Sephora’s power within the LVMH portfolio continues to rise.
On Thursday, LVMH shared in its 2023 year-end earnings report that selective retailing, the business unit that houses Sephora, posted a year-over-year revenue increase of 25%, to $19.4 billion, ahead of the luxury conglomerate’s four other units. Behind selective retailing was fashion & luxury goods, with a 14% year-over-year gain, and then perfumes & cosmetics, with an 11% year-over-year gain. The other selective retailers in LVMH’s portfolio are travel retailer DFS and department store Le Bon Marché. Overall, LVMH reported sales of $93.79 billion for 2023, up 13% on an organic basis from the previous year but below the 17% growth the group reported between 2021 and 2022.
LVMH singled out Sephora as having “another record-breaking year for revenue and profit,” though exact figures were not shared. The “exceptional” sales performance was across North America, Europe and the Middle East. Standout moments for Sephora in 2023 included bringing Glossier in-store in February and launching the influencer program Sephora Sounds in August. That was soon followed by updates to its loyalty program in September and the return of the consumer-facing event Sephoria in September.
In Sept. 2023, the beauty retailer announced the promotion of Artemis Patrick to CEO in North America, taking over the title in April from Jean-André Rougeot, the current president and chief executive officer, who has revealed he will retire. Priya Venkatesh, the svp of global merchandising, stepped into the global chief merchant role on Oct. 2, succeeding Patrick. Alexis Rollier, the global chief operations officer, began overseeing the Latin America region, in addition to his existing duties, effective Jan. 1. More recently, on January 22, Maggie Chan, CEO of Sephora Greater China, stepped down after five years with the company. No successor has yet been named, but the Chinese market has struggled to become a driving force for Sephora amid strong competition and a softer economic climate.
A key driver of Sephora’s success in North America is the Kohl’s at Sephora shop-in-shops. On its third-quarter earnings call in November, the Kohl’s executive team said the partnership will be a $2 billion business by 2025. There is currently a Sephora presence in over 900 Kohl’s stores, a 50% increase compared to 2022. Additionally, customers returning for additional purchases at Sephora shop 2x more often than Kohl’s-only shoppers, and 30% of the customers that shop Sephora at Kohl’s are new to Kohl’s.
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“The partnership with Sephora is phenomenal. And we really feel that the numbers we put out there will be achievable in the near future,” said Tom Kingsbury, CEO of Kohl’s, during the Nov. 2023 earnings call.
In 2022, LVMH’s selective retail unit sales grew 17% year-over-year, just behind fashion & leather goods at 20%. In 2021, notably a Covid-19 recovery year for nearly every industry, selective retail posted a 16% year-over-year sales growth compared to 2020 and a decline of 18% compared to pre-Covid 2019 sales.
“While remaining vigilant in the current context, we enter 2024 with confidence, backed by our highly desirable brands and our agile teams,” LVMH chairman and CEO Bernard Arnault said in a statement.
