Luxury sector undaunted by Covid, soaring inflation

The pandemic and soaring inflation have done nothing to take the shine off luxury brands, from Louis Vuitton to Gucci and Cartier, as the sector hiked prices to notch up stellar profits.

The world economy began to recover from the pandemic last year but the rebound has been accompanied by rising inflation, with prices for raw materials and energy soaring.

But luxury good makers can respond by hiking their prices and actually look more desirable to their customers.

"Our advantage over many other companies and groups is a certain price flexibility, i.e. we have the means to react to inflation," LVMH chief executive Bernard Arnault told reporters.

UBS analysts estimate that top brands such as Louis Vuitton, which is owned by industry leader LVMH, have raised their prices two-and-a-half times higher than the inflation rate over the past 20 years.

Indeed,  "pricing power remains one of the key characteristics of the luxury goods industry," UBS analysts wrote in a research note.

LVMH bagged a record 64 billion euros ($72 billion) in sales and 12 billion euros in net profit last year, both exceeding pre-pandemic levels.

The French company also owns a broad range of spirits, perfume, jewellery and cosmetics products.

Kering -- which owns Gucci and Yves Saint Laurent -- also beat its pre-Covid levels to book a net profit of 3.2 billion euros on sales of 17.6 billion euros, the group reported on Thursday.