LVMH Sales Up Despite Weakness in Asia

In What's New, Industry News by Jeff Prine

What happens when Christian Louboutin designs for Louis Vuitton's Monogram Collection: a Shopping Trolley. Retail: $23,000

What happens when Christian Louboutin designs for Louis Vuitton’s Monogram Collection: a Shopping Trolley. Retail: $23,000

Paris—LVMH, “the world’s biggest luxury group,” reported today that sales were up in its third quarter as business picked up in Europe and the United States which offset continued weakness in Asia.

For the three month ended Sept. 30, the parent to Louis Vuitton and Fendi, said comparable sales growth reached 4% in line with analysts’ expectations. This compared with 3% growth in the second quarter and 6% in the first.

Noting uncertain economic and financial environment, LVMH did not provide a full fiscal year target, nor did it provide organic growth rates by division.

The quarter “confirms a lukewarm trading environment, in which Chinese prudent, subdued consumer sentiment seems to be taking a toll on key divisions such as fashion and leather, and wine and spirits,” said Luca Solca, a luxury goods analyst at Exane BNP Paribas.

New LV Monogram: A Q4 Highlight

In its Fashion & Leathergoods division, sales were up 8% in the nine months to Sept. 30, compared to 4% increase in the first half.

LVMH claimed that Louis Vuitton “continued its strong momentum” thanks to the new creations by Nicolas Ghesquière. The new Monogram collection, interpreted by six well known designers, will “be one of the highlights of the fourth quarter.”

“Fendi and Céline made good progress and continued to expand their leathergoods and footwear collections while developing their store networks. Other brands, such as Givenchy, Berluti and Kenzo, continued to strengthen their positions.”

Like-for-like watch and jewelry sales were up 5%,“helped by strong trading at Bulgari.” LVMH said. Watches & Jewelrybusiness group recorded organic revenue growth of 5% for the first nine months of 2014.

Watches: Impacted by Cautious Consumers

“The third quarter showed a notable acceleration in the jewelry segment, driven notably by Bvlgari, while watches continued to be impacted by the cautious purchasing behavior of multi-brand retailers in an uncertain economic environment. The launch of the new watch for women Lvcea by Bvlgari and the success of Hublot’s iconic lines were the key highlights of the quarter.”

In the Wine & Spirits division, sales fell 3% in the first nine months against a 1% drop in the first half.

“This trend reflects the cognac market in China, where destocking by distributors continued, while Hennessy benefited from an excellent momentum in the United States,”

LVMH’s selective retailing business, which includes cosmetics retail chain Sephora and duty-free shops, had organic growth of 8 percent, down from 9 percent in the first half.

The group said the division benefited from sustained airport activity but that “certain tourist destinations suffered the repercussions of financial or geopolitical changes”.

On Tuesday, consultancy Bain & Co said it expected sales growth in the global luxury goods market to be steady next year at 2014 levels, or around 5 percent at constant exchange rate

 

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