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Key Takeaways
- Despite a move toward value-seeking in the U.S., Americans helped bolster sales at LVMH Moët Hennessy, the luxury goods conglomerate said.
- Research shows wealthy Americans are spending more freely than others and playing an outsize role in the economy.
Americans haven’t fallen out of love with luxury goods.
While retailers and consumer-goods companies say Americans are particularly focused on value these days, high-end brands like Tiffany and BVLGARI are building momentum in the U.S. LVMH Moët Hennessy said its brands gained ground in the U.S. last quarter amid soft sales in other parts of the world, underscoring research showing that the U.S. economy is increasingly reliant on affluent consumers.
LVMH’s third-quarter U.S. revenue in the U.S. increased 3% year-over-year, but was negative in Europe and Asia. (Unfavorable currency exchange rates flipped the results of some segments, executives said on a conference call Tuesday.)
What This Means for Investors
Research suggests the economy is increasingly reliant on affluent Americans, who are benefitting from investments in the stock market. This may bolster businesses that cater to the wealthy, such as luxury travel and wealth management services.
LVMH identified the U.S. as a source of strength for several product lines and brands, including fashion and leather goods, watches and jewelry, and the Sephora beauty business. The results lifted shares of LVMH and other European luxury houses, including LVMH, Hermès and Gucci owner Kering, in European trading.
Wealthier Americans, particularly the top 5%, are spending more freely than other consumers because they’re disproportionately benefitting from a booming stock market, Bank of America analysts said. Equity “gains are likely bigger in cash terms than the pay raises for these households and have probably played an important role in supporting their spending,” the bank wrote in a report published last week.
Wealthy Americans’ paychecks are also growing, rising at the largest rate in nearly three years and faster than middle and low-income households’ incomes, Bank of America said.
Still, signs of caution are apparent—even at luxury companies.
“There was a kind of rebound with the election that created a kind of surge of consumption” last year, LVMH CFO Cécile Cabanis said on Tuesday’s conference call, according to a transcript made available by AlphaSense.
