Paris—LVMH, the world’s largest luxurygoods conglomerate, reported Monday that first-quarter revenue jumped 17% to 5.25 billion euros ($7.47 billion), with operations in the United States, Europe and Asia all enjoying “strong momentum.”
LVMH’s sales beat beating analyst expectations for 4.95 billion euros, according to a Dow Jones Newswires poll. “All business groups recorded double-digit organic revenue growth in the quarter,” the France-based company said in a statement.
Analysts have been closely watching results from companies, such as LVMH, which have key markets in Japan, which suffered a devastating earthquake in March.
Sales “Confirm Return in Client Demand”
LVMH said U.S and European sales were improving, while Asia remained strong. Japan, which accounts for about 8% of LVMH’s total sales, fell 9% in the quarter.
Revenue at the fashion and leather-goods unit, LVMH’s largest, rose 17%, the company said, led by growth at the Louis Vuitton brand. Indeed to cope with increased demand, Vuitton may hire as many as 700 leather workers this year The company recently expanded its Louis Vuitton production sites with a new facility in France.
The LVMH watch division–which had suffered during the crisis when retailers destocked–grew 28% to 261 million euros. The division’s performance, along with that of the wine and spirits business, reflected a “confirmed return in client demand,” the company said, suggesting that growth results from consumer demand, not just from retailers replenishing inventory levels.
Perfume and cosmetics sales increased the lowest, advancing 9%. Revenue at the selective-retailing unit, which includes Sephora and DFS, rose 20%.
Bulgari Acquisition to Close in June
LVMH said today that expects to overcome regulatory hurdles to its 4.3 billion euro acquisition of Bulgari in May or June and consolidate Bulgari’s finances in its accounts on either June 1 or July 1.
LVMH, which has also built up a 20.2% stake in Hermes International, will double the size of its watch and jewelry unit with the Bulgari acquisition.
Meanwhile, Bulgari SpA reported Monday a 27.5% rise in first quarter revenue to 253.8 million euros as sales surged in Asia, particularly China. In a statement, Bulgari said that by category, jewelry sales rose 29.3%, while watch sales rose 21.9%. Geographically, sales in Asia rose 33.5%, as Greater China, Bulgari’s largest single market, jumped 76%.
Bulgari reported its first quarter sales earlier than expected, saying that it wanted “align” itself with LVMH.
Burberry Forecast Strong Profits as Sales Rise
London–Burberry Group Plc said today it expects full-year pre-tax profit to be at the top end of market expectations after booking a bumper end to its financial year.
The company is also planning to increase its retail selling space by 12% to 13% in the year ahead, after revenues rose 32% to 390 million pounds (about $635.7 million) in the three months ended March 31 helped by strong sales of its Prorsum and Burberry London lines.
“Burberry had a strong finish to the year, driven by our design, digital marketing and retail initiatives, as well as good early progress in China,” said Angela Ahrendts, ceo. “
While the luxury industry faces global challenges in the year ahead, we remain confident in our team’s ability to outperform, underpinned by the consistent execution of our key strategies.”
China Market on the Rise
In the second half of its financial year, the luxury house reported total revenues of 860 million pounds, up 30% on an underlying basis (calculated at constant exchange rates). Retail revenues were up 42% to 596 million pounds, with same-store sales rising by 13%.
In China, where Burberry has taken over the operations of its former franchisee, around 30% comp growth was achieved. And the rest of Asia Pacific continues to put in a consistently strong performance, with double-digit growth led by Hong Kong and Taiwan.
Wholesale revenue was up 14% at constant exchange rates to 214 million pounds, helped by a rise in in-season orders and higher fulfillment rates. And total licensing revenue in the second half fell by 5% on an underlying basis to 50 million pounds, in line with guidance as two product licenses came to an end.
Burberry also raised its annual earnings guidance. Stacey Cartwright, chief financial officer, said adjusted pretax profit this year would be at the top end of estimates, between 279 million pounds and 300 million pounds. In January, she said the range was 250 million pounds to 290 million pounds.
Burberry said its businesses in the Americas and Asia Pacific outperformed expectations and added it is looking to build its presence in Latin America and the Middle East.
Burberry is planning to add 20 to 25 stores with a bias towards China, Latin America and the Middle East. The 50 stores it acquired in China will also add about 12% to average selling space in the first half of the year.