Hermès, Louis Vuitton, Chanel report combined $3B in sales last year in Korea

The "Big 3" luxury brands — Hermès, Louis Vuitton and Chanel — made almost 4 trillion won in sales in Korea in 2022, with Louis Vuitton becoming the top-selling brand.

Customers wait in line in front of a luxury brand at a department store in Seoul on Sunday. [NEWS1]

The "Big 3" luxury brands — Hermès, Louis Vuitton and Chanel — made almost 4 trillion won in sales in Korea in 2022, with Louis Vuitton becoming the top-selling brand.

In a separate regulatory filing by Hermès Korea, Louis Vuitton Korea and Chanel Korea, the three brands reported a combined revenue of 3.93 trillion won ($3 billion) last year, a 22 percent increase on year.

Louis Vuitton Korea was the top-performing brand, with its revenue growing 15.2 percent on year to total 1.69 trillion won. The company recorded a 38.3 percent increase in operating profit, totaling 417.7 billion won, and a 68.9 percent rise in net profit, reaching 380 billion won.

Chanel Korea's domestic sales reached 1.59 trillion won in 2022, a 30 percent increase on year. Its operating profit rose to 412.9 billion won, a 66 percent increase from the previous year, while its net profit rose by 73.6 percent to 311.5 billion won.

Hermès Korea's revenue reached 650.2 billion won last year, marking a 23.2 percent year-on-year increase. The company's operating profit also increased by 23.4 percent to 210.5 billion won, and its net profit rose by 22.7 percent to 153.8 billion won.

With the increase in sales, the amount of dividends sent by the brands to their headquarters has also grown. Last year, Louis Vuitton Korea paid out 225.2 billion won in dividends last year, up 44 percent from the previous year. Chanel paid out dividends of 295 billion won, a 327.5 percent increase, while Hermès paid out 117 billion won, a 22 percent increase.

Yet their charitable donations were found to be relatively small compared to the amount of money they earned here.

Chanel Korea reported 1.01 billion won in charitable contributions, an increase of 300 million won from the previous year. Hermès Korea reported 561 million won, only increasing by 100 million won from the previous year. Louis Vuitton Korea did not report any charitable funding in 2022.

In 2022, Korea's luxury goods market experienced a rapid surge in the aftermath of the Covid-19 pandemic, which made it impossible for people to travel abroad. Typically, Koreans would purchase luxury goods overseas, where they tend to be less expensive, particularly in duty-free stores.

Demand for high-end designer goods started to build, and, despite high inflation and interest rates continuing last year, luxury brands saw open runs in front of their stores, or a sprint to the doors at opening time. Some brands attracted customers even after hiking their prices to as much as four times the original.

Korea stands as the seventh-largest market for luxury goods, worth around $14.16 billion annually in 2021, according to global market research firm Euromonitor. Koreans’ per capita spending on luxury goods is the highest in world. Total spending on personal luxury goods by Koreans amounted to $325 per capita in 2022, according to Morgan Stanley, surpassing that of the United States with $280 and China with $55.

As the Korean economy slows down and the year-on-year growth rate of luxury brands in department stores decreases, fears of a luxury market bubble burst have surfaced.

According to local media reports, Lotte Department Store reported a 7 percent increase in luxury goods sales in the first quarter of 2023 compared to the same period last year. Shinsegae Department Store saw a year-on-year increase of 7.8 percent and Hyundai Department Store, 9.1 percent. This represents a significant slowdown in the growth of luxury goods sales for all three department stores, which experienced over 30 percent growth in the first quarter of last year.

Luxury brands are scrambling to boost their appeal in the Korean market, as evidenced by Louis Vuitton's upcoming launch of its 2023 pre-fall collection in Seoul on April 29, marking the first-ever fashion show to be held by the brand in Korea.

BY BAEK IL-HYUN, SEO JI-EUN [seo.jieun1@joongang.co.kr]