Model backstage, bag detailLouis Vuitton show, Backstage, Fall Winter 2019, Paris Fashion Week Men's, France - 17 Jan 2019

PARIS — Blowing past global anxiety about China, LVMH Moët Hennessy Louis Vuitton said the year has started off well and reported brisk fourth-quarter business led by fashion and leather goods — with no sign that Chinese appetite for Louis Vuitton products is on the wane.

“The year 2019 has begun well,” said Bernard Arnault, the luxury group’s chairman and chief executive officer, speaking to analysts and journalists at the company’s annual results presentation. Ever cautious, the executive noted that while he considers an economic crisis inevitable, he didn’t expect it to necessarily happen in Europe this year — or even next year.

The company’s figures painted a picture of resilience, offering reassurance to investors fretting about Chinese luxury consumption, with a 17 percent rise in organic growth of its fashion and leather goods activity — an acceleration that defied expectations — which spurred fourth-quarter sales to 13.7 billion euros.

It was a record year for LVMH, with profit from recurring operations for the full year hitting a milestone, jumping 21 percent to top the 10 billion euro mark and meeting analysts’ forecasts.

The figures come amid expectations of a slowdown in Chinese consumption and as trade tensions with the U.S. cast a cloud over the global economy. Chinese consumers account for the bulk of luxury goods purchases, and jittery investors are on the alert for any signs of weakening demand.

HSBC, which is pointing to a soft landing rather than a sharp deceleration, estimates the high-end goods sector will grow 6 percent in 2019, compared with 9 percent last year.

“When it comes to Chinese clients of Vuitton, there was no major change between the third and fourth quarters,” noted LVMH chief financial officer Jean-Jacques Guiony. He reminded the audience that he had already noted the third quarter continued along the same trend as previous months, if slightly lower.

“We had a very sustained business with the Chinese client over the fourth quarter at Vuitton,” he added, noting Chinese consumers were buying more in mainland China and a bit less in tourist markets. The performance at Dior fit a similar trend, he added.

Analysts seized on the strong performance of the fashion and leather division — the group’s largest activity — as likely contributing to a positive reaction from investors.

“The surprising organic growth acceleration for its largest and most profitable Fashion & Leather division suggests to us accelerating market share gains for [Louis Vuitton and] Dior, which should be enough to drive the shares higher tomorrow,” noted Rogerio Fujimori, analyst with RBC Europe.

Fielding questions about the division’s performance, Arnault lauded the popularity of LVMH products.

“What we see in the figures is the current appeal of our products and the fact that they are increasingly in demand, and that the Asian market, and China in particular, remains strong — we had growth in China that was an acceleration compared to the previous quarter,” he noted. “We are more constrained by production capacity, which doesn’t allow us to go faster,” the luxury titan added.

“We try to be always the most desired brand in the world. For example, at Vuitton we never do sales, we never do outlets,” he said, noting the work of designers Nicolas Ghesquière for women’s and Virgil Abloh for men’s.

At Dior, too, a goal for ceo Pietro Beccari is for it to be the most desired brand in its category, Arnault added.

The first two fashion shows at Celine under the direction of its new artistic director Hedi Slimane were an “incredible success,” Arnault added, and the label is on track to achieving revenue goals. The executive has said he expects the brand, under the current Slimane-led reboot, could reach 2 billion euros to 3 billion euros — and perhaps more — in annual revenue within five years.

“Here, too, we can’t go at a speed that is too fast for the capacity of the teams,” Arnault said, citing new store designs as among the vast projects under way at the label, which has just added a men’s line.

“The commercial success is there,” he said of the Celine label.

The executive was less expansive when asked about plans to build a new label with Rihanna, which was first reported by WWD.

“First of all, she’s an exceptional singer,” Arnault said coyly, noting he personally adored the artistic quality of her music.

Arnault added that the singing star’s work with Sephora and its teams have led to an “incredible success.”

“It’s true, we could have other ideas, but for the moment, nothing has been established,” he concluded.

LVMH posted an 11 percent rise in full-year sales on an organic basis to 46.83 billion euros. Net profit for the year stood at 6.35 billion euros, slightly below analysts’ expectations for 6.45 billion euros, according to FactSet and StreetAccount consensus figures.

The company’s fashion and leather goods division, which also includes Loewe and Givenchy, posted 5.4 billion euros in revenue over the fourth quarter. Sales of the watches and jewelry division, home to Bulgari, Hublot and Tag Heuer, grew 7 percent on an organic basis to 1.1 billion euros.

Perfumes and cosmetics, home to Sephora, rose 13 percent on an organic basis, to 1.5 billion euros. The wine and spirits division grew 2 percent, organically, to 1.57 billion euros.

“LVMH enters 2019 with cautious confidence and once again, sets an objective of reinforcing its global leadership position in luxury goods,” the group said in its statement.

The group last month revealed its $2.6 billion acquisition of Belmond, pushing deeper into the hotels business in a bid to position itself to tap into demand from younger generations who show an affinity for experience over accumulating stuff. Arnault noted that the acquisition was “opportunistic” but declined to offer much insight into further possible purchases in this realm.

“We’ll see…let’s start by visiting the hotels — there are around 30 of them,” he said.

Earlier this month, Compagnie Financière Richemont reported a 5 percent increase in sales at constant currencies over the last three months of the year, marking a slight slowdown in organic growth over the all-important holiday period.

Kering reports full-year profit on Feb. 12 while Hermès reports full-year sales and results on Feb. 8 and March 20, respectively.

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