Why LVMH Is Staying Cautious Despite Double-Digit Sales Gain

Luxury behemoth LVMH Moët Hennessy Louis Vuitton posted a 13.6 percent rise in third-quarter sales as brisk business in most divisions helped offset a drag from unfavorable exchange rates and slower growth in its wine-and-spirits activities.

Sales over the quarter were 10.38 billion euros, or $12.2 million, up 12 percent on an organic basis.

The company continued to sound a cautious note, however, citing the global political environment and exchange rates.

“In an uncertain geopolitical and currency environment, LVMH will continue to be vigilant,” the company said in a statement. Currency rates had a negative impact of 5 percent over the first nine months, the company said. Industry observers are carefully watching to see how much the strong euro will weigh on business for European luxury companies.

The largest division, fashion and leather goods, home to star brand Louis Vuitton, clocked 13 percent growth on an organic basis for the quarter compared with the same period last year. LVMH highlighted the brand’s first smart watch as well as efforts to improve the quality of its distribution network as contributing to Vuitton’s performance over the first nine months. The label recently opened a new Paris flagship on the Place Vendôme in Paris.

Perfumes and cosmetics grew the fastest, up 17 percent on an organic basis over the quarter.

The company said supply constraints were the reason for a weaker performance from its wine-and-spirits division, which lagged other divisions with 4 percent organic growth over the quarter.

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