+3%, LVMH beauty sold 32.6 billion dollars in the first half of the year!

Local time on July 23, the world's largest luxury group LVMH Group announced the first half of the results.

The results show that LVMH Group sales revenue in the first half of this year fell 1% year-on-year to 41.68 billion euros (about RMB 328.472 billion yuan), with organic growth of 2%; operating profit fell 8% year-on-year to 10.65 billion euros (about RMB 83.931 billion yuan); and the net profit recorded 7.27 billion euros (about RMB 57.293 billion yuan), a year-on-year decline of 14%.

Among them, the LVMH Group's perfume and beauty division performed brightly, with first-half revenues up 3% year-on-year to 4.136 billion euros (about RMB 32.595 billion), with an organic increase of 6%.

01

Perfume and beauty business revenue exceeded RMB 32.5 billion 

Against the backdrop of the lipstick effect and the rebound of travel retail, LVMH's perfume and beauty business grew rapidly, with first-half revenue up 3% year-on-year to 4.136 billion euros (about RMB 32.595 billion), with an organic increase of 6%. Operating profit was 445 million euros (about 3.507 billion).

The financial report pointed out that in a highly competitive market environment, LVMH Group drove the growth of its perfume and beauty business with a strong momentum of innovation and a firm selective retail strategy.

In particular, Christian Dior performed well in all product categories and consolidated its leadership position in its strategic markets. Its Sauvage perfume continued to rank among the world's top fragrances, while J'adore, the House's iconic women's fragrance, continued to be well received. Sales of the new Miss Dior Parfum fragrance grew significantly. Makeup and skincare products also contributed to the brand's excellent performance, notably the Rouge Dior lipstick and the Capture Totale skincare line.

Guerlain's fragrance innovations performed well, particularly Néroli Plein Sud from its Extraordinary Fragrances collection, while Parfums Givenchy continued to grow with its L'Interdit perfume.

In addition, Benefit, which announced its exit from China this year, added new brow products to its Precisely, My Brow line. And Fenty Beauty launched a new line of hair care products and expanded its retail presence in China.

Fenty Beauty, a beauty brand launched in September 2017 by Rihanna and Kendo, the beauty incubator of the LVMH group, did not make a move to ramp up its China presence until 2024, although it entered the mainland China market through its Tmall International overseas flagship store back in September 2019. First of all, in February 2024 after two years again official announcement of the new brand ambassador Shan Yi Chun; then in March into the jitterbug to open the official flagship store; in April and official announcement of the official stationed in Sephora China, for the first time in China to roll out the offline channel, the current online and offline channel output are responsible for the management of the contact by the LVMH beauty.

Rihanna also appeared in China on May 20 flash store party spread pancake fruit, May 21 rounds appear in the brand and people live with goods, # eat Rihanna hand spread pancake fruit #, # Rihanna live with goods # and other topics have been on the social media platforms hot search list.

Globally, Fenty Beauty is counted as one of the most successful celebrity beauty brands. According to Upbeat Agency, a British digital marketing company, Fenty Beauty's revenue reached 477 million pounds (about 4.47 billion yuan) in 2023, topping the list of celebrity beauty brands. That's half the volume of Perrier, China's No. 1 local beauty group.

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Retail division results shine

U.S. Becomes Sephora's No. 1 Sales Market

The select retail division, in which DFS and Sephora are based, also showed a market performance that was contrary to the overall trend, with first-half revenues up 3% year-on-year to €8.632 billion (RMB 68.030 billion), or 8% organic growth. Operating profit was 785 million euros (about RMB 6.187 billion).

According to the financial results, growth in the Select Retail division was driven by Sephora's remarkable momentum, which achieved significant growth and continued to gain market share, reaffirming the brand's strength in the premium beauty market and the appeal of its unique approach, as well as its position as the world's leading fragrance and cosmetics retailer. Strong growth continued in North America, Europe and the Middle East.

The United States, Sephora's number one global market, accounted for 46 percent of sales.LVMH explained that in the United States, Sephora gained record-breaking market share, thanks in large part to the expansion of its store network and its successful partnership with Kohl's, which enabled it to reach new customers.

DFS's business activity remains below pre-New Crown epidemic levels in 2019, with significant differences in visitor flows between its destinations.Le Bon Marché continues to deliver growth thanks to its differentiation strategy, including a constantly updated selection of products and services and a unique schedule of events.

Sephora CEO Guillaume Motte previously said in an interview with overseas media that the LVMH Group's expectation for Sephora is to exceed the 20 billion euro mark in annual revenue. In order to achieve this goal, Sephora intends to “continue to gain market share” in the countries where it has matured, and this plan will be implemented first in the United States and China; by 2024, Sephora expects to open 100 new stores around the world. Sephora currently operates about 3,000 stores worldwide.

Guillaume Motte also mentioned that the U.S., China, and the U.K. will be Sephora's center of gravity, as well as the brand's top five markets.

It is easy to see that Sephora is focusing its resources on prioritizing mature and advantageous markets.

03

China becomes LVMH's center of gravity

Comprehensively expanding its footprint in China

From a regional perspective, Asia (except Japan) remains the number one market for the group's perfume and beauty business.

Financial data show that in the first half of this year, the revenue of the perfume and cosmetics business in Asia (excluding Japan) accounted for 32% of the total revenue of the business, Europe (excluding France) accounted for 20%, and the United States accounted for 19%.

It is worth noting that in the conference call, LVMH Group Chief Financial Officer Jean-Jacques Guiony and analysts in the discussion of a total of 76 references to the “Chinese market” and “Chinese consumers”, which has become the most concerned about the hot topics.

Jean-Jacques Guiony said that as far as consumers are concerned, U.S. and European shoppers will be higher in the second quarter than in the first, Chinese shoppers will grow at a slightly slower rate in the second quarter than in the first, and Japanese shoppers will be weak due to the multiple price increases of the past few quarters.

Jean-Jacques Guiony emphasized, “The only thing I would say is that the brands that have invested less in marketing in China over the last few quarters have been penalized more than others, and that customer response to marketing stimuli is still very important in China. That's why we keep investing in this market, which is obviously a very important market for us.”

Indeed, the LVMH group has been making frequent moves in the domestic beauty track through its L Catterton Roadway Catten, the world's largest consumer goods private equity fund.

In June last year, LVMH Catterton fund invested in the new baby skin care brand Turtle Dad parent company - Guangzhou Good Skin Technology Company Limited; in September last year, LVMH Catterton invested in Jiangsu Chuangjian Medical Science and Technology Co. In December last year, Ludwig Kadant Chengdu held 10.18% of the shares of Shanghai Yongxi Information Technology Company Limited, the parent company of the national beauty brand blankme, through a subscription amount, becoming its third largest shareholder.

As early as 2012, L Capital held a 10% stake in national beauty brand Marimekko through L Capital Guangzhou Beauty Ltd. In July 2019, Marimekko was listed on the Shanghai Stock Exchange, and at that time L Capital was its second largest shareholder.

And this year, Luwei Kaiten One (Chengdu) Equity Investment Partnership (limited partnership) invested 104 million yuan to set up Mystic Opportunity Beauty (Guangzhou) Co Ltd, which is also the first beauty retail company set up by Luwei Kaiten in China.

From the perspective of the overall layout of beauty in China, LVMH is continuously improving its position in beauty segments and comprehensively expanding its territory in the Chinese market by investing in local Chinese brands, setting up beauty retailing companies in China and making efforts in research and development.