Despite China Worries, LVMH Steams Ahead
Sales of fashion and leather goods advanced 14 percent in organic terms in the third quarter and the group reaffirmed its outlook.
PARIS — LVMH Moët Hennessy Louis Vuitton posted a solid performance in the third quarter, led by its key fashion and leather goods division, against a backdrop of persistent concerns over a slowdown in China, which accounts for roughly one-third of the world’s luxury sales.
The parent of brands including Louis Vuitton, Dior, Guerlain and Bulgari said revenues rose 10 percent to 11.38 billion euros in the third quarter. This represented organic growth of 10 percent, versus the 11 percent progression recorded in the second quarter.
The world’s largest luxury group kept its outlook unchanged. “In an uncertain geopolitical and monetary context, LVMH will continue to be vigilant,” it said in a statement. “LVMH will rely on the power of its brands and the talent of its teams to further extend its global leadership in the luxury market in 2018.”
Sales of fashion and leather goods advanced 14 percent in organic terms in the third quarter. This compared with 13 percent organic revenue growth in the second quarter of this year and with a 14 percent increase in the third quarter of 2017.
The sector’s performance in the first nine months of the year was driven by Louis Vuitton, its largest and most profitable brand.
The group underlined the “excellent reception” of the last two women’s wear and men’s wear fashion shows, designed by Nicolas Ghesquière and Virgil Abloh, respectively. Vuitton recently launched a global fragrance campaign featuring Emma Stone, directed by Sam Mendes.
The brand said in May it had renewed Ghesquière’s contract as artistic director of women’s collections. In an appearance on the French television program “Quotidien” last week, Ghesquière said his new contract was for another five years and allowed him to launch his own brand – though he declined to provide any further details.
Christian Dior, consolidated since the second half of 2017, posted an “excellent” performance in the first nine months of the year, the group said. It added that the first runway show by Hedi Slimane for Celine, which polarized critics during Paris Fashion Week, “was a great success and created enormous resonance.”
Watches and jewelry recorded organic growth of 10 percent in the third quarter, while perfumes and cosmetics were up 11 percent. Selective retailing rose 5 percent, while revenues for wines and spirits grew by 7 percent.
The luxury goods sector is on alert for signs of a slowdown in demand from Chinese shoppers, amid tougher comparatives and ongoing uncertainties about trade tensions with the United States.
Shares of high-end brands fell sharply in Europe and Asia last week as Chinese officials stepped up efforts to crack down on daigou shoppers during the Golden
Week holiday, seen as a prime time for those intent on bringing home goods from abroad for resale. LVMH’s stock price ended the week down 6 percent.
Rogerio Fujimori, analyst at RBC Capital Markets, branded LVMH’s third-quarter results “reassuring,” noting that fashion and leather goods sales were ahead of consensus. “All in all, this was another strong quarter from LVMH, with fashion and leather goods standing out thanks to LV and Dior,” he said in a research note.
LVMH was scheduled to hold a conference call for analysts on Wednesday. Rival group Kering is due to publish third-quarter results after the market closes on Oct. 23, with Hermès International to follow on Nov. 7.
Looks from the Louis Vuitton spring show.