By and  on October 9, 2008

PARIS — LVMH Moët Hennessy Louis Vuitton said “remarkable” sales at its workhorse Louis Vuitton brand helped lift revenues in the third quarter despite the turmoil engulfing financial markets.

Nonetheless, the reported 6 percent organic revenue growth in the three months through September was well below the 15 percent organic growth LVMH reported in the same quarter last year.

The positive results underscore the resilience of the European luxury sector, even as share prices continue to tumble and analysts warn of a looming economic pinch over the holiday selling period.

The French luxury group, owner of brands from Fendi to Dom Perignon, did not provide a breakdown of sales for the third quarter alone. It said sales in the nine-month period gained 4.5 percent to 11.96 billion euros, or $17.94 billion.

Based on calculations, sales in the three months improved 3 percent to 4.16 billion euros, or $6.24 billion, from 4.03 billion euros, or $6.05 billion, last year, broadly in line with analysts’ expectations. Dollar figures are converted at average exchange rates.

LVMH called the performance “even more noteworthy in view of the high comparative figures seen in the third quarter.” The firm confirmed its goal for “a tangible increase in results in 2008.”

The luxury group, which will host a conference call to discuss the results today, said Vuitton scored double-digit organic growth in the period thanks to strong sales of its Damier Graphite and Monogram line, which LVMH said is “still enjoying exceptional momentum.”

The firm said accessories continued to “see strong progress” and that brands Fendi, Donna Karan, Marc Jacobs and Givenchy sold well in the period.

For the nine months through September, sales of fashion and leather goods improved 5 percent to 4.24 billion euros, or $6.36 billion. Sales of perfumes and cosmetics in the period grew 6 percent to 2.08 billion euros, or $3.12 billion, spurred by Dior Homme Sport men’s fragrance and the continued success of Dior’s Escale a Portofino scent. BeneFit and Guerlain performed equally well, LVMH said.

Watches and jewelry sales advanced 11 percent to 656 million euros, or $984 million, thanks to the move upmarket by the Tag Heuer brand. LVMH said Hublot grew strongly in all regions and that the Zenith brand recorded “particularly strong growth in the Middle East.”

“De Beers saw a high level of growth in revenue, including in the U.S.,” the company added.

Sales of wines and spirits declined 2 percent to 2.04 billion euros, or $3.06 billion. LVMH highlighted strong growth in emerging markets, particularly China and Russia, but “a more contrasting situation” in the rest of the world.

In the selective retailing branch, sales in the nine months grew 5 percent to 3.01 billion euros, or $4.5 billion, thanks to growth in China, Macau and Abu Dhabi.

LVMH released the figures after the close of the market. The French firm’s shares closed down 1.8 percent to 51.03 euros, or $69.40. LVMH’s stock was trading above 70 euros, or $95, in early September.

Other French luxury and retail firms also continued to slide Thursday. PPR shares closed down 4.5 percent to 47.96 euros, or $65.22, while Carrefour SA shares fell 3 percent to 28.11 euros, or $38.23. Shares in Hermès International fell 3.5 percent to 98.55 euros, or $134.02.

Meanwhile, Italy followed the U.K. and Spain Thursday in offering funds to prop up its banks, where necessary. But despite government vows to prevent any lender from failing, the S&P/MIB Index continued to fall, losing 1.8 percent. The bailout pledge offered little respite for Italian luxury stocks — with only IT Holding and Safilo making up significant ground — as the overall pessimism in the Italian economy continued.

Debt-laded IT Holding SpA recovered 6.4 percent to 0.24 euros, or 33 cents at current exchange, after losing 14 percent on Wednesday. Eyewear manufacturer Safilo Group SpA gained 6.3 percent to 0.65 euros, or 88 cents. Despite the government assurances, Bulgari SpA declined for the seventh day, falling 6 percent to 4.78 euros, or $6.52.

Swiss bank Vontobel said in a report: “European luxury goods companies underwent a partial correction from their negative performance since the beginning of the year thanks to solid first-half results. However, share prices have tumbled since the beginning of September due to the growing uncertainty regarding consumer confidence. We assume that nine-month sales figures will remain solid but that the economic pinch will be felt this Christmas season.”

The bank also assumed the financial crisis and the related weakening in consumer sentiment will continue to impact the fashion and luxury goods sector next year.

“Our assumptions are now based on zero growth in the U.S., Europe and Japan. For Asia, excluding Japan, we expect growth of about 10 percent,” Vontobel analysts Rene Weber and Claudia Lenz wrote.

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