Getting the jump on competitors, LVMH, the world’s biggest luxury goods concern, reported higher-than-expected revenue growth for the third quarter.
LMVH owns and enviable portfolio of high end labels including Louis Vuitton, Christian Dior, and Moet & Chandon champagne report that like for like revenues grew 12% during the previous year to 30.1 billion euros
This high unexpected growth beat out a 9% organic growth forecast that was published an analyst poll conducted earlier by Inquiry Financial and Reuters.
Forecasts for the lower growth rate were based on the assumption that the luxury concern would not maintain growth reported from the second quarter. These assumptions were based on lower sales reportings from LMVH Spirits.
Despite this, growth continued at the 12% rate, to the surprise of industry analysts—setting a fairly high bar in an otherwise dismal outlook for competing houses.
Like-for-like revenues, which strip out currency swings and acquisitions or disposal–important in a tricky foreign exchange climate
A strengthening euro risks putting tourists off spending in many European destinations—made more precarious by tourism’s dip in Europe’s capitols following a spate of terrorist attacks..
Revenue growth was down at LVMH’s spirits and wines division.
The company reported a skimpy 4% increase compared to 6 % in the previous quarter, the outcome of insufficient manufacture orders in previous years led to undersupplies of its cognac brand, Hennessy this quarter.
LMVH is one of the first reports out of the third quarter, and it has set a pretty steep hurdle for its competitors.
We will be reporting on those releases in the coming weeks as quarterly earnings come in from fellow Paris-based conglomerate Kering — owner of Gucci — and standalone fashion houses like Hermes and Burberry .
Considering the industry underestimation of LMVH, it is possible that the third quarter will show healthy growth in other places.
Luxury goods are enjoying a renewed Chinese appetite for their watches, couture, handbags and expensive spirits in the past year. That strengthening market has provided revenue even while an economic downturn that hit the industry hard led to closure of brick and mortar shops throughout Chinese cities.
As a result, regional tensions in Asia lend a note of caution to forecasters. They include diplomatic tensions in Asia, amid a stand-off between the United States and North Korea over nuclear tests, which analysts say could affect tourist spending if the situation worsens.
“In an uncertain geopolitical and currency environment, LVMH will continue to be vigilant,” the group said in a statement.
LVMH, run by French billionaire Bernard Arnault, has been able to surf the sector’s recovery partially because of the sheer diversity of brands and labels in its luxury offerings. That diversity of income is key for a market in which customers are notoriously fickle and spending is led by whiplash inducing style changes.
Fashion label Louis Vuitton, known for its branded-luggage, leather handbags and couture remains a star performer.
LVMH has also recently fully integrated Christian Dior into the group. Dior’s sales and additional revenue brought non organic growth in the third quarter.