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The global fashion business journal

Jul 18, 20247:40am

Top luxury brands keep fighting: higher margins than in 2016 despite the Covid-19 effects

LVMH, Richemont and Kering ended 2020 decreasing by 1.3 points in their average gross margin. They also lost €13,000 million in sales in a year. 

Aug 26, 2021 — 12:00am
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The luxury industry resists the post-Covid effects. The world’s three largest groups in the sector, LVMH, Richemont and Kering, ended 2020 with a 1.3 point reduction in their combined average gross margin. Despite the drop, the luxury giants’ gross margin is above the figure registered five years ago, in 2016. It also represents a lower decrease than the one experienced by the major retailers.


At the end of 2020, the gross margin of the three firms was 65.63% compared with 66.93% recorded the previous year. Covid-19 year figure is lower than the ones from 2019 and 2018 but it is still above 2017 (65.33%) and 2016 (64.27%) figures. On the other hand, a downward performance can be observed in last year’s large-scale distribution. In the case of luxury, margins continued upwards, except for 2019 and 2020.


Of the three titans, Richemont is the one with the highest gross margins. At the end of 2020, the company specialised in jewellery and watches recorded a gross margin of 72.6%, compared with 74.1% in 2019 and 62.9% in 2016. Bernard Arnault's group, on the other hand, registered a gross margin of 64.5% (66.2% in 2019), compared with 59.8% (60.5%) for Kering.



In the Covid-19 year, the three luxury firms registered combined sales of €70,895 million, which means a drop of 15.29% on 2019 and €12,897 million less.


Again, Richemont registered the best development, with a fall of only 7.68%. In fact, this drop helped the company achieve the world’s second largest luxury company position, advancing Kering in the ranking. LVMH shrank its sales by 16.80% and Kering by 17.53%.

Covid made the three luxury giants lose €2.271 billion in profits.


LVMH, Richemont and Kering ended 2020 with a combined net profit of €8.14 billion, a drop by 21.81% compared with the previous year.


With a decrease of 38.45%, Richemont was the firm with the worst net profit performance in 2020, while Kering’s profit reduction was 6.89% and 34.43% for LVMH.


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