PARIS — After reporting a deceleration in its third-quarter sales versus the first half, LVMH Moët Hennessy Louis Vuitton took pains to allay fears of a major slowdown at Louis Vuitton, its cash cow.
This story first appeared in the October 17, 2012 issue of WWD. Subscribe Today.
“Our third-quarter figures reflected a tougher environment and I will not deny it,” Jean-Jacques Guiony, LVMH’s chief financial officer, told a conference call on Tuesday. He blamed record levels of Chinese and Japanese tourism in the year-ago quarter for creating onerous comps.
“We are relatively confident for the near future,” he stressed. “One shouldn’t see the glass half empty, in my view.”
He noted that Vuitton raised prices in Europe by 8 percent on Oct. 1, primarily to address a price discrepancy that has been driving Asians to make purchases on the Continent.
Guiony’s assurances helped shares in LVMH close up 3.6 percent to close at 128.25 euros, or $174.38 at current exchange, on the Paris Bourse.
Citing a “mixed business environment,” LVMH on Monday said sales advanced 14.8 percent in the third quarter to 6.9 billion euros, or $8.63 billion, versus 6.01 billion euros, or $8.51 billion, in the year-ago period, as reported.
In organic terms, revenue growth stood at 6 percent in the third quarter, versus 10 percent in the second quarter and 14 percent in the first three months of the year.
On Tuesday, LVMH provided additional data that underscored contrasting business in various regions.
In the first nine months, revenues in local currencies advanced 7 percent in Japan and Europe, 11 percent in Asia and 12 percent in the U.S., excluding Hawaii.
Business in Asia was varied, with sales of wines and spirits advancing 24 percent versus only 5 percent for fashion and leather goods.
Regarding the latter division, Guiony blamed modest organic growth of 5 percent in the third quarter to weakness on the wholesale side of the business, some of it deliberate as brands including Bulgari, Celine, Chaumet, Tag Heuer and Fendi pursue a more selective distribution policy. He stressed there was “no major slowdown” at Vuitton in the third quarter, with European growth slightly higher than the second-quarter and Asia slightly lower due to tourist flows.
Gains of 14 percent in Asia for perfumes and cosmetics point to the fact that “the appetite for luxury goods is there,” he added.
Guiony declined to give any forecast for the crucial holiday sales period, but noted, “The comparative basis will be quite tough in Q4 as well.”