PARIS — LVMH Moët Hennessy Louis Vuitton said the strong performance of Hennessy cognac and Bulgari jewels helped fuel a 7 percent rise in revenues in the third quarter, above analysts’ expectations.
The luxury conglomerate said revenues totaled 8.58 billion euros, or $9.54 billion, in the three months ended Sept. 30. The increase in organic sales compared with a rise of 9 percent in the second quarter of 2015 and an increase of 4 percent in the third quarter of 2014.
However, organic growth in its key fashion and leather goods division slowed markedly to 3 percent in the third quarter versus 10 percent in the second quarter.
In a statement released after the close of the market, LVMH did not provide detailed comment on the third quarter. Company officials were expected to discuss the results in a conference call scheduled for Tuesday.
The group noted that in the first nine months of 2015, Louis Vuitton grew, with a strong performance of leather goods, in particular the Monogram line. Fendi generated strong revenue growth, while Marc Jacobs and Donna Karan continued to reposition their collections.
Conversely, the wines and spirits segment saw growth accelerating to 16 percent in the third quarter from 5 percent in the previous three months. Hennessy cognac benefited from a strong rebound in shipments to China in the third quarter and continued strong momentum in the United States.
Growth in watches and jewelry totaled 11 percent in the third quarter, down slightly from 13 percent in the second quarter. Bulgari was the strongest performer in the category, while Tag Heuer was gearing up for the planned launch of its smart watch, developed in partnership with Google and Intel, in November.
Perfumes and cosmetics were up 7 percent, versus 6 percent in the prior quarter, boosted by the success of Dior Addict Lipstick and Guerlain’s premium skin-care lines Abeille Royale and Orchidée Impériale, among others. LVMH said Dior’s men’s fragrance Sauvage, fronted by Johnny Depp, was launched “with great success.”
Selective retailing was stable at 5 percent as DFS continued to face political and currency turmoil in some tourist destinations. Sephora again gained market share in all its markets, with online sales rapidly increasing in all regions.
The group’s 7 percent overall organic growth in the third quarter was above a consensus forecast of 5.4 percent, according to Bernstein Research. It had forecast a 6.1 percent increase and consequently maintained an “outperform” recommendation on the stock, with a target price of 178 euros, or $200 at current exchange.
“This is a good set of numbers overall,” said Luca Solca, managing director at Exane BNP Paribas. “Yet, we anticipate the miss in [fashion and leather goods] may be taken as a negative by the market — reopening questions on LV, just at a time when a recovery by the leather megabrand was becoming consensual.”
He said the wines and spirits business group beat a growth forecast of 5 percent, while the fashion and leather goods division fell short of its forecast of 6 percent growth. Both perfumes and cosmetics and watches and jewelry were “significantly better than expected,” he noted.
“The explanations LVMH will provide in the conference call tomorrow will be important,” Solca added, noting that Louis Vuitton would face tougher comparatives in the fourth quarter as the impact of the 160th anniversary collection it launched in late 2014 starts to kick in.
LVMH reported that revenues were up 18 percent in reported terms to 25.28 billion euros, or $28.2 billion, in the first nine months of the year, boosted in particular by the strong performance in the watches and jewelry division. Revenues for the period rose 6 percent on an organic basis.
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The French group gave no specific guidance for the year-end other than to increase its global leadership position in luxury goods. Shares in LVMH closed up 0.5 percent at 166.50 euros, or $187.20, on the Paris Stock Exchange on Monday.
