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PARIS — Leather goods and timepieces are taking a backseat to duty-free stores and perfumeries at LVMH Moët Hennessy Louis Vuitton.
This story first appeared in the October 16, 2013 issue of WWD. Subscribe Today.
The French luxury goods giant said third-quarter revenues rose 1.7 percent to 7.02 billion euros, or $9.3 billion, with selective retailing the only business unit logging a double-digit gain, up 12.8 percent.
The sales tally for the three months ended Sept. 30 came below consensus expectations and represents a slowdown from the first and second quarters, when sales gained 5.5 percent and 5.7 percent, respectively.
Still, LVMH said it remains “confident for 2013” despite an “uncertain” economic environment in Europe.
The company gave no specific guidance for the full year other than to “further extend… its global leadership in the luxury market.”
Stripping out the impact of currency fluctuations and acquisitions, the third-quarter gain stood at 8 percent, LVMH said, noting that only the wines and spirits and watches and jewelry divisions saw growth accelerate from the first half.
Reporting results after the closing of trading in Paris on Tuesday evening and ahead of a conference call this morning, the company said Europe demonstrated “good resilience” in the third quarter, while the U.S. and Asia continued to record strong growth.
For the first nine months of the year, revenues gained 4.3 percent to 20.72 billion euros, or $27.28 billion, propelled by selective retailing, up 15.8 percent. LVMH cited an “excellent performance” of DFS Gallerias in Macau and Hong Kong, and rapid growth for Sephora in the U.S., Asia and online.
Sales in the nine months gained 2.7 percent in wines and spirits, reflecting a rebound for Champagne, and 2.2 percent in perfume and cosmetics. Revenues slipped 2.3 percent for watches and jewelry and 0.6 percent for fashion and leather goods.
The latter figure suggests flagging sales for the cash-cow Louis Vuitton brand amidst an upscaling drive and a forthcoming change in creative direction. Longtime artistic director Marc Jacobs said earlier this month that he would step down from Vuitton to concentrate on his signature brand and pursue an initial public offering.
Vuitton has yet to name Jacobs’ successor. According to market sources, former Balenciaga designer Nicolas Ghesquière remains the frontrunner.
On Tuesday, LVMH said Vuitton “continues to implement its strategy of very high product quality and distribution excellence,” alluding to its shift away from logo handbags and rapid store expansion.
“LVMH management always said the upmarket repositioning of the LV brand would take 18 months, but given the easier basis of comparison (in Q3), these figures are disappointing,” HSBC analysts Antoine Belge and Erwan Rambourg wrote in a research note. “Some investors and brokers got recently carried away by channel checks indicating that some new LV products were on ‘waiting lists,’ which was true and encouraging for the future, but not meaningful short-term for a brand selling (around) 4 million handbags a year.”
LVMH mentioned that Céline “showed excellent momentum, supported by its leather goods and shoe lines” and that Fendi continued to focus on fur and leather goods. “Other brands continued their development,” the company added.
According to calculations made by WWD, revenues in the fashion and leather goods division slipped 3.8 percent in the third quarter to 2.43 billion euros, or $3.22 billion.
The division posted sales growth of 2 percent in the second quarter, and 0.4 percent in the first three months of the year, as reported.
Dollar figures are converted from euros at average exchange rates for the periods in question.