Moët Hennessy Louis Vuitton has notched its strongest quarter of the year, with organic sales climbing 6 percent to 9.12 billion euros, or $10.21 billion, year-on-year and revenue in the fashion and leather goods division up 5 percent to 2.94 billion euros, or $3.29 billion.
Organic sales refer to like-for-like sales on a constant currency basis. At actual currency, sales in the three months to Sept. 30 were up 6.5 percent. The results outstripped analysts’ projections of 4 percent organic growth, and 2 percent in the fashion and luxury goods division.
The results were fuelled by a “significant improvement” in Asia, and solid performances in the U.S. and Europe, with the exception of France, which continues to suffer from a downturn in tourism. The third-quarter was the fastest growing of the year, outpacing overall growth in the first half, which saw sales grow four percent.
Sales in the nine months were up 4.1 percent to 26.33 billion euros, or $29.49 billion. All figures have been calculated at average exchange rates for the periods to which they refer.
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The company said today in its nine-month trading update that while it continues to operate in an uncertain geopolitical and currency environment, it would pursue its strategy focused on innovation and targeted geographic expansion in the most promising markets.
In the three-month period, the perfumes and cosmetics division grew 10 percent, while watches and jewelry were up 2 percent, and the selective retailing division 8 percent. Wines and spirits advanced 4 percent.
Fashion and leather goods put on a particularly good show, growing 5 percent in the third quarter, compared with a flat performance in the first half.
The company pointed out that during the nine-month period, it ventured into new territory with the launch of the Louis Vuitton perfumes, which have made a “very promising” start. Its new Horizon luggage, conceived by Marc Newson, was also among the major innovations of the last quarter, it said.
Fendi generated “significant revenue growth” in the first nine months, while Céline, Loewe and Kenzo experienced “good growth.” Marc Jacobs continued the repositioning of its collections.
The perfumes and cosmetics division outperformed the market, with Parfums Christian Dior gaining market share in all countries, thanks to Sauvage and a series of makeup innovations.
The company said Guerlain successfully expanded its perfume brand, La Petite Robe Noire, into the world of makeup, a market where Givenchy also saw strong growth. The launch of the new perfume Kenzo World was a hit; Benefit, Make Up For Ever, Fresh and Kat Von D all delivered “excellent” performance, according to the company.
The third quarter for watches and jewelry was not as successful, with growth slowing to 2 percent from 4 percent in the first half.
LVMH said Bulgari continued to gain market share while TAG Heuer made great progress in a difficult market, benefiting particularly from the success of its new collections and its smartwatch. The market remains a difficult one, with the collapse of the once-thriving Hong Kong and Macau tourist areas, excess stock and cautious wholesale partners.
In the selective retailing division, Sephora continued to gain share in all its markets and recorded double-digit revenue growth. Online sales rapidly increased in all regions and Sephora continued its store opening program.
LVMH said DFS navigated a “difficult” tourist environment in Asia, particularly in Macau and Hong Kong. In September, DFS opened a new T Galleria in Europe, in Venice, expanding its presence in major tourist destinations.
Wines and spirits business group growth came from Champagne volumes, which grew 3 percent over the period, with a particularly strong performance in prestige cuvées. Hennessy cognac saw its volumes increase by 9 percent.
Robust markets included the U.S., while China showed improved momentum during the period, following the destocking of distributors in 2015.
Luca Solca, managing director at Exane BNP Paribas, said the third-quarter results will be “an important trigger for the LVMH share price” with the bank expecting a share price performance catch up.
“LVMH was trailing the sector, with investors were staying out of it as a proxy for the sector itself. We have indicated LVMH as our top pick in our recent research,” he said.
In a brief statement, Julian Easthope of Barclays said called the results a “good recovery” with LVMH delivering better-than-expected organic growth.