With European tourism in a slump due to recent terrorist outbursts, wealthy Asians and Americans are more reluctant to travel to the continent. This should greatly affect LVMH, whose Louis Vuitton brand is quite reliant on sales to these travellers. However, the company is remaining strong in the face of this adversity with increased sales overseas.
According to the Wall Street Journal, Americans are still spending their hard-earned cash on Louis Vuitton: the sales are just happening on their home turf. The brand’s CFO, Jean-Jacques Guiony, Louis Vuitton’s U.S. growth was in the high single digits.
Additionally, the brand’s Hennessy label is booming, with its volumes rising 13 per cent year over year in the first half. Moreover, cosmetics retailer Sephora—also owned by the brand—is growing at a double-digit pace. The same can’t be said for the group’s other American labels, with Donna Karan—which recently sold to G-III—and Marc Jacobs losing money in the first half.
With spending by Chinese consumers drastically decreasing, LVMH is dependent upon the success of its U.S. businesses. Only time will tell what remains in store for the luxury house.