Retail in Asia


What to glean from the biggest luxury players’ annual reports (part two)

In the ever-evolving world of luxury, staying ahead of the game requires a deep understanding of the industry’s key players and their strategies. As luxury titans, LVMH, Kering, Hermès, and Richemont provide valuable insights into the intricate workings of the luxury market, their annual reports serve as treasure troves of information, revealing the trends, challenges, and successes shaping the luxury industry today.

In the second instalment of this two-part series, we dive into the performance of the different business sectors within these companies and respective activities with a focus on Asia. 

SEE ALSO: Luxury learnings: What to glean from the biggest luxury players’ annual reports (part one)

Fashion and accessories

Louis Vuitton had a ‘record-breaking’ year according to LVMH, and generated its share of buzz with a key appointment in Pharrell Williams as creative director of menswear. Christian Dior collections by Kim Jones and Maria Grazia Chiuri were met with enthusiasm, on top of growth in leather goods and shoes. 

In 2023 fashion and leather goods contributed 49 percent of LVMH’s revenue by category, an upward trend from 2020 (47 percent) and retaining its percentage in 2022 (49 percent).

Fashion and leather goods have consistently comprised the largest share of LVMH’s revenue globally, from 2020 to 2023.

Kering’s 2023 revenue by segment was led by Gucci (51 percent of group revenue, down from 52 percent in 2022). Its Other Houses group – which includes Balenciaga, Alexander McQueen, and jewellery brands Boucheron and Qeelin) combined for 18 percent of the group’s revenue. This was followed by Yves Saint Laurent (16 percent) and Bottega Veneta (8 percent).

Taking Gucci to the next stage is a priority for Kering as it looks to nurture its best-performing brand. In its annual report it identified the need to “reinforce luxury attributes” including perception and aesthetic of the brand, and elevated communication of its craftsmanship and heritage.

At Richemont, fashion and accessory brands (which include Alaia, Serapian, Dunhill, Montblanc, Chloe, and Delvaux, among other maisons) are classified into its ‘Other’ business group and together contributed 13 percent to its group revenue, up 19 percent from 2022.

Richemont’s Chloe brand is continuing to shift to a direct-to-consumer model, opening 15 new retail stores. Also demonstrating growth is Delvaux with the relocation of the Omotesando boutique in Tokyo, as well as new openings in Chengdu, South Korea, and the first Delvaux shop in the Middle East.

Source: Shutterstock

At Hermès, ready-to-wear and accessories as well as silk and textiles demonstrated solid performances, representing 29 percent and 27 percent of group revenue, respectively, thanks to a strong demand for its ready-to-wear and footwear. Ready-to-wear and accessories were up from 27 percent of group revenue in 2022, while silk and textiles maintained its share. The maison is also expanding its production capacities for its silk with the establishment of a new printing line in Lyon, France. 

Beauty is a category to watch at LVMH, Kering, and Richemont

Demonstrating a surge in popularity, LVMH fragrances and makeup offered “solid performance across all regions,” according to the company, posting organic revenue growth of 11 percent in 2023, with Christian Dior “achieving a remarkable performance, extending its lead in its key markets,” while makeup and skincare also contributed to growth.  

As seen in the graph below, looking more closely at the group’s revenue from APAC (excluding Japan), perfumes and cosmetics contributed over 40 percent to the group’s global revenue in 2020 and 2021 for that segment; whilst 2022 and 2023 saw a dip in the region’s contribution, 35 percent and 33 percent, respectively.

Perfumes and cosmetics had a strong showing for LVMH’s APAC business in the pandemic years and will look to regain its footing.

Notably, Dior’s Sauvage continued its global triumph, reclaiming its position as the best-selling fragrance worldwide in 2023. Beauty retailer Sephora showcased exceptional performance, solidifying its status as the global frontrunner in the beauty retail industry.

Kering, on the other hand, is expanding aggressively into the beauty sector, with solid movement in 2023.

Raffaella Cornaggia, CEO of Kering Beauté. In 2023, Kering made a direct investment in its own Beauty division called Kering Beauté, aimed to assist Kering’s Houses such as Bottega Veneta, Balenciaga, Alexander McQueen, Pomellato, and Qeelin, in expanding their beauty businesses. Source: Kering

Launched in early 2023, Kering Beauté began to recruit a team headed by CEO Raffaella Cornaggia and announced the acquisition of prestige fragrance house Creed. Leveraging Creed’s reputation, Kering Beauté plans to launch its first fragrances from the second half of 2024 and continue scaling its portfolio from there. 

While excluded from Richemont’s full-year 2023 annual report (which covers the year ended March 31, 2023 for Richemont), it’s important to note that the Swiss group, too, built a new division called Laboratoire de Haute Parfumerie et Beauté to compete in the thriving luxury fragrance market. Announced in 2023, the division is led by fragrance expert Boet Brinkgreve, who previously served as the president of ingredients and procurement at fragrance manufacturer DSM-Firmenich.

Meanwhile, Hermès’ perfume and beauty business experienced a notable growth of 12 percent, driven by performance of both new releases and signature products such as Terre d’Hermès, the Jardins collection, and Twilly d’Hermès. 

Jewellery and watches

LVMH’s watches and jewellery business group achieved 7 percent growth in recurring profit. Of note is Tiffany & Co. with the reopening of its New York flagship as well as its new store concept in Omotesando. Bulgari is also saw strong growth in both jewellery and women’s watches.

The Asian region (excluding Japan) saw a steady contribution to the category’s overall revenue, with watches & jewellery at LVMH contributing 32 percent and 34 percent to the category’s global revenue, in 2022 and 2023 respectively.

Source: Shutterstock

At Richemont, Buccellati continued its retail expansion with the opening of new stores in Singapore, Tokyo, Shinjuku, Shanghai, Shenzhen, Nanjing, Hangzhou and Doha. Cartier, which offered a solid showing but continued to see disruption in sales in mainland China, introduced several additions to its collection of timepieces, including a new rendition of the iconic Tank Française watch. Van Cleef, on the other hand, plans to build its presence in strategic markets in Asia such as South Korea and China. 

Cartier, Van Cleef & Arpels, and Buccellati made significant expansions to their retail presence in Asia: Cartier opened new flagship boutiques in Sydney and Seoul; Van Cleef & Arpels expanded to Chengdu, and Buccellati opened new stores in Singapore (Marina Bay Sands), Nanjing (Deji Plaza), and Shenzhen (Bay Mix). These strategic moves demonstrate the brands’ commitment to providing exceptional luxury experiences in key locations around the world.

Piaget’s store on Canton Road, Tsim Sha Tsui. Source: Piaget

Piaget, celebrating its 150th anniversary in 2024, opened new points of sale in Asia including a flagship boutique along Hong Kong’s Canton Road, and key openings in Singapore, mainland China, and Australia. 

Hermès’ watches grew 23 percent in 2023, representing 5 percent of the group’s revenue, compared to 4 percent in 2022. The maison’s Hermès H08 also introduced several new models throughout the year. Hermès jewellery are categorised under its ‘Other Houses,’ which contributed 12 percent of group revenue in both 2022 and 2023.

Other business groups

At LVMH, selective retailing delivered 25 percent organic growth globally, with the business group contributing 21 percent of the group’s revenue in 2023 versus 19 percent in 2022. This was not yet the case in Asia, where selective retailing had comprised 27 percent of revenue, for that category, from the region in 2020. This  segment in the region remains in recovery in 2023, with APAC (excluding Japan) contributing just 15 percent to LVMH selective retailing global revenue. 

Of note in this segment, beauty retailer Sephora saw a record-breaking year for revenue and profit, while at DFS, revenue was still below pre-pandemic levels but slowly recovering thanks to the return of tourists in Hong Kong and Macau, however the daigou fallout will have a lasting impact. DFS also announced a Sanya development set to open in 2026. 

LVMH’s wines and spirits category saw a decline in group global revenue, down 4 percent in 2023, despite maintaining a steady performance in APAC; it comprised 20 percent of group revenue from APAC in 2022, and 21 percent in 2023.

Established in 2002, Richemont’s Watchfinder & Co. has emerged as a leading destination for purchasing and selling pre-owned luxury watches. Source: Richemont

Richemont’s Watchfinder&Co., which is expanding its retail footprint around the world, particularly in the US, unveiled its own marketplace in 2023, raising the bar by implementing site-wide authentication as a standard practice. Watchfinder is also classified into Richemont’s ‘Other’ business group and together with fashion maisons such as Chloe, Montblanc and Delvaux, contributed 13 percent to its group revenue.

Notably for Kering, Kering Eyewear achieved a remarkable milestone with a record-breaking revenue of EUR1.5 billion – a significant increase of 35 percent as reported and 10 percent on a comparable basis. The growth was primarily driven by the successful integration of Maui Jim and the exceptional development of the brand portfolio. In the fourth quarter, sales also experienced a positive trend with a 6 percent increase on a comparable basis.

SEE ALSO: APAC countries emerge as strong contenders in global retail market

Environmental and social impact 

LVMH introduced new circular services along with a dedicated research and innovation programme focused on exploring new materials. The establishment of an environmental training centre, known as the LIFE Academy, further underlines their commitment to education and training in environmental sustainability. The group also achieved a notable 63 percent improvement in its utilisation of renewable and low-carbon energy.

Kering’s commitments to sustainability are anchored on ‘Crafting Tomorrow’s Luxury,’ identifying key targets on traceability, reduction in environmental footprint, and material innovation. In 2023 the group introduced new materials such as Balenciaga LunaformTM, Gucci Demetra, as well as added investment into VitroLabs (lab-grown leather). Kering also launched the Kering Generation Award in Japan.

Richemont’s approach to sustainability framework, centred on its philosophy ‘We Craft the Future,’ is focused on carbon reduction targets, such as attaining 100 percent renewable electricity by 2025 across its global real estate portfolio.

Hermès is reinforcing its commitments in education, primarily through its expansion of the École Hermès des savoir-faire which extends its leatherwork, cutting, and stitching diploma courses to eight regional training schools in France. In 2023 the company also initiated the Science Based Targets for Nature (SBTN) process, joining 120 companies worldwide in setting scientific targets for nature, particularly in areas such as biodiversity, freshwater, forests, and soils.