LVMH Perfumes & Cosmetics Revenue in H1 Exceeded €4 Billion, reaching a New High
- Chaileedo Press
- Jul 26, 2023
- 8 min read
Updated: Aug 15, 2023
LVMH reported revenue of €42.24 billion for the first half of 2023, representing a 15% increase from the previous year. Organic revenue growth for the same period was 17%. The Perfumes & Cosmetics business achieved revenue of €4.028 billion, reaching a new high since the pandemic.
LVMH, the global leader in high-quality products, reported revenue of €42.24 billion for the first half of 2023, representing a 15% increase from the previous year. Organic revenue growth for the same period was 17%. All the company's business units, apart from Wines & Spirits, achieved double-digit organic revenue growth in the first half of the year. Among them, the Perfumes & Cosmetics business achieved revenue of €4.028 billion, reaching a new high in nearly five years.
Perfumes & Cosmetics business revenue exceeded 4 billion euros, reaching a New High
LVMH continued its strong performance in the first half of 2023. Overall, the company achieved revenue of 42.24 billion euros, with organic growth of 17%.
In detail, the Wines & Spirits business unit's revenue was 3.181 billion euros, with an organic year-on-year decline of 3%. The Fashion & Leather Goods business unit's revenue showed a significant organic year-on-year increase of 20% to 21.162 billion euros. The Perfumes and Cosmetics, and Watches and Jewelry business units had an organic year-on-year revenue growth rate of 13%, reaching 4.028 billion euros and 5.427 billion euros, respectively, with the Perfumes and Cosmetics business achieving a new high in five years. The revenue of the Selective Retailing business grew by 26% year-on-year to 8.355 billion euros.
In addition, LVMH's recurring operating profit increased by 13% in the first half of the year, reaching 11.574 billion euros. The operating profit margin reached 27.4% of revenue. The group's net profit increased by 30% to 8.481 billion euros.
In the first half of 2023, LVMH's Perfumes & Cosmetics business achieved a year-on-year revenue organic growth of 13%, reaching €4.028 billion, with a profit from recurring operations of €446 million, up 15% year-on-year. In terms of geographical regions, Asia (excluding Japan) accounted for 34% of LVMH's revenue from the Perfumes & Cosmetics business, far exceeding Europe (excluding France) and the United States, both at 19%.
Looking at the performance over the past five years, the revenue of LVMH's Perfumes & Cosmetics business exceeded €3 billion and reached €3.236 billion in the first half of 2019. However, in the first half of 2020, due to the global pandemic, the revenue of its Perfumes & Cosmetics business fell by 28.8% to €2.304 billion. But in the first half of 2021, when the pandemic's impact began to weaken, the revenue of LVMH's Perfumes & Cosmetics began to rebound significantly, with organic growth of 37% year-on-year, returning to €3 billion. In the first half of 2022, revenue reached €3.618 billion, surpassing the pre-pandemic level of 2019. In 2023, revenue broke through €4 billion, reaching a new high in five years.
LVMH stated that that the Perfumes & Cosmetics business group achieved a 13% organic revenue growth in the first half of 2023, thanks to successful innovation and a highly selective distribution policy. Profit from recurring operations also increased by 15%. Christian Dior had exceptional performance, strengthening its leadership in key markets. Sauvage remained the world's top-selling fragrance, while J'adore and Miss Dior continued to see success.
The Maison's makeup line, particularly Dior Addict Lip Maximizer and Forever Skin Correct foundation, also contributed to the strong results. Skincare also had excellent performance, particularly in the premium segment in Asia with its iconic Prestige range. Guerlain continued to expand, driven by its Abeille Royale skincare and high-end perfumery collection l'Art et la Matière, enriched with new Jasmin Bonheur creations. Givenchy's new fragrance Gentleman Society was well-received, and Benefit expanded its Professional skincare range. Fenty Beauty's latest product, Hella Thicc mascara, quickly became one of Maison's top sellers.
The Selective Retailing revenue was up 26%, with Sephora outperformed
In addition to the strong overall performance, the Selective Retailing business, which includes Sephora and DFS, saw a significant increase in revenue of 26%.
In the first half of 2023, driven by the recovery of international travel, LVMH's Selective Retailing business achieved a historically high revenue of €8.355 billion. The operating profit also doubled from €367 million in the first half of 2022 to €734 million in the first half of 2023.
LVMH stated that Sephora continued its strong performance globally, and outperformed in North America, Europe, and the Middle East. Sephora also continued to expand its distribution network, with its first store in London's Westfield, which opened in March this year, achieving tremendous success, and ranking among the top 20 globally, significantly exceeding its target. Sephora also expanded its reach through a partnership with Kohl's in the United States.
As for its duty-free business, LVMH's DFS saw good growth thanks to the recovery of international travel. However, LVMH also noted that although DFS's revenue has increased, it is still below the pre-pandemic level of 2019, and the return of international travelers to flagship destinations in Hong Kong and Macau has been relatively slow compared to other regions. In France, the strong performance of the Parisian destination hotel La Samaritaine confirmed its attractiveness as a destination, especially with the increasing number of Asian tourists. The thriving Le Bon Marché continued to develop innovative concepts and benefited from a loyal French customer base and the return of international travelers.
Looking at the past five years, the Selective Retailing business unit achieved revenue of over €7 billion, reaching €7.098 billion in the first half of 2019. However, due to the global pandemic, revenue dropped by 32% to €4.844 billion in 2020. In the first half of 2021, there was a slight increase with organic growth of 12%, reaching €5.085 billion. In the first half of 2022, the Selective Retailing business continued to recover, achieving an organic growth of 30% to reach €6.63 billion, but it had not yet returned to the pre-pandemic level of 2019. In 2023, revenue of the Selective Retailing business unit surged by 26%, surpassing €8 billion for the first time and reaching €8.355 billion.
LVMH said, in the second half of the year, Sephora plans to expand its presence in key markets such as North America, France, the Middle East, and China. This includes extending its partnership with Kohl's in North America. In the United Kingdom, Sephora will invest in opening a second store by the end of the year. Sephora's iconic Champs-Élysées location, which has been fully renovated, will also reopen. Sephora will continue to expand its store network and invest in its omnichannel strategy to improve the entire shopping experience for customers. The product range will also be expanded to include promising categories such as haircare, fragrances, and sun care.
Looking at the performance of LVMH's Perfumes & Cosmetics business and the Selective Retailing business unit, which includes Sephora, over the past five years, although LVMH was also significantly impacted by the pandemic, it was able to quickly recover to pre-pandemic levels within two years.
Bernard Arnault's visit to China underscores the ambition of the Chinese market
In terms of regions, both Europe and Asia saw strong business growth. It is worth mentioning that the Asian region, including the Chinese market, remains the largest market for the LVMH group, contributing 34% of its revenue, which is an increase from the same period last year. The United States achieved 3% organic growth in the first half of the year. Japan achieved 31% organic growth in the first half of the year. The rest of Asia, excluding Japan, achieved 23% organic growth in the first half of the year, with Q2 accelerating further to a YoY increase of 34% on an organic basis, making it the fastest-growing market among all regions. Europe achieved 22% organic growth in the first half of the year.
Although LVMH's Perfumes & Cosmetics business has continued to grow in revenue in recent years, its growth rate is lower than the overall level of the group. At the same time, the trend of the past few years shows that the proportion of its beauty business in LVMH's overall business has also declined. In the first half of 2019, its Perfumes & Cosmetics business accounted for 12.9% of the total revenue, which fell to 9.85% in the first half of 2022 and slightly declined to 9.54% in the first half of this year.
Meanwhile, within the Perfumes & Cosmetics business, the proportion of its revenue in Asia (excluding Japan) to the total beauty business revenue is also showing a downward trend. In the first half of 2020, the revenue from Asia (excluding Japan) accounted for 49% of LVMH's Perfumes & Cosmetics business, close to 50%, while by 2023, the proportion had declined to 34%.
For China, the world's second-largest cosmetics market, LVMH is also vying for every inch of ground. Under the conditions of the declining Perfumes & Cosmetics business and the continuous decline in the Asian market, LVMH urgently needs the Chinese market to boost its Perfumes & Cosmetics business. After the easing of pandemic restrictions this year, LVMH has launched a series of activities in China to revive the Chinese market.
After achieving a good start to the first quarter earnings report this year, LVMH CFO Jean Jacques Guiony said LVMH Group is very optimistic about the Chinese market in 2023, and the next time will herald promising prospects for development. In the second quarter, Jean Jacques Guiony expressed great satisfaction with the rebound in the Chinese market, which accounts for a large part of sales in Asia.
In March of this year, LVMH made several important personnel changes. Among them, the most important personnel change was the appointment of former L’Oréal China CEO Stéphane Rinderknech as Chairman and CEO of LVMH's Beauty Division, responsible for all perfume and cosmetics business under LVMH.
In 2016, when Stéphane Rinderknech served as the CEO of L’Oréal China, the company's business in China showed a downward trend. But just two years after he took over, in 2018, L’Oréal’s growth rate in the Chinese market reached the highest level since 2007. At the same time, the group's three major brands became the largest market in the world in the Chinese market. The appointment of Stéphane Rinderknech, who is very familiar with the Chinese market, reflects LVMH's ambition to revive the Chinese market.
In addition to personnel appointments, LVMH has also begun to lean towards the Chinese market in R&D.
In April of this year, LVMH followed in the footsteps of international giants such as L’Oréal and Estée Lauder, unveiled its first high-end cosmetics R&D center in Shanghai. It was reported that this is the largest R&D center established by LVMH in Asia, with skincare and makeup and color development laboratories, product testing rooms, and other product innovation development laboratories. The main task of the center is to carry out a series of R&D innovations for the Chinese market and consumers, to continuously enhance the innovation and vitality of the Chinese market.
In addition, in June of this year, Sephora grandly unveiled the second store in Asia and the first future concept store in China on Nanjing East Road in Shanghai's core business district, bringing consumers a large number of exclusive high-quality selections, professional store services, and innovative digital makeup preparations, as well as a comprehensive upgrade of consumers' beauty shopping experience.
In addition to the above series of actions, LVMH President Bernard Arnault's visit to China further reflects LVMH's emphasis on the Chinese market.
At the end of June this year, Bernard Arnault appeared in Beijing and Chengdu, China, accompanied by his daughter Delphine Arnault, his youngest son Jean Arnault, and Louis Vuitton CEO Pietro Beccari.
The presence of several key executives in China after the relaxation of pandemic restrictions also indirectly demonstrates LVMH's eagerness to revive the Chinese market.
As luxury giants continue to increase their stake in beauty, the Chinese market has become a battleground for global luxury giants. After Kering reportedly acquired perfume brand Creed for €3.8 billion, the competition for the beauty market among luxury goods has entered a white-hot stage, with the Chinese market likely to become the main battleground for these luxury giants' beauty businesses.
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