Louis Vuitton's surprise growth helps LVMH weather pandemic

[PARIS] The owner of Louis Vuitton enjoyed an unexpected rebound in consumers' appetite for dresses and monogram bags, buoying third-quarter sales.

Organic revenue at its fashion and leather goods unit jumped 12 per cent in the third quarter, LVMH said Thursday. Analysts expected a 0.9 per cent decline.

Some consumers are eager to splurge on Louis Vuitton or Christian Dior handbags despite a dire economic backdrop. LVMH's performance shows how its "mega brands" are helping it weather the pandemic's destructive economic consequences. Lockdowns and travel quarantines have sent the luxury industry into a deep slump because it relies on physical stores for the bulk of its sales.

Total revenue fell 7 per cent on an organic basis, reaching US$14 billion. Analysts expected a 12 per cent drop.

The conglomerate's wines and spirits division which houses Hennessy cognac and Moet & Chandon Champagne also resisted better than expected during the period. Organic revenue fell 3 per cent when analysts were expecting a 7.9 per cent slump.

However, some businesses fared worse. LVMH's selective retailing unit which includes DFS duty-free outlets and Sephora cosmetics store networks - saw organic revenue slump 29 per cent amid a halt in international tourism. Analysts had expected a 25 per cent drop.

LVMH, the world's biggest luxury company, stunned investors when it announced last month that it planned to pull out of a US$16 billion deal to buy Tiffany. Earlier on Thursday, the US jeweller unveiled positive sales trends in an effort to keep the deal on track.

BLOOMBERG