Fashion, Leathergoods Push LVMH into Stronger Q1 Sales

In Industry News, What's New by Jeff Prine

The Louis Vuitton Fall/Winter 2014-2015 Women's Collection created by Nicolas Ghesquière. (Photo: Juergen Teller)

The Louis Vuitton Fall/Winter 2014-2015 Women’s Collection created by Nicolas Ghesquière. (Photo: Juergen Teller)

Paris—LVMH, the world’s largest luxurygoods conglomerate, said today that its first quarter sales rose 4% buoyed by its fastest fashion and leathergoods revenue growth since 2012 that offset an unexpected decline in its wine and spirits divison.

Total revenue rose to 7.21 billion euros (about $9.95 billion). Excluding currency fluctuation and acquisitions, such as Loro Piana, sales would have grown 6%. Still the results were just shy of analysts’ estimate for 7.4 billion euros.

New Louis Vuitton ‘Successful’

While LVMH’s Wines & Spirits division reported a 3% decline hit by the Chinese’s crackdown on luxury spending for cognac and other liquors, the fashion and leathergoods division posted a 9% increase on an organic basic, the fastest start of a new year since 2012; first quarter 2013 saw a 3% increase. That was also ahead of analysts’ forecast for a 6% increase.

Louis Vuitton was particularly strong, LVMH said, due mostly to “strong creative creative momentum” poised at the first show of its new artistic director, Nicolas Ghesquière.

“New models in the iconic Monogram line were very successful, while the leather lines continue their development. Other fashion brands continue to grow. The quarter was marked by the opening of flagship stores in Munich for Fendi and in London for Céline. Loro Piana, whose activity is consolidated for the first time this quarter, delivered a remarkable performance,” the company said.

The Watches & Jewelry group recorded organic revenue growth of 5%, helped by sales at company-owned boutiques. “The numerous innovations at TAG Heuer, Hublot and Zenith presented at the World Watch and Jewelry Show in Basel, received a warm welcome from distributors,” LVMH said.

In Perfumes & Cosmetics, organic revenue growth was 5% in the first quarter. Christian Dior continued to benefit from the excellent dynamics of its iconic perfumes J’adore and Miss Dior. Make-up also contributed to the good performance of the Maison. Guerlain successfully rolled out its high-end skincare range, Abeille Royale, in Asia. La Petite Robe Noire fragrance goes from success to success. Benefit continued its rapid progress around the world, supported by its innovative product lines, and Fresh expanded rapidly.

In Selective Retailing, organic revenue growth rose 10%. DFS performed well, supported by the ongoing development of tourism in Asia, despite a drop in spending by Japanese tourists due to the weakness of the yen. “Macao and Hong Kong destinations recorded strong gains, notably thanks to the excellent start to the year of the Hong Kong International airport concessions,” LVMH said. “Sephora continues to gain market share in all regions. Its progress is particularly rapid in Asia, the Middle East as well as North America, where online sales grew strongly.”

Given “an economic environment which remains uncertain in Europe,” LVMH said it will focus efforts on developing its brands, maintaining a strict control over costs and will “target its investments on the quality, excellence and the innovation” of products.