LVMH revenue boosted by growth in Europe

A model presents a creation from the Fendi Spring-Summer 2016 collection. LVMH is the owner of the Fendi brand. Picture: Alessandro Garofalo

A model presents a creation from the Fendi Spring-Summer 2016 collection. LVMH is the owner of the Fendi brand. Picture: Alessandro Garofalo

Published Oct 13, 2015

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Paris - LVMH, the world’s largest luxury-goods maker, reported third-quarter revenue that exceeded analysts’ estimates, boosted by growth in Europe, the United States and Japan.

Revenue advanced 7 percent on an organic basis, the Paris-based maker of TAG Heuer watches said in a statement on Monday, topping the 5.4 percent median of 18 analysts’ estimates compiled by Bloomberg. Gains at the wines-and-spirits unit outweighed slower-than-anticipated growth in fashion and leather goods.

The figures provide a boost for the luxury industry at a time when China’s slumping stock market and currency devaluation add to the challenges that companies face in the world’s second- largest economy. While sales of leather-goods, cognac and watches have fallen in the country following a clampdown on extravagance, Europe and Japan have benefited as Chinese consumers buy abroad. LVMH-owned Bulgari sees record travel purchases this year, the jeweller said last month.

“In an uncertain economic and financial environment, LVMH will continue its strategy focused on innovation and targeted geographic expansion in the most promising markets,” LVMH said.

Shares of the company, whose full name is LVMH Moet Hennessy Louis Vuitton SE, rose 0.5 percent to 166.5 euros in Paris. The sales were released after markets closed.

Total revenue for the quarter climbed 16 percent to 8.58 billion euros ($9.76 billion). Analysts predicted 8.53 billion euros.

The wines-and-spirits unit provided the biggest surprise, showing a 16 percent increase in organic revenue for the quarter, compared with the median estimate for 5 percent growth. Shipments of Hennessy cognac were helped by a rebound in China, the company said.

Fashion and leather-goods sales rose 3 percent, less than the 6 percent median estimate.

“We anticipate the miss in F&LG may be taken as a negative by the market - re-opening questions on LV, just at a time when a recovery by the leather mega-brand was becoming consensual,” Luca Solca, an analyst at Exane BNP Paribas, said in a note.

BLOOMBERG

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