With LVMH being the first luxury company to post global sales growth this week since the Chinese economy started to recoup from the COVID-induced paralysis of late 2022, it is already clear that 2023 should be a stunning year.

Expect record sales and profits for the industry overall, as well as bold creative and retail initiatives that will put many of the dire scenarios to rest. When China’s luxury demand was hampered by lockdowns and a lack of consumer confidence last year, other nationalities saved the day. Now, as local consumption in the US and Europe could start to moderate in 2023, China’s rebound as well as strong consumer trends in Japan, Southeast Asia and the Middle East should more than compensate.

The good news for 2023? Margins are unlikely to fall despite meaningful reinvestments as operating leverage from strong global sales, greater growth in Asia, and FX (foreign exchange) will all be very supportive.

The better news for the long term? Luxury used to be a play for Japanese wealth 20 years ago and Chinese wealth pre-COVID; now it’s just a play for global wealth, whatever the nationality. Caution not warranted.

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