PARIS — Luxury behemoth LVMH Moët Hennessy Louis Vuitton powered through the third quarter, with sales advancing 4.9 percent to 3.08 billion euros, or $3.76 billion.
Excluding the impact of currency exchange, organic growth stood at 10 percent, headlined by double-digit gains at cash cow Louis Vuitton and a continued rebound at its selective retail and watch and jewelry divisions.
The results were in line with analysts’ expectations and underscore a strong run for luxury firms this year, despite tough comps leading into the critical holiday selling period.
Citing a gradual improvement in tourism in October and robust economies in the U.S. and Asia, LVMH said it “expects this momentum to extend through the fourth quarter.” It also reiterated its objective of a “significant” increase in operating income for 2004.
“We are very optimistic for the rest of the year and in our businesses for the year to come,” chief financial officer Jean-Jacques Guiony stressed during a conference call on Thursday.
Pressed by analysts for more information on Louis Vuitton’s performance and prospects, Guiony cited flat sales for the brand in Japan, and acknowledged that sales were slowing in the U.S.
“We don’t expect Vuitton to [continue growing] at 50 percent a year,” Guiony said, referring to figures in recent quarters in the U.S. However, he emphasized that sales of Vuitton to Japanese clients were still growing at double-digit levels, reflecting more sales outside of Japan, and that prospects in the U.S. remain promising. He described sales of Vuitton in the U.S. as growing at “very, very strong” double digits.
“There are no signs on the market that consumption patterns are changing,” Guiony said. “The market is still very strong and reacting strongly to all the novelties.”
LVMH cited particularly strong demand for Vuitton’s trompe l’oeil bags, which feature its famous monogram printed on jacquard velvet.
In a research note, HSBC luxury analyst Antoine Belge said market fears about the group’s leading brands are unfounded.
“Even if management does not want to commit itself to a target, we believe there is fairly high visibility on [Vuitton] achieving at least 10 percent organic sales in 2005,” he wrote.
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