Fashionably great investments that endure: who would have thought?

We live in a material world.

And that’s proven by the financial performance of LVMH in 2022, the world’s largest conglomerate of luxury brands - including the likes of fashion juggernauts Christian Dior, Givenchy and Louis Vuitton alongside famous wine and watch labels too. LVMH recorded more than 56 billion in revenue in the first nine months of the year, up an incredible 28 percent year-on-year.?

High-end fashion is holding its ground amidst the turbulence of rising inflation and the threat of recession thanks to the combination of pricing power, high margins and human behaviour.?

What does this tell us? Desire endures throughout economic downturns.

The consumers’ desire for luxury products won’t be satiated by uncertain economic conditions. High-end fashion labels centre their strategies on building desirability, and when done successfully, they can raise prices in any market and maintain sales volumes.?

That’s not to say that high-end goods aren’t susceptible to economic downturns at all, but history shows that the impact of recession is short lived among the strongest luxury brands. Take the GFC for example: LVMH’s Fashion and Leather Goods (F&LG) activities posted 2 percent sales growth amidst the worst recession we had seen in decades. At the time, F&LG was responsible for 55% of LVMH’s group profits. Today, that number has jumped to 75%.?

So, as we enter 2023 and perhaps move towards a recession, companies like LVMH will be bolstering their defensive strategies to weather the storm and bounce back bigger than ever.?