Chinese customers, who still mainly buy luxury items on overseas trips, buy more than a third of luxury sector sale. They and other Crazy Rich Asians have helped boost the shares of LVMH. Chinese consumers purchased $121 billion worth of luxury goods in 2018 which was 32 percent of the worldwide total. This share is estimated to grow to 40 percent by 2024. The rest of asia added another 10% of luxury goods sales and the US sales has a large fraction from China and other asian tourists shopping at US outlet stores.
The LVMH luxury brands (LV, Hennessy etc…) is seeing strong sales growth in China, with e-commerce accounting for 8 percent of the brand’s sales.
LVMH, Bernard Arnault’s luxury-goods maker, share value has increased 50% since the start of 2019. This pushed Bernard Arnault’s net worth to $107.6 billion and ahead of Gates by more than $200 million.
The PE ratio of LVMH is only 26.6. Amazon has a PE ratio of 83.
Arnault, 70, joined Gates and Amazon.com Inc. founder Jeff Bezos, the world’s richest person, in the most exclusive wealth club last month, when his fortune surpassed $100 billion for the first time.
The surge in LVMH and luxury goods spending in China was in spite of the trade war. If there is deal in the trade war then there could be an even larger surge in China’s luxury goods spending and in the value of LVMH. There would be surge in LVMH shares with a trade deal. Those factors could drive Bernard Arnault past Amazon’s Jeff Bezos to become the wealthiest person in the world.
SOURCES- Deloitte, LVMH
Written By Christina Wong, Nextbigfuture.com