Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Luxury Sales Posted Strong First Half To Year: Can Good Times Last?

By Frank HolmesMarket OverviewAug 06, 2021 12:21PM ET
Luxury Sales Posted Strong First Half To Year: Can Good Times Last?
By Frank Holmes   |  Aug 06, 2021 12:21PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

This month, Louis Vuitton turns 200 years old. That’s Louis Vuitton the man, not the company. Born in Jura, France, in 1821, the designer opened his first shop in 1854 primarily as a maker of custom travel trunks.

Today, Louis Vuitton the company, also known as LV, is the most valuable luxury brand in the world­­­­, according to the Kantar Group. Using a proprietary methodology that includes not just corporate financial data but also consumer research, the London-based data analytics firm valued the LV brand at $75 billion as of 2020. That’s almost $30 billion more than the second-place luxury brand, Chanel, which was valued at $47 billion.

LV is now owned by LVMH Moet Hennessy Louis Vuitton (OTC:LVMUY), the biggest European company by market cap. The super luxury conglomerate controls around 75 brands, including Christian Dior, TAG Heuer and Bulgari, on top of LV. Its most recent acquisition, American jewelry retailer Tiffany, was completed in January of this year.

The reason I’m bringing this up is because it’s been a very good year so far for LV and LVMH more broadly.

LVMH Reports Record Numbers

The Paris-based conglomerate just posted record revenue in the first half of the year, generating a very noteworthy 28.7 billion euros ($34.0 billion). That comes out to a hefty 56% increase from the same six months in pandemic-impacted 2020 and a respectable 14% increase from 2019.

The business group that saw the largest sales growth was fashion and leather goods, of which LV is a member. (LVMH notes that demand for LV products is so high right now, consumers often must get on a waiting list.) The group generated record revenues of 13.8 billion euros ($16.4 billion) in the first six months, up 81% from 2020 and 38% from 2019. Profits for fashion and leather goods were 5.6 billion euros ($6.7 billion), also a new record high for LVMH.

You get the point. Sales have been exceptionally strong since the start of the pandemic as economies have reopened. Consumers appear to be spending the money they saved up during the months in lockdown.

The big question investors might have is whether the good times can last. Was the first half of 2021 a one-off, or have we reached a turning point?

I happen to be bullish for a number of reasons, one of the biggest being that consumers’ purchasing power has continued to expand with the rising number of high-net worth individuals (HNWIs).

Millionaires Now Make Up 1% Of Global Population

A HNWI is understood to be someone with a net worth over $1 million, and due to a strong stock market and near-zero interest rates, the pandemic did not slow down capital creation for many in 2020. For the first time ever, more than 1% of the global population can now be considered millionaires, with the top 10 economies minting 5.2 million new millionaires last year alone, according to Credit Suisse. This brought the global total of adults with more than $1 million to 56.1 million, the most in history.

Take a look below. In each of the top 10 economies, the number of HNWIs increased from 2019 to 2020, without exception. The U.S. added the most millionaires (+1.7 million) of any country, followed by Germany (+633,000) and Australia (+392,000).

It’s not just the top 1% who have expanded their purchasing power, though. Adjusted for inflation, U.S. real disposable personal income in 2019 averaged $14,882, the highest on record up to that point. Disposable income is what someone has to spend after income taxes have been deducted. The figure shot up again in 2020 to $15,770, but the increase was likely a result of stimulus checks hitting Americans’ bank accounts. Quarantining families pocketed the savings of not going out to eat and spending on entertainment.

Households also appear to be more eager to splurge than at any other time since the pandemic began early last year. July’s Consumer Confidence Index (CCI), which measures how optimistic U.S. consumers are about their personal finances, rose to 129.1, the highest reading since February 2020.

I believe this is all very constructive for luxury sales going forward. Favorable economic and financial circumstances could make shares of these companies attractive to investors seeking exposure to the growth in HNWIs.

Investing In Global Luxury Goods

As I see it, investors who are interested in luxury names have two options.

They can put in the time conducting research on multiple companies, pouring over financials, following price charts and more.

Or, they can keep things simple and invest in the Global Luxury Goods Fund (USLUX), the only fund in North America that provides access to luxury companies around the world. That includes not just LVMH but also Hermes, Kering (OTC:PPRUY), Prada (OTC:PRDSY), Burberry (OTC:BURBY) and more. The fund also invests in luxury vehicle manufacturers, like BMW and Ferrari (NYSE:RACE), and it maintains exposure to precious metal miners that produce the materials needed to manufacture high-end jewelry.

USLUX came on to the market in July 2020 after changing its name and investment strategy. I’ve been very thrilled to see how well the fund has done in the year since. As of June 30, 2021, USLUX was up more than 56% for the 12-month period, compared to its benchmark, the S&P Composite 1500 Index, which was up 42%.

Luxury Sales Posted Strong First Half To Year: Can Good Times Last?

Related Articles

Luxury Sales Posted Strong First Half To Year: Can Good Times Last?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Houenon Michel
Houenon Michel Aug 07, 2021 10:09AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
salut comment tu vas
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry.
Continue with Google
Sign up with Email