As economies around the world start to re-open, consumers who have accumulated disposable income are ready to spend it.Â
Perhaps counter-intuitively during a pandemic which has shut down businesses and entire economies, luxury goods companies have been doing well - LVMH's recent Q1 results beat estimates by some 10%, with organic sales growth in the range of 30% YoY (vs. the 19% anticipated)1. The stock’s subsequent rise made it Europe’s most valuable company, with L’Oréal not far behind.
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As the US economy reopens, consumer spending is set to be the strongest in at least 70 years, with Americans having saved $1.7 trillion since the beginning of the pandemic2. In China, Cartier has seen sales surge, whilst Hermès raked in $2.7 million in one day from a store reopening in Guangzhou2.
Over the sixteen year history of value creation in Premium Brands we have seen multiple market crises followed by a rebound higher and faster than the broader market. As fiscal stimulus continues, global travel and hotels open up, online luxury good sales increase, and the great consumer rebound comes to fruition we remain optimistic for our strategy and the investors who can capture this timely opportunity.
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1Â Source: Pictet Asset Management.
2 Source: Bloomberg, Americans Have $1.7 Trillion to Burn in Revenge-Spending Binge.
Senior Investment Manager
Caroline Reyl joined Pictet Asset Management in 2002 and is a Senior Investment Manager and Head of Premium Brands in the Thematic Equities team.
She began her career in 1994 with Lehman Brothers’ corporate finance division, where she worked as an analyst in New York and London for three years. In 1997, she became a Fund Manager at GLG Partners (a hedge fund management company that was part of Lehman Brothers at the time). She managed two long-only European funds and helped select long-short investments.
Caroline graduated in Finance and Economics from the Institut d’Etudes Politiques (IEP) in Paris and holds a DESS (French Master’s Degree) in Finance from Université Paris-Dauphine.
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