LVMH Sales Growth Is Slowing -- WSJ
October 11 2016 - 3:03AM
Dow Jones News
Gain of 4% is propelled by perfume business and the Asian
market; core fashion unit lags
By Manuela Mesco
French luxury giant LVMH Moët Hennessy Louis Vuitton SE said its
nine-month revenue rose 4% from a year earlier, boosted by the
Asian market and its perfume business, despite flagging sales at
its core fashion unit.
Sales growth, however, was slower than in the year-earlier
period. During the first nine months of 2015, LVMH's revenue grew
18%
The company, a bellwether for the industry and the first
European luxury house to release its earnings this season, said
Monday that its revenue totaled EUR26.3 billion ($29.3 billion) in
the first nine months of the year.
LVMH's fashion and luxury-goods division -- its largest unit,
which includes such brands as Celine and Marc Jacobs -- grew only
1% over the period to EUR9 billion.
Revenue at LVMH's wines and spirits business, including its Moet
& Chandon unit, grew 5% to EUR3.3 billion.
Perfumes and cosmetics were the strongest division in the
period, growing 6% from a year earlier, the company said. Louis
Vuitton, its flagship brand, launched a new perfume.
Sales in Asia, excluding Japan, showed a significant improvement
during the third quarter, LVMH said. The company added that the
wines and spirits division improved its results in China.
LVMH doesn't report quarterly profit figures. As a result,
investors will have to await full-year results to see what impact
the slowdown has had on profitability, given that many luxury-goods
companies are sinking more money into their retail networks and
digital channels to combat an industry slowdown.
While LVMH said that sales growth picked up over the course of
this year, the company is growing far more slowly than last
year.
LVMH's slowdown reflects a shift in the global luxury market.
Weakening luxury-goods sales in China -- whose shoppers represent
one third of the luxury market, according to advisory firm EY --
changes in customers' tastes and volatile currency and
macroeconomic conditions have erased the double-digit growth rates
many luxury-goods houses enjoyed until recently.
LVMH's sales growth began to slow in 2013, prompting it to
refresh key brands such as Louis Vuitton, the conglomerate's profit
and sales powerhouse.
Other brands such as Kering and Prada have also had similar
slowdowns.
The company offered a positive outlook Monday for its U.S. and
European markets, with the exception of France, which continues to
suffer a decline in tourism after recent terror attacks.
LVMH also said the company will pursue "targeted geographic
expansion" in certain markets.
Write to Manuela Mesco at manuela.mesco@wsj.com
(END) Dow Jones Newswires
October 11, 2016 02:48 ET (06:48 GMT)
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