The Covid-19 pandemic has cost French luxury group LVMH 15 % in revenue in its first quarter. Most shops and production facilities are closed, but owner Bernard Arnault remains positive. He has waived his salary to set an example.
“Proven resilient”
“LVMH has proven its ability to be resilient in an economic environment disrupted by a serious health crisis that has led to the closure of stores and manufacturing sites in most countries in recent weeks, as well as the suspension of international travel”, says CEO and owner Bernard Arnault.
By the end of March, the luxury group had already predicted a drop in sales of between 10 and 20 % for the first quarter, and now sales figures indeed end up right in the middle. Turnover fell by 15 % in the period from January to March, accounting for 10.6 billion euros in sales. On an organic basis, excluding currency effects and acquisitions, there was a 17 % sales drop.
Online sales nonetheless increased, while sales in the core division of fashion and leather goods – with brands such as Louis Vuitton and Christian Dior – were actually slightly better than some analysts had expected, showing an organic decline of just 10 % compared to the previous year.
Bernard Arnault waives salary
“Thanks to everyone’s commitment and the strength of its brands, the LVMH group maintains good resilience in the face of this worldwide challenge”, says Arnault, who himself renounces his full salary for April and May, as well as his variable remuneration for the year 2020. Other top managers, including his daughter Delphine Arnault, are reported to follow suit. The group is also reducing its dividend proposal by 30 %.
LVMH hopes for recovery in May or June, but does not dare to make any concrete predictions. CFO Jean Jacques Guiony says to keep a close eye on costs and to negotiate, among other things, rent reductions. The acquisition of Tiffany & Co will also go ahead as agreed, Guiony promises.
