Oct 15, 2014
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Luxury group LVMH posts improved third quarter sales growth

Oct 15, 2014

PARIS, France - LVMH, the world's biggest luxury group, posted improved sales growth for the third quarter on Tuesday as stronger trading in Europe and the United States helped make up for weakness in Asia.

The Paris-based group, which owns leather goods maker Louis Vuitton and Hennessy cognac, said comparable sales growth reached 4 percent in the three months to Sept. 30, in line with analysts' expectations.

Louis Vuitton Spring/Summer fashion show Paris / Source: PixelFormula

This compared with 3 percent growth in the previous quarter and 6 percent in the first three months of the year.

LVMH pointed to an uncertain economic and financial environment but did not give a full-year financial target. Nor did it provide quarterly organic growth rates by division.

LVMH is expected to offer more details about its performance in a conference call with analysts at 1300 GMT (0900 EDT) on Wednesday.

The quarter "confirms a lukewarm trading environment, in which Chinese prudent, subdued consumer sentiment seems to be taking a toll on key divisions such as fashion and leather, and wine and spirits," said Luca Solca, a luxury goods analyst at Exane BNP Paribas.

Like-for-like sales growth at LVMH's fashion and leather division, its biggest, reached 3 percent in the nine months to Sept. 30, compared with 4 percent in the first half.

LVMH, which owns Dom Perignon and Moet & Chandon champagne, said wine and spirits sales fell 3 percent in the nine-month period, against a 1 percent drop in the first half.

"This trend reflects the cognac market in China, where destocking by distributors continued, while Hennessy benefited from an excellent momentum in the United States," LVMH said.

Like-for-like watch and jewelry sales rose 5 percent, helped by strong trading at Bulgari, LVMH said.

LVMH's selective retailing business, which includes cosmetics retail chain Sephora and duty-free shops, had organic growth of 8 percent, down from 9 percent in the first half.

The group said the division benefited from sustained airport activity but that "certain tourist destinations suffered the repercussions of financial or geopolitical changes".

LVMH's trading update came on the same day as Mulberry issued its third profit warning this year and Burberry said trading in major markets such as China had worsened in recent weeks.

The global luxury goods industry has been through a difficult period with the conflict in Ukraine hitting demand in Russia, and demonstrations in Hong Kong adding to concerns about a slowdown in China.

Big luxury groups such as Cartier-owner Richemont and Prada warned last month of tougher trading conditions, particularly in Asia.

On Tuesday, consultancy Bain & Co said it expected sales growth in the global luxury goods market to be steady next year at 2014 levels, or around 5 percent at constant exchange rates.

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