LVMH returns to growth with fashion unit proving resilient
The world’s largest luxury group has endured an extended pullback, particularly in China, which had long been a driver of growth
[PARIS] LVMH sales unexpectedly returned to growth in the third quarter as shoppers splurged on Moet & Chandon Champagne and Dior perfumes, suggesting a persistent slump in luxury demand is easing.
Group sales rose 1 per cent on an organic basis, snapping two quarters of declines, LVMH Moet Hennessy Louis Vuitton said on Tuesday (Oct 14). Revenue at all of the company’s divisions exceeded analysts’ estimates, including the key fashion and leather goods unit, which fell a less-than-expected 2 per cent.
“Overall, we view these results as a step in the right direction,” RBC Capital Markets analyst Piral Dadhania said in a note.
LVMH’s American Depositary Receipts surged as much as 8.8 per cent in New York following the release, while ADRs of Gucci-owner Kering, Hermes International and Cartier-owner Richemont also jumped, as LVMH is generally considered a bellwether.
The world’s largest luxury group, led by billionaire Bernard Arnault, has endured an extended pullback, particularly in China, which had long been a driver of growth. In a positive sign for the company and the wider luxury industry, LVMH’s sales in the region that includes China rose 2 per cent last quarter, after dropping by 9 per cent in the first half.
China potential
The company is seeing encouraging China demand, despite the macroeconomic picture, LVMH’s chief financial officer, Cecile Cabanis, told analysts on a call on Tuesday.
There’s further potential for a pickup in China, where consumers are “still sitting on a big chuck of savings post-Covid”, Morningstar analyst Jelena Sokolova said. LVMH’s return to growth there should be supportive of sentiment in the sector, she added.
Even the struggling wines and spirits division, which suffered two-and-a-half years of slumping revenue, posted growth, helped by a restocking of Champagne in the US and sales of rosé wine.
US sales overall rose 3 per cent, while revenue in Europe and Japan fell 2 per cent and 13 per cent, respectively. Japan sales boomed last year as Chinese tourists shopped there to take advantage of the weak yen, but the situation has since returned to normal.
Cabanis cautioned that the comparable basis for its performance will be tougher in the fourth quarter than in the third. In 2026, those comparables will be easier, she added.
Creative moves
Amid the downturn, LVMH has carried out changes at some of its top brands, including Christian Dior Couture. Earlier this year, it named Jonathan Anderson as the new designer, overseeing womenswear, haute couture and menswear. The former Loewe creative director unveiled his first women’s fashion show this month in Paris. His new men’s designs should hit stores in January, with women’s arriving from the second quarter.
LVMH’s Fendi brand, meantime, appointed former Dior womenswear designer Maria Grazia Chiuri as its new chief creative officer, the label said on Tuesday. Chiuri will unveil her first collection in Milan in February. BLOOMBERG
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