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PARIS — Undented even by hurricanes, luxury’s smooth ride continues for LVMH Moët Hennessy Louis Vuitton, which reported a 12 percent organic rise in third-quarter sales to 3.43 billion euros, or $4.18 billion.
“We really expect the rest of the year will be in line with what we’ve seen,” finance director Jean-Jacques Guiony said during a conference call Tuesday. “The growth is coming from all directions.”
He characterized LVMH’s performance as “outstanding,” driven by double-digit gains for the cash-cow Louis Vuitton brand, a continued rebound in watches and jewelry and strong momentum across all geographic regions. The world’s largest luxury group also reiterated its target of a “significant” increase in operating profits for the year.
In the U.S., Guiony characterized third-quarter luxury sales as “robust,” citing an acceleration in Vuitton sales, even if its New Orleans location was wiped out by Hurricane Katrina.
“Katrina’s impact has been fairly limited in our business,” he said in reply to an analyst’s question. “The U.S. market is showing no signs of slowing down.”
Guiony cited strong growth for Fendi in the U.S., and good performances for Guerlain and Parfums Christian Dior, demonstrating the first benefits of a restructuring program.
Sales of watches and jewelry leaped 25 percent in the first nine months in the U.S., with selective retailing up 18 percent, led by Sephora and sephora.com.
The only blot Guiony spied on the U.S. market was champagne sales, which were “a little soft” in the third quarter owing to lighter deliveries of Dom Perignon, which should intensify in the run-up to the crucial holiday selling season.
Guiony would not give specific projections for the fourth quarter. Analysts tried to get at the question by asking him to quantify the increase in floor space for Vuitton during the period, which he pegged at 10 to 15 percent.
To be sure, LVMH said it expects its new Vuitton flagship on the Champs-Elysées, which opened to the public last week at the climax of Paris Fashion Week, to have a widespread impact on the recognition of the brand and its sales on a global scale. LVMH noted sales of denim handbags are among products driving Vuitton’s business. Only Japan fell a few percentages short of double-digit gains in the quarter.
This story first appeared in the October 19, 2005 issue of WWD. Subscribe Today.
Fendi received repeated mentions, with LVMH hailing Karl Lagerfeld’s recent collection shown on the Milan runway and trumpeting double-digit sales growth in the nine months.
Guiony said the “signs are fairly encouraging,” although he allowed that ready-to-wear is “still lagging behind” and is “not a major part of the Fendi business.”
LVMH also highlighted strong sales performance at Marc Jacobs, Loewe and Emilio Pucci, which just welcomed a new designer, Matthew Williamson. He replaced Christian Lacroix.
Asked about Donna Karan, Guiony described third-quarter sales as “flat,” and noted that further reductions in the outlet channel dented strength in retail, licensing and the DKNY line. He called sales of the Donna Karan collection “quite weak” and cited delivery problems for fall.
Kenzo is another problem child for the group, with Guiony citing a “negative” quarter for the brand in sales and profits. He said designer Antonio Marras has “a lot of work” ahead. “We have to convert Antonio’s ideas into salable products,” he added.
In the nine months, group sales rose 11 percent to 9.59 billion euros, or $12.13 billion. Fashion and leather goods sales rose 9 percent to 3.38 billion euros, or $4.28 billion, with perfumes and cosmetics also up 9 percent to 1.62 billion euros, or $2.04 billion. The company said Miss Dior Cherie and Dior Homme fragrances drove revenues, along with KissKiss lipstick by Guerlain and Irresistible Pour Homme by Givenchy.
Wines and spirits advanced 16 percent to 1.68 billion euros, or $2.13 billion; watches and jewelry were up 13 percent to 403 million euros, or $509.5 million, and selective retailing up 12 percent to 2.55 billion euros, or $3.23 billion.
All currency conversions were made at average exchange rates for the respective periods.
The results were announced after the markets closed. Shares in LVMH finished trading down 0.7 percent to close at 68.25 euros, or $82.24, on the Paris Bourse.
Separately on Tuesday, Christian Dior SA, parent of LVMH and the Dior fashion house, reported nine-month sales largely in line with the LVMH figures: up 12 percent to 10.06 billion euros, or $12.72 billion.
In a release, the Dior house said third-quarter sales totaled 179 million euros, or $218.47 million, a 14 percent gain at constant exchange. The firm cited strength across all product categories.