By  on April 21, 2006

PARIS — LVMH Moet Hennessy Louis Vuitton continues to shine as first-quarter sales vaulted 15 percent, thanks to lusty demand for champagne, status handbags and antiwrinkle creams.

Touting particular strength in the U.S. and Asia, the French luxury giant said sales for the three months ended March 31 reached 3.56 billion euros, or $4.27 billion. In organic terms, the increase stood at 12 percent, reflecting a more favorable currency environment.

"All lights remain green," an upbeat Jean-Jacques Guiony, LVMH's finance director, told analysts during a conference call on Thursday. "All businesses and all regions witnessed an acceleration of their organic growth."

The most profitable divisions led in the gains: Wines and spirits were up 23 percent to 632 million euros, or $760 million; watches and jewelry improved 23 percent to 150 million euros, or $180.4 million, and fashion and leather goods advanced 14 percent to 1.29 billion euros, or $1.56 billion. Dollar figures are calculated at average exchange rates for the respective periods.

Sales of perfumes and cosmetics leaped 18 percent to 597 million euros, or $717.9 million, with LVMH citing the "extraordinary" success of Dior's Capture Totale skin care and makeup, and good momentum at Guerlain, Parfums Givenchy and BeneFit.

The results beat analysts' expectations, and the bullish outlook sent shares of LVMH up 2.1 percent Thursday to close at 83.60 euros, or $103.49, on the Paris Bourse.

"The main drivers for future growth in the luxury goods sector seem on track," Goldman Sachs analyst Jacques-Franck Dossin commented in a research note. "These results represented a substantial acceleration in sales growth versus [the fourth quarter]."

Encouraged by the solid numbers, LVMH reiterated its objective of "very significant" growth in operating results for 2006.

In the first quarter, cash cow Louis Vuitton posted double-digit organic growth in all markets except Japan, which logged a high-single-digit gain that was above the rise in the fourth quarter of 2005. LVMH said Vuitton's first suede bags, and monogram styles in perforated or glossy raspberry-colored leather, helped drive momentum worldwide.

LVMH also trumpeted double-digit gains at Fendi, led by the continued success of its Spy handbag and strong sales of the new B. Fendi range, which includes bags, shoes and ready-to-wear. "We are very proud of the turnaround of the brand," Guiony said.Marc Jacobs, Pucci, Berluti and Loewe brands were singled out for "good momentum." But Guiony sidestepped efforts by analysts to pinpoint progress at Celine, Givenchy and Donna Karan.

He would say only that Karan was negatively affected by store closings and the discontinuations of some businesses. "All in all, it's going according to our plans and we expect to get more growth in the months and years to come," he said.

Although LVMH characterized the first quarter as a small one by its standards, sales galloped ahead in Asia; revenues (in euros) of wines and spirits were up 35 percent; of perfumes and cosmetics, 34 percent; of watches and jewelry, 23 percent, and of fashion and leather goods, 19 percent.

The U.S. was robust, too. Sales in dollars grew 27 percent for perfumes and cosmetics, 18 percent for watches and jewelry, 9 percent for fashion and leather goods, and 11 percent for selective retailing, boosted by the "outstanding" performance of Sephora. Demand across Europe and Japan continued to rebound.

Selective retail, where sales rose 9 percent to 895 million euros, or $1.08 billion, was one of the only blotches analysts spotted in the glittering numbers. The DFS Group experienced some difficulties in Guam, Hawaii and Saipan, largely due to a weak yen and external factors such as limited hotel capacity in Hawaii. But LVMH trumpeted the increasing number of Chinese tourists, and noted that the new DFS Galleria Okinawa was picking up some of the slack in Japanese tourism.

During the call, several analysts sought more details about Sephora's plans to open departments in J.C. Penney, but Guiony said they would have to wait until yearend for LVMH to assess the potential. However, he said investment in the project likely would have "no major impact on margins" and that the high visibility of the Sephora corners would lead to quick profitability.

Separately, on Thursday, Christian Dior SA, parent of LVMH and the Christian Dior fashion house, released first-quarter sales largely in line with those of LVMH.

At Christian Dior Couture, sales rose 13 percent to 165 million euros, or $198.4 million. Dior said all geographic regions contributed to the increase, and its new Gaucho range of leather goods was among the star products.

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