LVMH Moet Hennessy Louis Vuitton SE sales jumped as the owner of Louis Vuitton and Christian Dior benefited from wealthy American tourists splurging on luxury goods in Europe.
Defying fears of a global recession, sales of LVMH’s fashion and leather goods soared 22 percent on an organic basis in the third quarter, the company reported on Tuesday.
Analysts had expected a gain of 16 percent. Even so, the company said it would control spending as uncertainty persists.
Photo: EPA-EFE
LVMH, founded by French billionaire Bernard Arnault, is the first high-end group to report revenue for the three months ending last month, making its earnings a closely watched event for investors.
LVMH’s results indicate that the industry has so far avoided the squeeze on spending that other retailers and consumer-goods companies have faced amid a growing cost-of-living crisis.
Chief financial officer Jean-Jacques Guiony said during a call with analysts that a recession expected by investors “hasn’t materialized in full swing yet.”
In past downcycles, luxury customers have tended to react more to stock market shocks rather than GDP slowdowns, he said.
Guiony warned against using the group’s results as a “proxy” for the general health of the economy.
Unlike mass-market retailers, LVMH has the ability to pass cost increases to its well-heeled customers, he said.
While LVMH has been able to raise prices on its goods this year, Guiony stopped short of laying out the company’s plans for next year amid a wider price discrepancy between the US and Europe.
Europe saw LVMH’s strongest organic revenue growth in the third quarter, rising 36 percent, helped by visiting Americans, who have splurged on trips to Europe in recent months.
Japan and the US followed Europe in organic sales growth, which strips out items such as the impact of exchange rates. Asia, excluding Japan, lagged the other regions, posting 6 percent growth after seeing a drop in the previous three months amid COVID-19 lockdowns in China.
Despite the expansion of sales, LVMH said it is not immune to the wider economic distress and pledged to keep a tight rein on costs and only invest selectively. That was a change of tone for the company — in past quarters, the outlook has tended to focus on growth prospects.
Tiffany & Co, which LVMH bought in early last year, grew at a slightly lower pace in the third quarter compared with the first half, Guiony said.
He attributed the slowdown to consumers’ preference for gold, whereas Tiffany’s is known for its silver jewelry. Guiony added that watches and the Rome-based jeweler Bulgari in particular led the growth of the unit.
Even though conditions improved in China, which has implemented strict pandemic lockdowns, the group’s brands are not yet operating normally there, Guiony said.
Sales of Louis Vuitton were “more or less flat” during the third quarter, he said.
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