This photo shows a Louis Vuitton shop in Seoul on Jan. 17, 2022. (Yonhap)
SEOUL, April 22 (Korea Bizwire) — Overseas fashion and luxury brands including Louis Vuitton, Chanel, Hermes and others reported record earnings last year despite a series of price increases.
Chanel Korea earned racked up 1.22 trillion won (US$987 million) in sales last year, up 31.6 percent from the previous year. The company earned 249 billion won in operating profits over the same period, up 67 percent from the previous year.
Louis Vuitton Korea reported revenue of 1.47 trillion won last year, up 40 percent from the previous year. The company earned 301.9 billion won in operating profits over the same period, doubling from the previous year.
Hermes, the most expensive brand among luxury franchises, succeeded in double-digit growth. Hermes Korea earned 527.5 billion won in sales and 170.4 billion won in operating profits last year, increases of 26 and 28 percent, respectively, from the previous year.
The luxury brands’ outstanding sales performance is largely attributed to a series of price increases that came into effect last year. Louis Vuitton raised prices five times, and Chanel four times over the course of the year.
Industry sources say that ‘revenge consumption’ sparked by the pandemic has contributed to the success of these companies.
“South Koreans were spending almost 9 trillion won per quarter on foreign travel in the pre-pandemic era. Since the second quarter of 2020, it dropped below 3 trillion won,” said Yoo Jeong-hyeon, a researcher at Daishin Securities Co.
“The remaining 6 trillion won seems to have trickled down to domestic consumption, particularly on luxury goods.”
Foreign luxury brands are making a lot of money in the Korean market, but their social contribution remains lacklustre.
Last year, Hermes and Chanel Korea donated a trifle of their sales, at 458.3 million won and 700 million won, respectively.
Louis Vuitton Korea didn’t report any donations at all last year, just like in 2020.
“No matter how much they raise their prices, South Korean consumers still line up to buy their products. The luxury brands don’t have the incentive to spend a lot of money on donations,” an industry source said.
“The Veblen effect is taking a strong foothold in the South Korean market, in which heightening levels of vanity and exhibitionism continue to boost demand despite rising prices.”
H. M. Kang (hmkang@koreabizwire.com)
