PARIS — A weak euro is the wind beneath luxury’s wings, allowing LVMH Moët Hennessy Louis Vuitton to report a 16 percent lift in first-quarter revenues to 8.32 billion euros, or $9.39 billion.
In organic terms, the increase stood at 3 percent, slower than the 5 percent pace in the fourth quarter and the 4 percent gain the French group registered in the third quarter of last year.
The figures, reported Monday after the close of trading on the Paris Bourse, suggest a slow start to the year due to weaker demand for luxury in Asia, and reflecting tough comps in the year-ago quarter.
The French luxury giant cited “excellent momentum” in Europe and the U.S., trumpeting that strength at Vuitton partially offset the continued destocking of liquors and watches in China due to an antiextravagance crackdown.
In organic terms, sales slipped 1 percent in wines and spirits, while other business divisions registered single-digit improvements: 1 percent for fashion and leather goods; 5 percent for selective retailing; 6 percent for perfumes and cosmetics, and 7 percent for watches and jewelry.
In reported terms, sales advanced 12 percent for wines and spirits to 992 million euros, or $1.12 billion; 13 percent for fashion and leather goods to 2.98 billion euros, or $3.36 billion; 16 percent for perfumes and cosmetics to 1.09 billion euros, or $1.23 billion; 19 percent for watches and jewelry to 723 million euros, or $815.8 million; and 20 percent to selective retailing to 2.66 billion euros, or $3 billion.
Dollar figures are converted from euros at average exchange rates for the three months ended March 31.
On Monday, LVMH noted Fendi, Céline, Givenchy, Kenzo and Berluti experienced an “excellent” quarter.
In selective retailing, LVMH highlighted a “remarkable” performance at Sephora, particularly in North America and the Middle East, that contrasted with challenges at DFS, which is facing a “complex situation in Asia and has been impacted by currency and geopolitical developments in certain tourist destinations.”
Analysts had been expecting a soft quarter due to weak demand in Hong Kong and Macau — and robust gains in the year-ago period, when Japanese clients rushed luxury purchases, particularly fashion and leather goods, ahead of an increase in sales tax on April 1, 2014.
In a preview note, RBC Capital Markets analyst Rogerio Fujimori noted lower Russian purchases in Europe and a more crowded handbag market in China are also factors at play.
A weak euro is expected to boost revenues and margins related to earnings before interest and taxes for Europe’s big luxury players, which produce mainly on the continent and export globally and fuel purchases by Chinese tourists in Europe given widening price gaps.
LVMH is one of the first big luxury players to disclose sales results for the first months of 2015, and is to host a conference call today to elaborate on the figures. Burberry is slated to divulge its first-half figures on Wednesday and Kering is scheduled to report its first quarter on April 21.
Bernstein maintains an outperform rating on LVMH stock, with analyst Mario Ortelli noting “the market has begun to reduce the discount it attributed to the repositioning risk” of the flagship Vuitton brand. “Additionally, LVMH has a number of brands ramping up on the development curve — Bulgari, Sephora and Loro Piana,” he added.
The company gave no precise sales or earnings guidance, other than to increase its “global leadership position in luxury goods.”