Luxury goods group LVMH has suffered a major setback this year after the fallout from the coronavirus put consumers off spending.
LVMH has a 55% stake in Château d’Esclans.
The company, which owns Champagnes Moët & Chandon, Krug, and Veuve Clicquot, Hennessy Cognac and Bordeaux label Château d’Yquem, saw organic sales down by 28% compared to the first six months of 2019, as global lockdowns and cancelled weddings left little cause for celebration.
However, the company’s wine and spirits brands were the least affected by lockdown. While sales of jewellery and watches fell close to 40% organically compared to the same period last year, wine and spirits fell just 23%. Profit from recurring operations was down 29% during the six-month period to €551m (US$646m), down from €772m (US$905m) in 2019.
The second quarter was worse than the first as lockdowns went into effect worldwide, shutting bars, restaurants and non-essential stores, the company said, with declines seen “particularly for the Champagne business”, the company said.
LVMH’s sales in the US showed “resilience” in the second quarter thanks to the performance of Hennessy Cognac, which rebounded in June, as well as more sales growth in China, where social distancing measures have been in place in restaurants for months.
The company acquired majority stakes in two Provence wine brands – Château d’Esclans and Château du Galoupet – last year. Rosé wine sales have performed well in retail in the UK and US during lockdown. LVMH spent the first half of 2020 fully integrating them into the wine portfolio, “strengthening Moët Hennessy’s position in the growing market for high-end rosé wines”.
Bernard Arnault, chairman and CEO of LVMH, said the company’s executives will “remain very vigilant for the rest of the year”, in case a second wave prompts further on-trade closures and further damages the company’s sales.
Arnault said the company’s brands “have shown remarkable agility in implementing measures to adapt their costs and accelerate the growth of online sales. While we have observed strong signs of an upturn in activity since June, we remain very vigilant for the rest of the year. We continue to be driven by a long-term vision, a deep sense of responsibility and a strong commitment to environmental protection, inclusion and solidarity. In the current context, we remain even more firmly dedicated to showing continuous progress in these areas.
“Thanks to the strength of our brands and the responsiveness of our organisation, we are confident that LVMH is in an excellent position to take advantage of the recovery, which we hope will be confirmed in the second half of the year, and to strengthen our lead in the global luxury market in 2020.”
編輯：Frida Xu
