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Rich people are more insulated from inflation, which means they’re still shopping for luxury goods.
Luxury companies like LVMH, Kering, Ferrari, and Hermès are reaping the benefits.
Still, some worry that the Ukraine war, China lockdowns, or recession could hurt their bottom line.
As inflation continues to squeeze consumers across income brackets, rich people aren’t feeling the same pinch — which means the brands they shop for aren’t either.
The world’s two largest luxury conglomerates, Kering and LVMH Moët Hennessy Louis Vuitton, reported strong earnings last week, with both companies seeing revenue increases over 20% in the first half of the year compared with 2021. They’re not the only companies in the luxury sector doing well right now: It seems like everyone from high-end automakers to coveted handbag designers is seeing strong demand.
This means that the wealthiest consumers across the globe haven’t slowed their spending, even as many Americans are opting for cheaper options at McDonald’s or stressing about how they’ll pay their bills. Now, with inflation climbing to new highs, the big winners are the companies who make products for the ultra-rich.
‘Healthy and high demand’ for cars, clothes, and Champagne
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At LVMH — the French mega-corporation run by the world’s third-richest person, Bernard Arnault — luxuries big and small have been flying off the shelves.
Champagne and cognac sales, in particular, saw “exceptional momentum” in the first half of 2022; fragrances and skincare grew rapidly, and high-end fashion is still performing well. Revenue for LVMH’s fashion and leather-goods category was up 24% during that period, with brands like Louis Vuitton, Christian Dior, Fendi, and Celine achieving “new record highs for profitability” in the first half of the year, the company said.
Kering-owned couture houses — including Gucci, Yves Saint Laurent, and Bottega Veneta — all saw significant growth in the first half of the year as well, the company said in its recent earnings report, though the luxury conglomerate has raised prices twice this year. Hermès, which makes leather goods like the coveted Birkin bag, reported a strong showing in the second quarter, with sales jumping by double digits in June. And at Italian fashion house Prada, half-year revenue jumped 22% year over year.
Wealthy consumers are clamoring for more than just fashion: Italian sports car maker Ferrari saw record orders in the second quarter, and …read more
Source:: Business Insider