LVMH SALES INCREASE 35%
Byline: Miles Socha
PARIS — The momentum continued unabated at LVMH Moet Hennessy Louis Vuitton as strong demand for its fashion and leather goods and even more rapid growth in its selective retailing unit led the way to a 35 percent gain in third-quarter sales.
The luxury giant said Thursday that group sales in the period reached $2.49 billion, up from $1.85 billion a year ago. LVMH said all geographic regions and all divisions, except its champagne and cognac unit, contributed to the increase. (Dollar figures have been converted from the euro at current exchange rates.)
The strong numbers represent a slight slowdown from the first half, when group sales leaped a record 40 percent to $4.8 billion, as reported. French companies report sales and earnings separately, but LVMH is forecasting operating profits for the year will grow in excess of 25 percent. While not disclosing numbers for September, it said sales reached a record level for the month.
“I think we’re on track,” said Myron Ullman, LVMH group managing director. “We’re still seeing strength in all geographic markets and all our brands are performing well.”
An LVMH spokesman noted that sales in the U.S. jumped 60 percent in the quarter.
LVMH’s fashion and leather goods division showed no signs of deceleration, with sales leaping 46 percent in the quarter to $706.4 million and the key Louis Vuitton brand advancing 38 percent. At present, there are 276 Vuitton stores, with recent openings including Seoul and Stockholm. Also posting double-digit sales growth were the LVMH fashion brands Celine, Loewe, Kenzo and Givenchy.
LVMH’s selective retail division jumped 52 percent in the quarter to $704.7 million. In the quarter, it opened a new DFS Galleria in San Francisco, its first in North America, bringing the total number of Galleria formats to 13. The Sephora network, expanding rapidly in Europe, reached 320 stores by the end of September. There are 62 Sephora locations in the U.S. and six in Japan.
Sales in the fragrance and cosmetics business unit grew 16 percent, which LVMH described as ahead of the market average. It cited several strong introductions — Hot Couture by Givenchy, Flower by Kenzo and Mahora by Guerlain — as contributing to the vigorous performance and said sales of J’Adore continue at a strong pace.
Sales in LVMH’s embryonic watch and jewelry division reached $136.6 million in the quarter. Strong sales of its TAG Heuer brand, particularly the new chronograph model Monza, were a key factor. It also introduced Mihewi, a new model from Chaument, in the quarter.
The only sore point in an otherwise strong performance was the champagne and cognac division, where sales fell 5 percent to $495 million. LVMH attributed the poor numbers to exceptionally strong demand for millennium celebrations last year. It expects a “normal seasonal trend” for champagne in the fourth quarter.
As reported, net income leaped 21 percent to $321.6 million in the first half, but analysts are questioning whether the booming luxury environment is sustainable.
In the nine months, revenues rose 38 percent overall, to $6.87 billion, led by a 55 percent growth in selective retailing, to $1.98 billion, and a 44 percent rise in sales of the fashion and leather goods unit, which finished just slightly ahead of selective retailing with revenues of $1.99 billion. Champagne and cognac dropped 2 percent to $1.25 billion and fragrances and cosmetics rose 20 percent to $1.22 billion. Watches and jewelry recorded sales of $371 million.
Shares of LVMH rose 1.34 percent Thursday on the Paris Bourse to close at $72.47.