By  on October 16, 2007

PARIS — Crisis? What crisis?

Suggesting luxury has been unruffled by recent financial turbulence, LVMH Moët Hennessy Louis Vuitton said sales accelerated in the third quarter, gaining 10.3 percent to total 4.03 billion euros, or $5.54 billion, versus 3.66 billion euros, or $4.67 billion, a year ago.

The world's biggest luxury group beat forecasts and posted double-digit organic gains across all business groups, trumpeting the "stellar" performance of Louis Vuitton and Hennessy cognac in the three months ended Sept. 30.

"I'm very pleased with the figures and they show both the strength of our brands and the underlying strength of the markets," Jean-Jacques Guiony, LVMH's finance director, said during a conference call on Monday.

Stripping out the impact of currency, which shaved five points off totals, the increase in the quarter stood at 15 percent, fueled by strong gains in Asia, the U.S. and improvements in Japan.

Guiony also cautioned against reading too much into Japan's improvements. "I think we have to remain cautious at this stage, even if we are experiencing some comeback in this market," he said.

"This clearly illustrates our view that consumer demand for luxury goods on average has been unaffected by the recent credit and real estate turmoil," Goldman Sachs analyst Jacques-Franck Dossin wrote in a research note, declaring the three-month period LVMH's best quarterly performance in two years.

Analysts also applauded the continued rebound in Japan. "We view this as great news given the overwhelming importance of Japanese purchases for the sector," Dossin wrote.

Despite the strong showing, especially for high-margin businesses like leather goods and liquors, LVMH did not ramp up its earnings guidance, reiterating its objective of a "significant increase" in results for the full year. During the call, Guiony balked at suggestions LVMH was being cautious. "We are simply realistic," he said. "The businesses are pretty strong, but the currencies are not particularly favorable."

Asia in particular is "booming," he said, citing an increase "in excess of 50 percent" for Vuitton in China in the first nine months of the year. In euro terms, sales in Asia vaulted 14 percent in the nine months, with a 20 percent gain in fashion and leather goods and a 22 percent rise in wines and spirits.

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