LVMH, the renowned manufacturer of high-end products, is the first European company to exceed $500 billion in market capitalization. The parent company of several luxury brands, reported a remarkable 17% increase in sales for the first quarter of this year, which was more than double what analysts had predicted. The company's shares reached an all-time high after the announcement.
- The company's earnings were 79.2 billion euros ($87.1 billion), and it achieved a record profit from recurring operations of 21.1 billion euros, marking the second year in a row of such achievement. The company, anticipates positive impacts from China's Covid reopening as the resumption of travel attracts affluent consumers.
LVMH products' demand has remained resilient despite inflation and rising interest rates. While concerns over a possible recession have led to a slowdown in US growth, paradoxically, they are currently boosting LVMH's value in dollars due to the euro's strengthening. The euro's rise is driven by market expectations of a potential interest rate cut by the Federal Reserve in response to a deteriorating US economy.
Why it matters
LVMH's recent accomplishment occurred within two weeks of entering the top 10 global companies due to impressive first-quarter sales. The competitive rival, Hermes International, also reported strong earnings, indicating that the fashion industry is experiencing growth as China reopens after pandemic restrictions. Bernard Arnault, the founder of LVMH, has accumulated tremendous wealth as a result of the company's success, with his net worth reaching nearly $212 billion.