Oct 10, 2016
LVMH third-quarter sales beat forecast
Oct 10, 2016
Luxury goods giant LVMH posted a forecast-beating acceleration in third-quarter sales on Monday, helped by improved trading in major markets such as China and resilient demand in the United States.
LVMH, the first European luxury group to release figures for the three months to Sept. 30, said revenue at constant currencies rose 6 percent to 9.14 billion euros ($10.24 billion), an improvement on growth of 4 percent in the second quarter and 3 percent in the first.
Analysts expected third-quarter sales of 8.91 billion euros based on a mean estimate compiled by ThomsonReuters I/B/E/S, and like-for-like sales growth of 3-4 percent.
"We think this will be an important trigger for the LVMH share price ... as LVMH was trailing the sector and investors were staying out of it as a proxy for the sector itself," said Luca Solca, luxury goods analyst at Exane BNP Paribas.
Some analysts see LVMH as better positioned to resist the industry's current downturn than other luxury goods makers such as Richemont CFR., which has been hammered by a slump in demand for high-end watches and has had to buy back stock to keep retailers afloat.
LVMH, which controls more than 70 brands including Louis Vuitton, Dior and Hennessy cognac, said trading in Europe remained good "with the exception of France which continues to feel the impact of a decline in the number of tourists."
The group makes around 10 percent of its total sales in France and the bulk of them to tourists, who have been staying away since the end of last year, spooked by attacks by Islamist militants.
Trading at LVMH's fashion and leather division, its biggest profit and sales contributor, picked up during the period with sales at constant currencies up 5 percent against a flat first-half performance.
Analysts expected the division's growth to reach around 2 percent.
The group said its flagship brand Louis Vuitton, which launched its first fragrances last month, maintained strong momentum.
It also noted that "Fendi generated significant revenue growth" and that Marc Jacobs continued the repositioning of its collections.
Growth at the group's wines and spirits division slowed to 4 percent at constant currencies, after a bumper second-quarter rise of 13 percent.
LVMH is holding a conference call with analysts at 1400 GMT on Tuesday at which it is expected to give more details.
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