LVMH shrugs off Hong Kong hit with Q3 sales beat
today Oct 10, 2019
Louis Vuitton owner LVMH beat sales forecasts for the third quarter despite unrest in Hong Kong that has forced luxury goods labels to shut stores, in an encouraging sign for rivals who might also be able to make up for the lost business elsewhere.
High-end brands have long relied on Hong Kong as a major shopping hub which draws visitors from mainland China in particular, and four months of pro-democracy demonstrations are starting to take their toll.
France’s LVMH, behind fashion brands like Christian Dior as well as Veuve Cliquot champagne, did not give details of the sales hit from the protests in an update late on Wednesday. It is due to hold a conference call on Thursday.
Third quarter sales rose 11% on a comparable basis, barely changing from the 12% notched up in the previous three months and beating analyst forecasts for 9% growth.
“The United States and Europe saw good progress in the third quarter, as did Asia, despite the difficult context in Hong Kong,” LVMH said in a statement.
Analysts expect mainland China and Japan to have made up for some of the lost sales, although not in every LVMH division.
Sales at LVMH’s retailing unit, which houses travel duty free group DFS, slowed more markedly in the period than in other divisions like perfumes. The Hong Kong demonstrations ground the airport to a halt in mid-August.
LVMH, which is kicking off the reporting season for luxury firms, has stood out for several years now as one of the top performers in an industry where not all labels are benefiting to the same degree from booming Chinese appetite for branded goods.
Its resilience in the third quarter - carried largely by a stronger-than-expected performance by its powerhouse Vuitton and its fashion and handbag unit - is likely to resonate for peers also riding that wave, like Gucci-owner Kering.
Companies more present in the watch market, however, like Omega owner Swatch Group or Cartier-parent Richemont, are more exposed to the turmoil in Hong Kong, a major center for luxury timepieces.
And many brands from Italy’s Prada to Burberry are still in turnaround mode and trying to refresh their image.
Overall, LVMH’s sales were up 17% to 13.3 billion euros ($14.60 billion) in the July to September period.
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