The first half of 2024 marked a period of significant shifts in the fashion and luxury industry, with both Kering Group and LVMH Moët Hennessy - Louis Vuitton experiencing unique challenges and opportunities. As two of the most influential conglomerates in the sector, their financial performance offers critical insights into the broader market dynamics. This article provides a detailed analysis of the latest financial results of Kering and LVMH, comparing key performance indicators, geographical performance, and sales by channel. Additionally, we explore each company's commitment to sustainability and future strategic goals.

LVMH: Steady Growth Amidst Global Uncertainties

LVMH Moët Hennessy - Louis Vuitton demonstrated resilience, with revenue for the first half of 2024 reaching €42.238 billion, a 15% increase compared to the first half of 2023. The group’s operating profit also saw an 11% rise, amounting to €11.574 billion. This growth was primarily driven by strong performances in Europe and Japan, with the latter showing a significant revenue increase of 27%, reflecting robust tourist activity.

In terms of brand performance, the Fashion & Leather Goods segment, which includes Louis Vuitton and Dior, continued to be the powerhouse for LVMH, contributing significantly to the overall revenue growth. The Watches & Jewellery segment also performed well, particularly in the context of high demand in Japan and other Asian markets.

LVMH’s geographical diversification played a key role in its success. The group reported robust growth in Europe, driven by both local customers and tourism, while the US market remained stable. Asia, particularly Japan, saw strong performance, underscoring LVMH’s strategic focus on capturing value from tourist spending.

Kering: Navigating a Challenging Market

Kering Group, on the other hand, reported revenues of €9.018 billion for the first half of 2024, reflecting an 11% decline compared to the same period in 2023. This contraction was driven by a slowdown in several key markets, most notably in Asia-Pacific, which accounted for 32% of total revenues but saw a 20% decrease on a comparable basis. The group’s EBITDA also suffered, dropping by 28% to €2.595 billion, while net income attributable to the group fell by 51% to €878 million.

A closer look at the brand performance reveals that Gucci, Kering’s flagship brand, experienced a 20% decline in revenue, with recurring operating income plummeting by 44%. Other brands like Yves Saint Laurent and Bottega Veneta also faced challenges, with revenue decreases of 9% and 3%, respectively. The Other Houses segment, which includes brands like Balenciaga and Alexander McQueen, saw a notable 7% decrease in revenue, and an 80% drop in recurring operating income.

Brand Name	Revenue in H1 2024 (€ millions)	Revenue in H1 2023 (€ millions)	% Change
Gucci	4.085	5.128	-20%
Yves Saint Laurent	1.441	1,576	-8.6%
Bottega Veneta	836	833	+0,4%
Other Houses	1.717	1.856	-7,5%
Kering Eyewear	1.067	869	+23%

Geographically, Kering faced significant headwinds in Asia-Pacific, where revenue dropped by 20% due to a decline in store footfall and reduced local demand. Western Europe and North America also saw declines, albeit more modest, of 8% and 12% respectively. In contrast, Japan emerged as a bright spot, with revenues increasing by 22%, buoyed by strong tourist spending.

Comparative Analysis: Kering vs LVMH

When comparing the financial results of Kering and LVMH, it becomes evident that LVMH's diversified portfolio and strong brand positioning have enabled it to navigate the challenging market conditions more effectively than Kering. While Kering faced significant challenges with its flagship brands, particularly Gucci, LVMH benefited from its robust product and geographical diversification, with continued strong performance in its key segments and regions.

There was a marked drop of 51% in the Net Income of Kering. While LVMH saw a decline of 14% as well.

LVMH's strategic focus on Europe and Japan, regions that have shown resilience in the face of global economic uncertainties, contrasts with Kering's struggles in Asia-Pacific, particularly in China. Additionally, LVMH's ability to maintain strong operating margins despite increased investments in sustainability and innovation reflects its operational efficiency and market leadership. For both the companies it can be observed that the contribution of revenue from Asian countries (barring Japan) has decreased in the first half of 2024 as compared to the same period last year.

Geographic Performance

The contribution of Asian countries to LVMH's revenue dropped by 4%, and to Kering's revenue by 5%. Whereas the contribution of revenue from other regions have increased slightly in comparison.

Region	LVMH Revenue in H1 2024 (€ millions)	LVMH Revenue in H1 2023 (€ millions)	Kering Revenue in H1 2024 (€ millions)	Kering Revenue in H1 2023 (€ millions)
Asia-Pacific	12.671,4	14.360,92	2.897	3.710
Western Europe	6.758,08	6.150,7	2.555	2.739
North America	5.228,56	5.057,52	2.057	2.266
Japan	3.801,42	2.890,66	737	683
Rest of the World	5.068,56	5.246,4	772	737

The contribution of Asian countries to LVMH's revenue dropped by 4%, and to Kering's revenue by 5%. Whereas the contribution of revenue from other regions have increased slightly in comparison.

Asia-Pacific

The Asia-Pacific region remains a crucial market for both LVMH and Kering, but the data shows a significant divergence in performance between the two companies. LVMH's revenue in this region dropped from €14.360,92 million in H1 2023 to €12.671,4 million in H1 2024, reflecting a decline of approximately 11,8%. This reduction can be attributed to the ongoing economic uncertainties in key markets such as China, where luxury demand has softened.

Kering also faced challenges in Asia-Pacific, with revenue decreasing from €3.710 million in H1 2023 to €2.897 million in H1 2024, marking a sharper decline of about 21,9%. The substantial decrease suggests that Kering may have been more vulnerable to the fluctuations in consumer sentiment and local demand within this region, particularly as it relies heavily on a few flagship brands.

Western Europe

Western Europe is a vital region for luxury goods, and both LVMH and Kering managed to maintain relatively stable revenues here. LVMH saw a slight increase in revenue from €6.150,7 million in H1 2023 to €6.758,08 million in H1 2024, a growth of about 9,9%. This positive trend reflects the resilience of the European market, supported by both local demand and the return of tourism, which is a significant driver for luxury sales.

Kering, on the other hand, experienced a slight decrease in Western Europe, with revenues declining from €2.739 million in H1 2023 to €2.555 million in H1 2024, representing a decline of 6,7%. While this is not as severe as the drop in Asia-Pacific, it does indicate that Kering faced some challenges, possibly due to its brand portfolio or competitive pressures in the market.

North America

North America has been a stable market for LVMH, with revenue in H1 2024 slightly increasing to €5.228,56 million from €5.057,52 million in H1 2023, showing a modest growth of around 3,4%. This stability is indicative of LVMH's strong brand positioning and continued appeal to affluent American consumers, despite the broader economic uncertainties that have affected consumer spending.

In contrast, Kering's revenue in North America decreased from €2.266 million in H1 2023 to €2.057 million in H1 2024, a decline of approximately 9,2%. This suggests that Kering might have faced more significant headwinds in this market, possibly due to a shift in consumer preferences or intensified competition from other luxury brands.

Japan

Japan emerged as a strong market for both LVMH and Kering in H1 2024. LVMH's revenue in Japan grew significantly from €2.890,66 million in H1 2023 to €3.801,42 million in H1 2024, a substantial increase of about 31,5%. This impressive growth underscores the importance of Japan as a resilient and lucrative market for luxury goods, bolstered by a favourable exchange rate and the return of international tourism.

Kering also saw an increase in revenue from Japan, albeit at a lower scale. Revenues rose from €683 million in H1 2023 to €737 million in H1 2024, reflecting a growth of 7,9%. While positive, this growth rate indicates that Kering’s performance in Japan, although strong, was not as robust as LVMH’s, potentially due to differences in brand appeal or market strategy.

Rest of the World

The Rest of the World category, which includes regions such as the Middle East, Latin America, and others, presented mixed results. LVMH experienced a slight decline in revenue from €5.246,4 million in H1 2023 to €5.068,56 million in H1 2024, a decrease of about 3,4%. This slight dip might be attributed to specific regional challenges or a slowdown in some emerging markets.

Kering, conversely, saw a small increase in this category, with revenue growing from €737 million in H1 2023 to €772 million in H1 2024, an increase of 4,7%. This growth could suggest that Kering’s strategic focus on certain markets within this category is yielding positive results, potentially through targeted marketing or expanding retail presence.

Sustainability and ESG Achievements

Both Kering and LVMH have placed sustainability at the core of their strategic agendas. Kering continues to lead the way with its ambitious environmental targets, as evidenced by its achievement of a “Triple A” rating from the Carbon Disclosure Project (CDP) for climate, water, and forests. The group has also invested in strategic real-estate acquisitions that align with its sustainability goals, such as the development of eco-friendly stores and offices.

LVMH, meanwhile, has made significant strides in its sustainability initiatives, particularly in reducing its carbon footprint and promoting a circular economy. The group’s Life 360 program, which aims to ensure that all products are eco-designed by 2030, is a testament to its commitment to sustainability. Furthermore, LVMH’s investments in sustainable innovation, such as the use of bio-based materials in production, highlight its leadership in integrating sustainability into luxury.

Observations

The first half of 2024 has been a period of both challenges and achievements for Kering and LVMH. While Kering has faced significant headwinds, particularly in its key markets and brands, LVMH has demonstrated resilience and growth, supported by its strong brand portfolio and geographical diversification.
Looking ahead, Kering's focus on innovation, sustainability, and strategic investments will be crucial in reversing its current challenges. LVMH, with its continued emphasis on sustainability and innovation, is well-positioned to maintain its leadership in the luxury market. However, both companies must navigate an increasingly complex global market, where consumer preferences and economic conditions are continually evolving.

While both LVMH and Kering faced challenges in specific regions, LVMH managed to maintain or grow its revenue in most key markets, reflecting its diversified brand portfolio and strong global presence. Kering, on the other hand, experienced more pronounced declines in several regions, particularly in Asia-Pacific and North America, which could indicate the need for strategic adjustments to better navigate the current market dynamics.

The significant growth in Japan for both companies stands out as a positive highlight, showcasing the region's potential as a growth driver in the luxury market. Moving forward, both companies will need to continue adapting their strategies to address regional challenges and capitalize on opportunities in resilient markets.

Given the contrasting performances of Kering and LVMH, further analysis could focus on the effectiveness of each company’s brand management strategies, particularly how they navigate challenges in key markets such as Asia-Pacific. Additionally, exploring the impact of digital transformation on sales channels and customer engagement would provide deeper insights into their future growth trajectories. Finally, a closer look at how each company’s sustainability initiatives influence consumer perceptions and brand loyalty could yield valuable insights for stakeholders in the luxury industry.

Read the full Kering Group report Here.

Read the full LVMH Group report Here.

Cover Image Courtesy: Official Websites of LVMH Group and Gucci