By  on October 14, 2010

PARIS — Reflecting the keen appetite of upscale consumers worldwide and the strength of its Louis Vuitton brand, LVMH Moët Hennessy Louis Vuitton saw its third-quarter sales increase 23.6 percent to 5.11 billion euros, or $6.59 billion, from 4.14 billion, or $5.34 billion, a year ago.

Stripping out the impact of currency, revenue growth for the French luxury goods giant stood at 14 percent, reflecting “very strong” momentum in Asia, Europe and America.

The Vuitton brand logged double-digit growth, propelling the fashion and leather goods division — also comprising labels including Givenchy, Loewe and Marc Jacobs — to a 25.8 percent sales gain in the quarter. The division’s sales totaled 1.95 billion euros, or $2.51 billion.

Dollar figures are converted from euros at average exchange rates for the periods to which they refer.

The strong numbers surpassed market expectations and confirm the luxury sector’s rebound ahead of the pivotal holiday selling period. LVMH said its third-quarter numbers “confirmed the trends observed since the start of the year.”

Indeed, Vuitton has been shutting its Champs-Elysées flagship here one hour earlier each day in order to prevent stock depletions ahead of the Christmas rush. Also, in recent weeks, Vuitton implemented an average price increase of 9 percent in the Eurozone.

“Louis Vuitton appears to be the most defensive brand in the industry,” Citigroup analyst Thomas Chauvet lauded in a research note, estimating it accounts for more than half of the group’s profits. “LVMH is less cyclical than commonly perceived.”

Its more cyclical business, such as Champagne, watches, DFS and cognac, account for just over 30 percent of consolidated earnings before interest and taxes, he noted.

Chauvet also pointed out that the LVMH numbers point to “global luxury demand,” not just in fast-growing Asia and other emerging markets. For the nine months, sales in local currencies advanced 20 percent in Asia, 15 percent in the U.S. and 13 percent in Europe. Japan sales receded 6 percent.

However, during a conference call, chief financial officer Jean-Jacques Guiony warned that volatile currencies and tough comps could impact LVMH’s performance in the fourth quarter.

“We feel more optimistic than cautious, but we shall know more by the end of the year,” he said.

LVMH’s business in Europe accelerated in the third quarter, reflecting robust tourism on the continent. He estimated sales growth among foreigners shopping at Vuitton boutiques was double that of its local European clientele.

By contrast, the luxury group’s U.S. business slowed in the third quarter, mostly due to caution among distributors of wines and spirits in September.

Still, he stopped short of voicing any pessimism for the region. “In terms of the overall business environment, we don’t see any signs of slowing down, or any major signs of concern in the U.S. market,” Guiony said.

As for Japan, he noted, “We have no reason to expect a big upswing in the near future.”

LVMH logged double-digit revenue gains across all business units. Sellers of timepieces and high-end liquors, which saw demand wilt last year, have been restocking depleted inventories to meet rising demand.

In the nine months ended Sept. 30, sales gained 29 percent for watches and jewelry; 22 percent for wines and spirits; 20 percent for fashion and leather goods; 17 percent for selective retailing, and 14 percent for perfumes and cosmetics. The group’s sales totaled 14.21 billion, or $18.71 billion, in the nine months.

LVMH said demand for Hennessy cognac accelerated in Asia in the third quarter.

In fashion and leather goods, LVMH cited exceptional growth at Vuitton with its core Monogram and Damier leather goods lines, and a return to “strong momentum” for Fendi and Donna Karan.

Peppered by questions about production shortfalls at Vuitton, Guiony said the brand would increase capacity by about 10 percent next year when it opens its 12th leather goods workshop in France. “We don’t expect this to be an issue in 2011,” he stressed.

In perfumes and cosmetics, LVMH trumpeted “remarkable” success for Christian Dior perfumes and lipstick, and highlighted key launches, including Guerlain’s new skin care range, Abeille Royale, and Givenchy’s new women’s scent, Play.

The company gave no concrete sales or earnings guidance for the year, reiterating its “confidence for 2010” and its goal of strengthening its leadership position in luxury goods.

Shares in LVMH rose 0.5 percent Thursday to close at 111.45 euros, or $155.62 at current exchange, on the Paris Bourse.

Separately on Thursday, Christian Dior SA, parent of LVMH and Christian Dior Couture, reported figures roughly in line with LVMH.

The Dior fashion house reported its third-quarter sales gained 28 percent, reflecting “sustained growth momentum” of its retail activities across all regions. For the nine months, revenues increased 15 percent to 594 million euros, or $782.3 million, compared to the year-ago period.

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