LVMH bet on resilient luxury and saw 2021 revenue beat 2019 by 20%

The pandemic hit LVMH hard in 2020 as travel retail collapsed and stores closed. Group revenue fell about 16% for the year, and its airports duty-free business kept struggling well into 2021.

Yet LVMH did not retreat. It kept investing in and raising prices on its scarcest brands, notably Louis Vuitton, and it went ahead with its $15.8 billion acquisition of Tiffany, closed in early 2021 after renegotiating the price down.

The bet on resilient, wealthy-dominant luxury worked. 2021 revenue jumped 44% to a record €64.2 billion, up 20% versus 2019, driven partly by booming sales to Chinese and US consumers. Fashion & Leather Goods grew 47% organically, and Watches & Jewelry's profit was up about six times versus 2020 thanks to Tiffany.

By not discounting and by keeping its most desirable products scarce, LVMH came out of the pandemic stronger than it entered it, and it used the crisis to add a whole new category.

LVMH's 2021 revenue rose 44% to €64.2B, up 20% versus 2019, and Fashion & Leather Goods grew 47% organically.

Its top brands have pricing power with wealthy buyers who were less affected by the downturn.

Keeping products scarce rather than discounting protected the brands and the margins.

The Tiffany deal added a high-margin jewellery category at the bottom of the cycle.

Chinese and US demand rebounded faster than European travel retail, and LVMH had exposure there.

Sticking with scarce, high-margin brands and buying through a downturn pays off in a V-shaped rebound.

LVMH's 2021 recovery was the strongest in the luxury sector, and it kept raising prices and buying assets through the 2020s. The Tiffany bet, initially mocked, was vindicated as jewellery became one of its fastest-growing businesses.