Luxury bags are selling very well

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When inflation hits, some switch to generic versions of food and turn down the thermostat while others stock up on luxury handbags when the dollar is higher than the euro.

For two consecutive quarters, the parent company of brands such as Louis Vuitton, Dior and Moët champagne has recorded dynamic sales and solid revenues.

Luxury handbags drive the numbers

During the period from January to June 2022, LVMH (LVMH) current operating income rose 34% year-on-year to 10.24 billion euros ($10.38 billion) while a collective poll of analysts from FactSet expected only 9.57 billion euros ( $9.69 billion) for the Paris-based luxury giant.

Overall turnover, meanwhile, increased by 27%.

The fashion and leather goods section by far dominated the rest of LVMH with 7.51 billion euros ($7.6 billion) in revenue. Brands like Louis Vuitton, Christian Dior, Fendi, Celine, Loro Piana and Loewe gained new market share and were among the most popular this quarter.

“Driven as always by exceptional creativity and with a major cultural focus, Louis Vuitton delivered an excellent first half across all of its businesses and maintained its profitability at an exceptional level,” the company said. “[..] Christian Dior continued to achieve remarkable growth in all of its product categories.”

Brands specializing in fragrances and skincare all performed well alongside strong demand for luxury champagnes and cognacs. That said, the segmented handbag is really where people buy the store.

“LVMH is having an excellent start to the year, to which all of our business groups have contributed,” Chief Executive Bernard Arnault said in a statement announcing the results. “[…] We are approaching the second half with confidence, but given the current geopolitical and health situation, we will remain vigilant and count on the agility and talent of our teams to further strengthen our position as the world leader in luxury in 2022.”

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Net profit, or what the company brings in with all expenses and taxes deducted, 6.53 billion euros ($6.61 billion).

Why are so many people buying luxury goods right now?

The luxury segment has, even in the most difficult times, followed its own economic trajectory.

At the height of the pandemic, a luxury bag or piece of jewelery has become, for the wealthy, a substitute for the inability to travel due to border closures. Now some are using a strong dollar to buy designer items in other countries.

Earlier this year, Chanel’s South Korean branch changed its policy so that customers could only purchase “one Timeless Classic flap bag and one Coco Handle bag each year” to prevent investors from buying them. en masse and only sell them off the market.

Chanel Bag 2.55 Lead JS

As with everything else, inflation has also affected the luxury handbag industry. One of Chanel’s most popular models, the Medium Flap Bag, increased in price from $6,800 in 2021 to $7,800 in 2022.

But with prices like that, even big increases don’t have as much of an impact on people who are already willing to shell out several thousand dollars for a handbag.

And the sales numbers certainly reflect that fact. A recent report by Transparency Market Research expects global luxury handbags market grow at a CAGR of 5.9% from 2021 to 2031 and reach $35.4 billion by 2031.

At the same time, a recent study from Omaha-based insurance company Breeze found that inflation caused 73% of US households to reduce restaurants and takeout, while 57% spent less on groceries and 44% took fewer trips to save fuel.

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