Luxury fashion houses report robust growth for 2021 

Ruhi Gilder 
Even amidst a year in the pandemic and soaring prices, luxury brands have retained their shine. Kering, luxury conglomerate that owns Gucci, Balenciaga, Bottega Veneta and YSL reported an astonishing 35% growth as compared to the previous year, up 13% in comparison to 2019 as well.  
“All our Houses achieved sharp sales rebound, way beyond their 2019 levels, while reinforcing the exclusivity of their distribution and further enhancing their brand equity. We are working assiduously to meet our ambitious sustainability commitments,” said François-Henri Pinault, Chairman and Chief Executive Officer of the group.  
House of growth 
Lady Gaga with Adam Driver on the sets of House of Gucci
Kering’s recurring operating income rose sharply, up 60% relative to 2020, to reach a new record of €5,017 million. Gucci was highlighted as a key player, with a revenue amounted to €9,731 million, up 31% higher than in 2021. The fourth quarter of the year saw Gucci release new product lines which lead to a sharp 32% year-on-year increase compared to 18% of the same period in 2019. The September launch of Gucci’s Aria ready-to-wear collection was a contributor, as was the buzz around Lady Gaga starrer film, House of Gucci, which highlighted the brand’s name. Even Yves Saint Laurent reported an increase of 45% revenue in 2021, while Bottega Veneta’s revenue exceeded €1.5 billion. Kering’s other luxury houses, including Alexander McQueen, Brioni and Boucheron, reported a recurring operating income at 2.5 times that of 2020, at €459 million.  
Industry overview 
Other luxury firms like Capri Holdings Limited, formerly Michael Kors Holdings Limited, a global fashion luxury group, also announced record earnings for 2021. Capri also owns Jimmy Choo and Versace, and announced great growth for the third quarter of 2021, with a revenue increase of 24%, with better than anticipated results across all three luxury houses. Gross profit was $1 billion compared to $848 million from the previous year.  

The parent company of Coach, Kate Spade New York and Stuart Weitzman, Tapestry Inc. reported exceptional growth across all brands for the fiscal of 2022 in the second quarter. The company expects to return over $1.5 billion to shareholders in this financial year, an increase from its prior figure of $1.25 billion. Tapestry marked a revenue growth of 18% against FY20 pre-pandemic levels, driven by Kate Spade and Coach. The French luxury conglomerate, which helms 75 high-end brands including Louis Vuitton and Tiffany & Co., raked in a record €64.2 billion. That marks a 44% increase compared to 2020’s total revenue of $49.7 billion and a 20% jump from 2019’s $59.8 billion. 
Coach x Michael B Jordan
Photo Courtesy: Coach
Richemont, parent company of labels like Cartier and Piaget, announced the rise of sales to the tune of 35% in the year 2021, like Kering. In the case of Richemont, the growth was led by the jewellery sector, which includes brands like Buccellati, Cartier and Van Cleef & Arpels, whose sales increased by 38%. Fashion and accessories houses reported a sales increase of 37%, sustained by Chloé, Montblanc and Peter Millar.  
Rising costs 
Reports also pore in regarding LVMH’s decision to raise prices globally of its top brand Louis Vuitton. In a statement given to Reuters, the group confirmed the price increase will affect Louis Vuitton stores worldwide and cover leather goods, fashion accessories and perfumes. The price adjustment takes into consideration changes in production costs, raw materials, transportation as well as inflation. Louis Vuitton is not the only brand where prices have increased, many labels have used the pandemic and surging demand for luxury goods to hike prices over the last 2 years.
LV Crafty Collection. Source: Louis Vuitton
LV Crafty Collection. Source: Instagram – Louis Vuitton
For example, Chanel increased prices on select handbags three times last year. The French fashion house’s Classic Flap bag variant has jumped 60% (almost $3,000) from its price in late 2019 and is currently selling at $8,200. Swiss watchmaker Rolex has also raised the prices of a couple of its classic wristwatches by an average of 3.4% at the beginning of this year. 
Rolex
Photo Courtesy: Rolex
US and Asia lead 
When it comes to global markets, LVMH (Louis Vuitton Moët Hennessy) said that US and Asia experienced strong revenue growth over the course of 2021, while Europe is experiencing a more gradual recovery. 
According to a report by consultancy firm Bain & Company in November 2021, a driver of luxury good growth is China, where the market size has doubled since 2019. Solid climb in sales has also been seen in the US, where secondary cities and suburbs announce growth. The report states, “The Americas is now the largest global market for luxury, representing 89 billion or 31% of the global market, while China now represents 60 billion or 21%. The Middle East was another bright spot with Dubai and Saudi Arabia leading growth.” 
Source: Pexels.com
Bain’s research noted that Europe, Japan, and the rest of Asia have only partially recovered and still not reached pre-Covid levels. However, Japan is expected to be back to pre-crisis levels by 2023 and Europe by 2024. 
On the whole, Bain & Company reported that the personal luxury goods industry made a V-shaped recovery in 2021, growing by 29%. Compared to 2019 levels, the entire market grew by 1%, and the report estimates that its valuation could reach 360-380 billion by 2025 with a sustained growth of 6-8% annually. Contributing factors could be the resumption of local consumption, Chinese and the US markets, online shopping, and e-commerce. Younger customers, millennials, and Gen Z are steering this uptick, and are expected to make up 70% of the consumer base by 2025. 
 Also read:
Luxury comes customised with Gaggenau
LuxeBook’s February issue