As the world struggles, luxury brands make a killing
A number of luxury brands cleaned up in Korea last year, reporting dramatic jumps in profit despite the pandemic.
In 2020, Paris-based Louis Vuitton achieved 1.05 trillion won ($940 million) of revenue, up 33.4 percent, and 70 billion won of net profit, up 284.7 percent.
Hermes reported net profit of 98.6 billion won, up 15.8 percent. Revenue was 419 billion won, up 15.8 percent. Chanel's net profit rose 31.8 percent to 106.9 billion won, but revenue dropped 12.6 percent on-year to 929.6 billion won.
The company took a hit to sales as its duty-free business was all but shut due to the freeze on tourist traffic, with duty-free revenue dropping 81 percent. Local sales rose 26 percent.
Christian Dior Couture Korea reported net profit of 77.7 billion won, up 253.5 percent and revenue of 328.5 billion won, up 75.8 percent. Moncler's net profit was 23 billion won and revenue was 150 billion won, up 59 percent and 13.6 percent, respectively.
Sales of luxury goods were helped along by the lack of overseas travel, with many Koreans diverting their demand toward the finer things available at local department stores. Pent-up demand also helped, as some people splurged once they had a chance to emerge from quarantine or lockdown.
In 2020, pricing was firm, and luxury brands were able to raise their pricing despite the crisis. This helped boost revenue and profit.
In some cases, specific marketing campaigns helped.
The release of Air Dior sneakers, a collaboration with Dior designer Kim Jones and Nike, helped performance. Steady-selling products such as the Lady Dior bag and the Book Tote bag also helped the brand.
After an amendment to the Act on External Audit of Stock Companies went into force in November last year, LLCs with revenue or total assets of 50 billion won or more are also subject to external audit and public disclosure.
Not all high-end brands prospered in 2020.
Salvatore Ferragamo's net profit dropped 57 percent on-year to 3.5 billion won. Revenue fell to 105.6 billion won, down 29.7 percent. Revenue of Valentino Korea was 38.7 billion won, down 20 percent. Tod's Korea operations reported net loss of 1.2 billion won.
Rolex's net profit in 2020 fell 50 percent to 21.9 billion won. Revenue was 232.9 billion won, down 20 percent. The Covid-19 shutdown of Rolex's manufacturing facilities in Europe resulted in a drop in production.
BY YOO JI-YOEN, LEE TAE-HEE [firstname.lastname@example.org]