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LVMH sends positive luxury signal with Q1 sales beating estimates

Sales rise 11% to 12.5b euros; key fashion and leather unit posts 15% gain

Paris

LVMH's move to tap hip new design talents in a bid to reignite interest in its biggest brands looks like it's paying off. Sales beat analysts' estimates in the first quarter as fresh propositions like Christian Dior monogrammed low-top sneakers and US$1,200 Louis Vuitton utility harnesses hit stores.

The key fashion and leather division - where good news often lifts shares across the fashion industry - posted a 15 per cent gain.

The luxury industry is now in its third year of rapid growth as millennial and Gen Z shoppers warm up to the revamped offer and newfound digital savvy of brands like Kering SA's Gucci.

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The growth has been driven by China, where booming sales of high-end fashion have resisted an economic slowdown that pinched revenues for some car manufacturers and Apple Inc.

LVMH's reshuffle has focused on menswear, with Virgil Abloh taking the helm of Louis Vuitton's menswear division last year.

At Christian Dior, designer Kim Jones released buzzy new sneaker models and adapted the brand's famous Saddlebag line for men.

The company said fur-and-handbags label Fendi, shoemaker Berluti, which also changed its designer, and Loro Piana also boosted the fashion division's growth.

The level of growth in fashion and leather "should be enough to sustain the upward momentum of the shares", Rogerio Fujimori, an analyst at RBC Capital Markets, wrote in a note to clients.

Star designer Hedi Slimane, known for his influential skinny silhouette and successful turnaround of Kering's Saint Laurent, returned to LVMH last year to expand the Celine brand, with plans to add menswear, couture, and perfume.

His new store concept and first collections, including a line of unisex suiting, were rolled out during the quarter.

Overall, LVMH's Q1 sales rose 11 per cent on an organic basis to 12.5 billion euros (S$19.1 billion), the Paris-based company said Wednesday after markets closed, which beat analysts' estimates. BLOOMBERG