To The Moon

On April 12th, Moët Hennessy Louis Vuitton (LVMH), the luxury giant and LV's parent company, reported a 16.8% jump in revenue for the first quarter of 2023, far beating analysts' expectations of 9.5%.

The day after the earnings report, LVMH shares soared 5.7% to a record high, with a market value of more than 440 billion euros. As the result of it, the wealth of the Arnault family, the beneficial owner, soared to $210 billion and solidified its position as the world's richest man, far exceeding Musk($180 billion worth of Tesla founder)!

Although LVMH is listed in France, the U.S. Pink Sheets can also be traded under the symbols LVMUY and LVMHF respectively.

The chart below shows the trends of LVMH's share price since 1989, which has risen 39 times in nearly 34 years, with an amazing 632% gain in the last 10 years.

The bullish stock price reflected LVMH's extraordinary performance. Since 2005, LVMH's revenue has only had a slight negative growth under the financial crisis in 2009 as well as the break out of COVID-19 in 2020. In all other years, none of them have maintained positive growth:

Looking back upon the earning reports in last 2 years, LVMH's revenue growth was as high as 43.8% in 2021, mainly due to the small revenue base in 2020, coupled with moderate monetary policies from global countries to save the economy hit by the Covid-19, leading to increasing demands for luxury goods.

In 2022, the European and U.S. economies are beset by rampant inflation brought by QE and narrowed demand of consumption; however, LVMH still maintains robust growth with its biannual price hikes.

In the Q1 of 2023, LVMH's revenue growth from Asia (mainly refers China when excluding Japan) reached 36%, which greatly beat analysts' expectations, as the accumulated demand for luxury goods exploded with easing of policies about Covid-19 prevention.

According to the annual report of LVMH in 2022, the revenue from Asia (excluding Japan) accounted for 30%, which is the largest source of revenue.

The main engine for LVMH's better-than-expected reports in Q1 comes from China, which is expected to continue to bring LVMH's growth beyond expectations in the coming quarters.

Specifically, LVMH's businesses are divided into the following parts: Fashion & Leather Goods, Boutique Retailing, Watches & Jewelry, Perfumes & Cosmetics, Wines & Spirits, of which Fashion & Leather Goods accounted for 51% of total revenue and Boutique Retailing accounted for 18.8%.

According to LVMH's chief financial officer, fashion and leather goods revenue growth from China returned to double digits in the Q1 of this year, which isn't crazy only to be back to normal.

Looking ahead to the next few quarters, the pent-up luxury demand from China’s consumers is expected to be released robustly. In addition, overseas travel is expected to explode in the Q2, which will stimulate LVMH boutique retail, especially duty-free sales.

The only cautionary note is that demand for luxury goods in the U.S. slowed in the Q1 of this year, particularly for alcohol; and according to the credit card spending data from Citigroup, American spending on luxury goods slowed significantly:

Whatever, considering LVMH's revenue over the years, in a long-term perspective, investors need not worry about its performance at all, which is the leader in luxury goods. As an investor, just waiting until the right buying point and becoming the shareholder of LV, you will be able to reap the world's rich along with the world's richest man!

$LVMH-Moet Hennessy Louis Vuitton(LVMUY)$ $LVMH-Moet Hennessy Louis Vuitton(LVMHF)$