By  on October 18, 2006

PARIS — Mini monogram handbags were popular items in the third quarter, but did not quite translate into big enough sales gains for LVMH Moët Hennessy Louis Vuitton.

Due to shortfalls in its wines and spirits division, the French luxury goods giant missed analysts' expectations in reporting a 6.8 percent rise in third-quarter sales to 3.66 billion euros, or $4.66 billion at average exchange rates for the period.

Still, the company trumpeted double-digit organic sales growth in the three months ended Sept. 30, and good momentum in key geographic zones.

"The U.S. market continues to be a strong contributor to our growth," Jean-Jacques Guiony, LVMH's finance director, told analysts during a conference call on Tuesday. "All businesses are in line or better than in the first half of the year."

In dollar terms, group sales rose 11 percent on the mainland U.S., with watches and jewelry rocketing 27 percent and perfumes and cosmetics up 13 percent.

Europe and Asia were also standout markets, despite reduced spending by Japanese tourists due to a weaker yen. For the nine months, group revenues in euros leapt 17 percent in Asia and 12 percent in Europe.

During the call, Guiony highlighted the "ongoing success" of the cash-cow Vuitton brand, and the "underlying strength" of LVMH's wines and spirits business, whose third-quarter sales were dented partly by timing issues, including an autumn festival in China that falls later on the calendar in 2006 than it did last year.

The firm, citing a "well-oriented economic environment," reiterated its objective of a "very significant" increase in profits for the full year.

Still, some analysts detected a marginal deceleration. The numbers also suggest European luxury firms, which have been on a roll, could see momentum slow in the second half due to the strong euro, which puts a crimp in sales reported from dollar and yen regions.

Pummeled with questions about the wines and spirits division, Guiony stressed that its sales per quarter are difficult to assess. "Don't make three months a trend," he said, also noting restrictions on carry-on liquids on aircrafts had "no meaningful impact" on duty-free liquor sales.

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