The world’s biggest luxury group LVMH has suspended its business in Russia following Russia’s invasion of Ukraine, citing operational challenges and concerns about staff safety.
The group owns 25 wine and spirits brands including Moët & Chandon, Krug, Veuve Clicquot, Hennessy and Château d’Yquem.
The company which owns more than 70 brands including Dior, Louis Vuitton, Fendi in addition to spirits and wines has about 3,500 employees in Russia and operates 120 stores in Russia.
The move however is less likely to cause a big financial impact on the luxury group, as Russia’s luxury market is considered marginal in comparison to the US or China.
Even with sanctions imposed on the country’s oligarchs, UBS estimates UBS reckons that LVMH, Hermès, Kering and Burberry earn less than 1 per cent of revenue in the market even when Russian shoppers buying abroad is taken into account, according to Financial Times.
Many luxury groups including Hermes, Chanel, and major companies such as Apple, Shell and BP have subsequently announced business suspension in Russia.
Last year, LVMH saw significant growth despite the pandemic. It recorded revenue of 64.2 billion euros in 2021, up 44% compared to 2020 and up 20% compared to 2019.
The luxury group’s Wines & Spirits business division recorded organic revenue growth of 26% in 2021 compared to 2020 and 9% compared to pre-pandemic 2019, according to the company’s latest annual report.