It’s a good time to be a luxury handbag brand. 2018, thus far, has seen ever-increasing sales and profits for Hermès, Chanel, Louis Vuitton and Gucci.
As we’ve written before, privately-held Chanel recently unveiled its financial status for the first time ever, showing a company flush with cash and growing revenues. (read Chanel Pulls Back its Financial Robe).
Last week, Hermès reported strong second quarter sales, even greater than that of the first quarter of 2018. The company said it expects its operating profitability in the first half of 2018 to approximate that of the record-setting first half of 2017. (read Don’t Cry for Hermès – Record Profitability in 2017 and More Birkins, More Revenue (For Now?))
Louis Vuitton has joined the profit party as well, with its parent company LVMH announcing a strong second quarter with double digit revenue growth, driven largely by “the group’s cash-cow brand Louis Vuitton.” Interestingly, the WWD article refers to earlier statements by CEO Bernard Arnault about wanting to keep the brand small to maintain exclusivity. Is this a ploy from the old Hermes playbook?
The quarterly and half-year results of Gucci (from its parent company Kering) were slightly disappointing but only in contrast to the stratospheric prior results. Apparently the 49% growth rate of the prior quarter was not sustainable, making this quarter’s 40% growth seem less than stellar.
In the recent news from Hermes, Louis Vuitton and Gucci, the Asian market (particularly China) is cited as a cause of the rapid growth and the companies express concern about continuation of this trend, particularly in light of the growing trade tensions. It will be interesting to see whether demand in China continues to bolster these luxury brand sales. We are curious as to whether and to what extent trade wars will affect prices and demand.
What do you think? Are you worried that trade wars will increase prices of your favorite bags?