- LVMH's overall sales were robust, with the U.S. category growing +22% (but slightly less than the +26% posted in 1Q22). Wines & Spirits outperformed (as cognac was released from being stuck in the port) while Fashion & Leather Goods, Perfumes & Cosmetics, and Watches & Jewelry moderated. Management didn't flag a slowdown in the U.S. during its update; however, from the questions by analysts, it appears that many are expecting one. Moreover, management did say that the weak Euro to Dollar "creates a little bit of activity with U.S. clients [shopping instead] in Europe, which is something that we haven't seen in a very long period of time." And "we've seen, probably this is connected with the strength in the U.S. dollar, is that towards the end of 2Q22, we've seen a little bit of shift, particularly in fashion and leather from the U.S. into Europe." That said, CFO Jean Guiony stated that they saw "no tangible sign of slowdown" and the company was "not particularly gloomy about the outlook". (Nevertheless, as a consequence of this shift, we expect sequentially softer results for Bloomingdales, Macy’s, and Nordstrom when they report.)
- The company flagged strong sales at Sephora and they called out the partnership with Kohl’s as part of that in the release. On its update, LVMH management noted that, "Sephora's partnership with Kohl's is working well with more than 250 new stores opened in the first half." It is unusual for LVMH to be that flagrant on a particular business or partnership. As such, LVMH must be viewing the Kohl’s partnership as fundamental to its U.S. Sephora business and something that one should weigh when thinking about Kohl’s business, positioning, and strategy. Placer.ai data indicates continued visitation outperformance for Sephora at Kohl's locations compared to the rest of the chain (below).
