LVMH shrugs off China concerns in boon to luxury peers

PARIS: LVMH posted robust results for the first half of the year and said Chinese shoppers were still lapping up goods at its major brands like Louis Vuitton, easing fears of waning demand in the luxury industry’s biggest market.

A brewing trade spat between Washington and Beijing, which hit stocks and the yuan, has raised concerns of a trickle-down effect on China’s economy and on luxury purchases even though tit-for-tat tariff hikes have not directly hit the sector.

Chinese consumers’ appetite for branded goods appears to have largely weathered the dispute so far, however, in an encouraging sign for LVMH rivals like Paris-based conglomerate Kering, owner of Gucci.

At LVMH’s powerhouse Louis Vuitton – which ranks alongside independent label Chanel as one of the world’s top luxury labels by sales – Chinese demand was even slightly stronger in the second quarter compared with the first three months of the year, financial director Jean-Jacques Guiony said.

“The threats... are there but I don’t think they have materialised yet in any way,” Guiony told a conference call with analysts, re-

The threats... are there but I don’t think they have materialised yet in any way. Jean-Jacques Guiony, financial director

ferring to currency volatility and the fallout from trade tensions.

Guiony sounded a note of caution for the remainder of 2018, however, when comparison bases for earnings will be tougher and underlying trends – as well as the context on trade tariffs – could change.

And across the group as a whole, revenue growth in Asia excluding Japan dropped to 15 per cent in the second quarter on a like-for-like basis, which strips out currency swings, from 21 per cent in the first quarter.

“Although the luxury industry is not on the frontline on this, such a risk would certainly bear some negative consequences for us,” Guiony said of tariff hikes.

France’s Hermes, known for its luxury leather handbags, last week said Chinese demand had remained solid, a trend also noted by British trench coat maker Burberry. — Reuters