LVMH sets upbeat tone for luxury as China demand for handbags rolls on


  • Business
  • Wednesday, 11 Apr 2018

Strong sales: Prosperous Chinese consumers have been stocking up on LVMH’s Louis Vuitton handbags and Givenchy makeup, powering record sales last year for the company with the highest market value in France. — Reuters

PARIS: LVMH set an upbeat tone for the luxury industry, plowing ahead with double-digit sales growth that beat analysts’ estimates for the start of the year.

First-quarter sales rose 13% on an organic basis, the Paris-based owner of Sephora and Christian Dior said Monday after Paris markets closed. Analysts had estimated 8.5%, projecting growth to taper off after a 12% jump last year.

Prosperous Chinese consumers have been stocking up on LVMH’s Louis Vuitton handbags and Givenchy makeup, powering record sales last year for the company with the highest market value in France.

Gucci owner Kering SA and Birkin-bag maker Hermes International benefited, too. While China’s economic growth is expected to slow to 6.5% in 2018, according to forecast data compiled by Bloomberg, the strong sales show that demand for luxury products remains high.

“This is a remarkable start to the year for LVMH, with broad-based market share gains in a buoyant environment for luxury goods,” said Rogerio Fujimori, an analyst at RBC Europe who rates the shares the equivalent of buy, in a note to clients.

The company saw organic growth of 10% or greater in categories such as spirits, fashion goods, cosmetics and jewelry.

The strong results across all divisions show that sales momentum for LVMH’s key brands remains intact, said John Guy, an analyst at MainFirst, who raised his rating on the stock to outperform from neutral after the results.

With more than 4,000 stores from Paris’ Avenue Montaigne to Los Angeles’ Rodeo Drive, LVMH is getting a boost from a rising Chinese middle class that is travelling more than ever.

It’s also gaining from a push into e-commerce and new products to entice young consumers – like luxury sneakers and iPhone cases styled like Louis Vuitton trunks.

LVMH highlighted its digital efforts, such as its sponsorship for a startup accelerator that aims to encourage entrepreneurs developing new technologies and services for the luxury industry.

The programme is situated in Station F, a former Paris terminal that telecommunications billionaire Xavier Niel has turned into a sprawling campus for startups. — Bloomberg

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