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LVMH Moët Hennessy Louis Vuitton said Monday that revenues for the first quarter rose 5.5 percent, a steep slowdown from the previous year and perhaps an indication that the slowdown in luxury in China as well as continued economic volatility in Europe are beginning to hit the world’s leading brands.
The French luxury company reported sales totaling 6.95 billion euros, or $9.17 billion, during the quarter versus 6.58 billion euros, or $8.62 billion, in the year-ago period. In the first quarter of 2012, sales leaped 25 percent, momentum that was maintained through the second quarter of last year. But in the second half, sales growth began to slow, falling to 10 percent or less in each of the final two quarters of the year.
Dollar figures are converted from euros at average exchange rates for the periods to which they refer.
In organic terms, revenue growth in the first quarter amounted to 7 percent, compared with the same period a year ago, indicating the impact of currencies. LVMH chairman and chief executive officer Bernard Arnault had earlier warned the strong euro might begin to dent growth.
Sales of fashion and leather goods rose 0.4 percent to 2.38 billion euros, or $3.15 billion, helped by Louis Vuitton, Fendi and Céline. Perfume and cosmetics got a boost from Dior’s J’adore, Miss Dior and Dior Homme lines, pushing sales up 3.7 percent to 932 million euros, or $1.23 billion.
The conglomerate’s watches and jewelry business suffered a slight 1 percent dip, as sales totaled 624 million, or $823.7 million.
The owner of brands including Bulgari, Givenchy, Dom Perignon and Guerlain said its performance in the watches and jewelry category was linked to “prudent buying” by multibrand retailers. It also could stem from the impact of the Chinese government’s crackdown on luxury and gift-giving.
The tepid results in watches and jewelry were offset by 16.4 percent growth in the selective retailing segment, which includes business from Sephora. Revenue for this segment amounted to 2.12 billion euros, or $2.80 billion.
According to LVMH, Sephora “gained market share in all its regions and continued to expand on its global store network,” helped specifically by the opening of its Shanghai store, which is one of its largest doors in China.
The company also pointed to a continued uptick in demand from Asian tourists, despite a decline in spending from Japanese tourists, who were impacted by the weaker yen.
“In an economic environment, which remains uncertain in Europe, LVMH will continue to focus its efforts on developing its brands, will maintain a strict control over costs and will target its investments on the quality, the excellence and the innovation of its products and their distribution,” said Arnault. “The group will rely on the talent and the motivation of its teams, the diversification of its businesses and the good geographical balance of its revenues to increase, once again in 2013, its leadership of the global, high-quality goods market.”
LVMH released the sales results after stock markets closed in Europe. It is due to have a conference call today to discuss the results.