PARIS — The luxury sector continued its auspicious trajectory in the first quarter, with rapid growth in China and the U.S. contributing to a 17 percent bump in sales at LVMH Moët Hennessy Louis Vuitton to 5.25 billion euros, or $7.17 billion, beating analysts’ expectations.
This story first appeared in the April 20, 2011 issue of WWD. Subscribe Today.
Shares in LVMH increased 5 percent Tuesday to close at 115.20 euros, or $164.97 at current exchange, on the Paris Bourse.
But the drop-off in business in Japan was equally dramatic, almost 25 percent in March in the wake of the earthquake, tsunami and nuclear crisis, sending revenues described as “flattish” in January and February to finish down 9 percent for the three months ended March 31.
“The business [in Japan] is progressively coming back to normal operating conditions,” LVMH’s chief financial officer Jean-Jacques Guiony said on a conference call Tuesday to discuss results that were released the night before.
He declined to indicate sales trends in April, but held out hope the Japanese people would be able to “overcome the current situation as quickly as possible.”
Japan accounted for 8 percent of LVMH’s business in the first quarter, and sales of watches and jewelry in the island nation grew 8 percent, while sales of fashion and leather goods slid in the low double-digits, Guiony noted.
All divisions at the French luxury giant logged double-digit revenue growth during the first quarter, except for perfumes and cosmetics, which saw sales rise 9 percent — still well ahead of the industry’s average expansion of 3 to 4 percent. Revenues were up 28 percent for watches and jewelry; 20 percent for wines and spirits; 17 percent for fashion and leather goods, and 20 percent for selective retailing. Like-for-like sales at Sephora advanced 7 percent in Europe and 9 percent in the U.S.
Guiony said the “very strong” quarter underlined positive trends across most geographies, with sales in local currencies up 24 percent in Asia, 18 percent in the United States and 8 percent in Europe.
He noted that Europe would have been up double digits had it not been for the disposals last year of Champagne maker Montaudon and La Brosse et Dupont, a maker of beauty and personal care products such as hair brushes and accessories.
Still Guiony sounded a cautious note given ongoing geopolitical and economic uncertainties. “I’m not saying the worst is certain,” he said. “But the time when currencies were creating a strong tailwind is over.” He also reiterated: “We still face a very uncertain situation in Japan.”
The company gave no specific guidance for 2011 other than to increase its leadership in the global luxury goods market.
During a question-and-answer period, Guiony said LVMH has not increased its stake in Hermès International beyond the 20.2 percent it declared last December. He also noted that its $6 billion deal to absorb the Roman jeweler Bulgari into its constellation of brands would likely be completed in May, with the revenues consolidated into its tallies starting in June or July. (For more on Bulgari, see page 3.)
Double-digit organic growth at the Louis Vuitton brand — fueled partly by Monogram Empreinte leather goods — headlined gains in the fashion and leather goods division, which also includes such labels as Marc Jacobs, Givenchy and Loewe. The division’s sales totaled 2.03 billion euros, or $2.77 billion, helped also by rapid revenue growth at Fendi and Donna Karan.
Separately on Tuesday, Christian Dior SA, parent of LVMH and the Dior fashion house, released revenue figures broadly in line with LVMH, up 17.5 percent.
Dior outpaced the group average, with revenues up 22 percent to 221 million euros, or $301.7 million, suggesting the March firing of its star couturier, John Galliano, did not disturb the house’s current momentum.
Sidney Toledano, Dior’s chief executive officer, told WWD sales in March exhibited the same trend as previous months and signs in April remain “very good.”
In the quarter, all regions registered double-digit growth, and all categories, including men’s and women’s ready-to-wear and leather goods, including the New Lock and Granville lines, in addition to the iconic Lady Dior style.
Sales in Dior’s retail network — which generated 81 percent of the business last year — increased 28 percent in the period, or 24 percent at constant exchange rates.