Luxury giant LVMH beat sales forecasts for the third quarter despite unrest in Hong Kong that has forced luxury goods labels to shut stores, in an encouraging sign for rivals who might also be able to make up for the lost business elsewhere.
High-end brands have long relied on Hong Kong as a major shopping hub which draws visitors from mainland China in particular, and four months of pro-democracy demonstrations are starting to take their toll.
France’s LVMH, behind fashion brands like Christian Dior as well as Veuve Cliquot champagne, did not give details of the sales hit from the protests in an update late on Wednesday. It is due to hold a conference call on Thursday.
Third quarter sales rose 11% on a comparable basis, barely changing from the 12% notched up in the previous three months and beating analyst forecasts for 9% growth.
“The United States and Europe saw good progress in the third quarter, as did Asia, despite the difficult context in Hong Kong,” LVMH said in a statement. Analysts expect mainland China and Japan to have made up for some of the lost sales, although not in every LVMH division.
The Fashion & Leather Goods business group achieved organic revenue growth of 18% in the first nine months of 2019. Louis Vuitton enjoyed a remarkable performance in all its businesses and in all regions. The “Louis Vuitton X” exhibition in Los Angeles, which traces the history of the Maison and celebrates its many artistic collaborations, has been a great success. Louis Vuitton continued to strengthen its production capacity with the inauguration in September of a new workshop in France. Christian Dior also made remarkable progress. The new Champs-Elysées boutique in Paris, which combines innovative experiences with architectural virtuosity, has been very well received. Fendi unveiled several partnerships in the world of art and music. Celine launched its first haute parfumerie collection, for which a dedicated boutique will open soon in Paris. Loro Piana, Loewe and Rimowa enjoyed good progress. The other Maisons continued to strengthen.
The Perfumes & Cosmetics business group recorded organic revenue growth of 8% in the first nine months of 2019, driven mainly by the momentum of its flagship brands. Parfums Christian Dior performed well, particularly with the vitality of its iconic fragrances and the new Joy and Sauvage ranges. Makeup and skincare were significant areas of growth. Guerlain made remarkable progress, driven by the Abeille Royale skincare and the Rouge G and L’Essentiel makeup lines. Parfums Givenchy saw rapid growth of its new fragrance, L’Interdit, and its makeup line. Fresh, Fenty Beauty by Rihanna and Acqua di Parma made good progress.
In the first nine months of 2019, the Watches & Jewelry business group recorded organic revenue growth of 4%, driven by jewelry. Bulgari enjoyed an excellent performance, especially in its own stores. Its iconic lines Serpenti, B.Zero1, Diva and Fiorever, as well as the new Serpenti Seduttori watch collection contributed to this performance. After Beijing in 2017 and Tokyo in 2018, this summer, Chaumet presented its new exhibition in Monaco; “Chaumet in Majesty. Jewels of Sovereigns since 1780”. In watches, TAG Heuer continued to focus on its iconic lines. Hublot made solid progress, continuing to enrich its lines with new models from several collaborations.
The Selective Retailing business group achieved organic revenue growth of 6% in the first nine months of 2019. Sephora recorded steady growth in revenue and gained market share in all key markets. Online sales continued to grow at a rapid pace. The expansion of its distribution network continued with the opening of its first stores in Hong Kong and Auckland. At DFS, the Venice Galleria is enjoying good momentum, benefiting in particular from strong demand from international travellers. DFS continued to grow over the first nine months of the year despite the slowdown in Hong Kong.
LVMH, which is kicking off the reporting season for luxury firms, has stood out for several years now as one of the top performers in an industry where not all labels are benefiting to the same degree from booming Chinese appetite for branded goods.
Its resilience in the third quarter – carried largely by a stronger-than-expected performance by its powerhouse Vuitton and its fashion and handbag unit – is likely to resonate for peers also riding that wave, like Gucci-owner Kering
And many brands from Italy’s Prada to Burberry are still in turnaround mode and trying to refresh their image. Overall, LVMH’s sales were up 17% to 13.3 billion euros ($14.60 billion) in the July to September period.
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