MC Lvmh Moet Hennessy Louis Vuitton SE

By Jason Chow 

PARIS-- LVMH Moët Hennessy Louis Vuitton SE is defying economic headwinds in China and other parts of the world, easing investor worries across the luxury industry.

Chief Executive Bernard Arnault's bullish take on Chinese demand--supported by a 12% rise in fourth-quarter revenues--fueled a rise in LVMH shares on Wednesday.

Shares closed at EUR151.75, off a morning peak but still 4.5% higher than the previous day's close.

Chinese consumers are crucial to the luxury industry, with experts estimating they account for more than a third of total overall global luxury spending. China's mixed messages on currency policy have investors worried over whether the world's second-largest economy is slowing more sharply than expected.

Mr. Arnault brushed aside those concerns Tuesday night after LVMH reported EUR10.38 billion ($11.3 billion) in sales during the last three months of 2015.

"Analysts underestimate the Chinese economy," Mr. Arnault said. "The fundamentals are good. Household spending is still increasing, and that's important to us."

LVMH's status as a luxury bellwether--with businesses ranging from jewelry and watches to the DFS duty-free chain and the Sephora cosmetics label--helped stabilize share prices across the industry.

Trading in Kering SA, which owns Gucci and Yves Saint Laurent slipped 0.1% on Wednesday, while shares in Hermès International SCA rose 2.2%. The Paris CAC-40 index ended the day down 1.3%.

Mario Ortelli, a luxury analyst at Sanford C. Bernstein, said he was "encouraged by [Mr. Arnault's] confidence going into 2016 despite the volatile economic environment."

Strong demand for LVMH's fashion and leather goods as well as its alcoholic drinks helped the luxury giant overcome headwinds that have affected rivals.

The Nov. 13 attacks in Paris sapped demand in a city where many tourists, particularly the Chinese, come to splurge on luxury goods. China's anticorruption crackdown continues to hit demand in other parts of the luxury sphere, most notably in watches.

Swatch Group AG, which owns high-end brands including Longines, Breguet and Omega, said Wednesday that net profit fell to 1.09 billion Swiss francs from 1.38 billion francs, hurt by the strength of the Swiss currency and weak demand for expensive timepieces. The profit figure was also below analysts' expectations.

That news sent shares in the Swiss watch company down as much as 4% in early trading, before rebounding later in the day. Shares closed at 334.80 Swiss francs, or about 1.2% lower than Tuesday's close.

Shares fell despite the company's decision to buy back 1 billion Swiss francs ($982 million) of its shares.

Analysts at Citi said there was "not much to cheer for" in the latest results, which reflected "adverse macro and geopolitical environment, global price gap distortion from [foreign-exchange] volatility and further demand weakness for Swiss watches in Hong Kong."

While associated by its namesake plastic watch brand, Swatch is heavily reliant on the high-end brands. About 45% of its sales form high-end brands like Omega, which retail for more than $7,000, and 20% from its upper end brands like Longines and Rado, which sell from around $1,200.

Chinese shoppers' shifting tastes, as well as their sensitivities to currency shifts and political tension, have many questioning the sector's overall growth this year.

Luca Solca, luxury analyst at Exane BNP Paribas, predicts the Chinese consumer in 2016 will spend "marginally more at home but less abroad" if Beijing increases restrictions on capital outflows and raises taxes.

Most luxury brands are straining to boost sales on mainland China, Mr. Solca said, because consumers prefer to shop abroad. That allows them to take advantage of currency arbitrage while avoiding local import duties and luxury taxes.

Louis Vuitton, however, has bucked that trend, Mr. Solca said, adding: "Louis Vuitton has the best momentum among soft luxury megabrands."

John Revill in Zurich contributed to this article.

Write to Jason Chow at jason.chow@wsj.com

(END) Dow Jones Newswires

February 03, 2016 13:25 ET (18:25 GMT)

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