Mid-day Update

LVMH sales bump up 25 percent

Sarah Stolarz Apr 18, 2012

Stacey Vanek Smith: When times are tough you’d think people would take it easy on the champagne and designer wear. Well, apparently not. The world’s largest luxury goods company has posted huge profits today.

In our Mid-day Extra, the BBC’s Sarah Stolarz reports on how sales to the 1 percent shot up by 25 percent.

Sarah Stolarz: Dom Perignon, Louis Vuitton, Bulgari — they’re all names synonymous with luxury and excess. You may not have heard of LVMH; it’s the company that owns all of those brands and it’s posted a 25 percent rise in sales in the past three months. Continual growth in emerging markets like Asia and Russia is fuelling the increase.

James Lawson is director of Ledbury research, a consulting firm for luxury brands and wealthy consumers. He says that a love of spending and travel amongst new consumers is helping to prop-up markets world-wide

James Lawson: The impacts of these emerging markets is not only in their home markets but also in their historic markets of western Europe and North America.

Lawson says wealthy customers from emerging markets will vacation in the developed world, and open their wallets for luxury goods that are hard to find back home.

But LVMH says not all its success was from the high-end brands. The strongest brand growth at the company was actually seen at cosmetics retailer Sephora.

The makeup company is usually thought of as directed towards the 99 percent — it caters to walk-in customers at shopping malls. And analysts argue the success of a mid-level brand like Sephora could be a sign that the luxury bubble may be about to burst.

In London, I’m the BBC’s Sarah Stolarz for Marketplace.

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