawn on their heritage and have produced timeless pieces.

Swatch Group, the world’s largest watchmaker, is the latest group to announce results for the first six months of 2010. The Group expects a positive rest of  2010 after record sales and soaring profit in the first half.

The results added to evidence that consumers have put the financial downturn behind them and are increasingly willing to splash out on pricey items after months of holding back due to fears about job cuts and their dwindling savings.  Much like in the case of the other luxury groups, China has represented the highest growing market for Swatch.  Swiss watch exports rose by 19.7 percent in the first six months of 2010, the federation of the Swiss watch industry said last month.

All the four groups have indicated that they have stepped up advertising campaigns and are running extensive campaigns in print and online. More and more brands have opened this year their own online shopping facility. With the improving consumer sentiment, sales are likely to continue climbing, the peak will be reached over the Christmas holidays season.

Oliver Petcu, CPP