Louis Vuitton, Dior Power LVMH’s Sales

PARIS—LVMH Moët Hennessy Louis Vuitton SE said surging revenue at its biggest fashion brands, Louis Vuitton and Dior, propped up the luxury-goods company’s results during the fourth quarter, offsetting other businesses such as Champagne that have fizzled during the pandemic.

The Paris-based conglomerate on Tuesday said revenue in the quarter fell 3% to €14.3 billion ($22.4 billion). Sales at its fashion and leather-goods division—where Louis Vuitton and Dior account for most of the revenue—rose 18%. Revenue for all of 2020 fell 17% to €44.7 billion. Net profit for the entire year was down 34% at €4.7 billion.

The results show how some of the marquee brands of luxury fashion have gained market share during the pandemic. Louis Vuitton, the world’s top-selling luxury brand, Dior and Hermès have posted strong sales growth since boutiques were allowed to reopen after lockdowns in March and April. Smaller brands—both inside and outside LVMH—have lagged behind.

Drawn by the performance of Dior and Louis Vuitton, investors have sent LVMH’s shares to near record highs, brushing aside concerns about the future of the luxury business during and after the pandemic. The company’s market capitalization is now €260 billion, solidifying the place of Bernard Arnault, LVMH’s chief executive and controlling shareholder, among the ranks of the world’s wealthiest people.

Jean Jacques Guiony, LVMH’s chief financial officer, said Louis Vuitton and Dior had a strong pipeline of new products that they continued to roll out despite the lockdowns. The brands also maintained fashion shows in reduced formats and continued digital-marketing efforts when others were forced to pull back drastically. Dior, for example, held a closed-door fashion show for its cruise collection in Lecce, Italy, in July, while rival brands pushed the unveiling of new collections until later in the year.

“We did it when nobody else was talking,” Mr Guiony said. “It was really Dior and Vuitton taking the bulk of the customers’ attention.”

Mr. Guiony said that Fendi and Celine—two of LVMH’s midsize fashion brands—also gathered momentum toward the end of the year. Marc Jacobs managed to turn a profit in 2020 for the first time in years, Mr Guiony said, though that came after a wave of layoffs at the American brand.

LVMH’s performance also benefited from strong consumption of Hennessy, the world’s top-selling cognac brand. Sales in the U.S. surged, LVMH said, bolstered by large government stimulus payments to consumers. Global cognac volumes were down only 4% for the year and rebounded in the second half, the company said.

That helped offset the poor performance of LVMH’s Champagne division, which includes brands such as Veuve Clicquot and Dom Pérignon. With weddings and birthday parties cancelled because of social-distancing rules, consumers had little reason to sip a glass of bubbly, pushing down Champagne sales by 19% for the year.

LVMH just completed its purchase of the American jeweller Tiffany & Co. at the start of this year, after the pandemic nearly cancelled the $15.8 billion deal. Mr Arnault pulled the plug on the merger in September before deciding to see it through after Tiffany agreed to a small discount.

The acquisition could be riding a tailwind: Jewellery sales in the final months of last year were one of the bright spots in the global luxury business, Mr Guiony said.

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Investors should pay attention to that distinction. When Meta Platforms META 3.38%increase launched its Muse agent last month, travel stocks including Booking Holdings BKNG -1.19%decrease, Expedia and Airbnb all fell sharply.

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Online travel companies make much of their money by simplifying search and collecting fees on bookings. AI agents threaten that model.

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Airbnb has more ways to adapt. More than half its listings are available only on its platform, and more than 90% of its traffic comes directly to its app or website.

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How the companies have responded to the possible agentic future is telling.

Expedia quickly signed on as a Muse partner. Airbnb hasn’t, and Chief Executive Brian Chesky says AI chatbots have so far been a boon, sending customers to Airbnb’s website.

Chatbots might work for buying paper towels, he quipped at a Skift conference last month, but people enjoy planning trips. He argued that browsing dozens of homes isn’t something a text-based chatbot is well suited for.

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This year, Airbnb growth seems to be accelerating. The stock jumped in August after the company raised its full-year revenue-growth guidance with its second-quarter results. Wells Fargo analyst Ken Gawrelski credits a run of product improvements under a revamped leadership team.

Among the changes: letting guests reserve now and pay later, adding hotels, and a redesigned home page and app. Investors were also betting on what comes next, including thousands more hotels, car rentals and, eventually, advertising.

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To bulletproof itself, Airbnb might look to another e-commerce giant that has so far kept AI agents at arm’s length: Amazon.

Like Amazon, Airbnb has a loyal customer base and hard-to-match supply. But it has nothing like Prime membership to make customers think twice before taking their business elsewhere.

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Airbnb also plans to launch its own AI agent next year. But travelers using an agent might still want it to search Airbnb, Vrbo, Booking and hotel websites alike, rather than limit itself to one company’s inventory.

Eventually, Airbnb might have to strike deals with agent makers, using its unique homes as leverage to negotiate favorable terms, says Gawrelski. Such deals, along with rewards for loyal guests, could over the long term eat into the company’s roughly 13% take rate, he adds. But if they bring in enough additional bookings, the trade-off could be worthwhile.

History offers a reason not to panic. The shift from desktop to mobile unsettled investors in Alphabet and Amazon, but both emerged as major beneficiaries. Companies with valuable assets can come out of a platform shift stronger, if they adapt quickly enough.

Airbnb has homes the bots can’t easily replace. Now it needs to give guests a reason to insist on booking them there.

Louis Vuitton, Dior Power LVMH’s Sales

Big fashion brands bolster results, while Champagne revenue falls amid pandemic.

AI-powered travel agents are challenging online booking platforms, but Airbnb’s exclusive listings and direct customer relationships could give it an edge. Its next challenge: turning repeat guests into loyal customers through stronger rewards and innovation.