LVMH third-quarter sales beat expectations
Growth shows no sign of slowing despite warnings on second-half performance
LVMH, the world’s largest luxury group by revenues, has continued its upwards momentum with a 12 per cent increase in third-quarter sales that beat analyst expectations.
The owner of Louis Vuitton and Fendi said on Monday after the market close that, after stripping out the effect of currencies and acquisitions, revenues rose to €10.4bn in the three months to the end of September, exceeding consensus analyst estimates of €10.2bn.
LVMH’s sales growth is showing no sign of slowing despite warnings from its chairman and chief executive Bernard Arnault in July to approach the second half of the year with caution. In the first six months of 2017, LVMH benefited from a favourable basis of comparison on the previous year, notably in France where there was a decline in the first half of 2016 following terrorist attacks in Paris.
During the third quarter, all LVMH divisions recorded double-digit revenue growth with the exception of wines and spirits, home to Moet & Chandon champagne and Hennessy cognac, which lifted revenues 4 per cent in the third quarter and was held back by supply constraints.
Fashion and leather goods — the largest contributor to earnings — increased revenues 13 per cent to €3.9bn. Sales in perfume and cosmetics rose 17 per cent, while watches and jewellery, and selective retailing divisions each reported year-on-year revenue rises of 14 per cent on an organic basis.
Overall for the first nine months of the year revenues at LVMH rose 12 per cent to €30.1bn, stripping out the effect of currencies and acquisitions. On a reported basis, the strengthening euro drove a negative currency impact of 5 per cent on revenues, while the acquisition of Christian Dior Couture, which was finalised in July, was behind a positive impact of 7 per cent.
Luca Solca, analyst at Exane BNP Paribas, said the third-quarter revenues “confirms our expectations that winners will continue to win in soft luxury — with LVMH and Kering at the forefront”.
Last month LVMH announced new environmental targets for 2020, reflecting how environmental, social and corporate governance concerns are becoming more prominent for luxury groups. Targets include 30 per cent renewable energy use and a 25 per cent reduction in CO2 emissions compared with 2013.
Ahead of Paris Fashion Week, last month LVMH and rival luxury group Kering also committed to stop using ultra-thin and underage models, in response to criticism of how young women are portrayed and treated in the fashion world