French luxury group LVMH saw its second-quarter revenue rise by 19%, with demand for its fashion and leather products driving growth, two percentage points higher than analysts’ expectations.
Demand for products was particularly high in Europe and the U.S., which helped offset the slowdown the company is experiencing in China.
In Europe, the company observed a revenue recovery rate of 48%, which was higher than in the U.S. and Japan. Sales in Europe were partly driven by U.S. customers that are flocking to countries such as France to take advantage of the low parity of Euros against the U.S. dollar.
On the other hand, China continues to see foot traffic that is “way below” the levels observed in 2021.
Overall, the company’s first-half profit from recurring operations reached $10.35 billion, which was higher than the $9.6 billion analysts had expected.
Bloomberg reported that one of the key strategies that helped the brand drive sales was its focus on promoting high-end leather goods as opposed to those offered at entry-price points.
“The top end of the portfolio has done better than the entry price, but it’s on purpose because we intend to rebalance the two,” LVMH Chief Financial Officer Jean-Jacques Guiony said during the call with analysts.
The company also seemingly benefitted from having a diverse portfolio of brands that span luxury products, fine spirits, and high-end hospitality.
LVMH’s wine and spirits unit, for example, saw a revenue increase of 30%, outperforming other brands and products in the company’s portfolio.