LVMH has reported a 4% revenue rise to €21.4bn ($27bn) for the first nine months of 2014 but the pressure is on in Asia.

 

The luxurygoods company said that DFS benefited from sustained airport activity ‘while certain tourist destinations suffered the repercussions of financial or geopolitical changes’.

 

The good news was that ‘organic revenue’ also grew by 4% compared to the same period in 2013 and LVMH Moët Hennessy Louis Vuitton was also upbeat that ‘all business groups grew’, with the exception of Wines & Spirits. This sector continued to suffer from destocking by distributors in China following the government’s determined drive against corporate gift giving and bribery.

 

With organic revenue growth of 4% in the third quarter, LVMH says the trend remains comparable to that recorded in the first half of the year. An improved growth rate in Europe and the United States during the quarter compensated for the slowdown observed in Asia.

 

In short, LVMH acknowledges that it is ‘an uncertain economic and financial environment’ and as such it will continue its strategy focused on ‘innovation and targeted geographic expansion in the most promising markets’. The company said: “LVMH will rely on the power of its brands and the talent of its teams to further extend its global leadership in the luxury market in 2014”.

 

 

FAST GROWING RETAIL DIVISION

The Selective Retailing business group – which is fast catching up the leading Fashion & Leather Goods division in terms of sales turnover, recorded organic revenue growth of 8% for the first nine months of 2014. LVMH said: “DFS benefited from sustained airport activity while certain tourist destinations suffered the repercussions of financial or geopolitical changes”.

 

By contrast, the luxurygoods company said: “Sephora continued to gain market share in key regions. Comparable store revenue growth was particularly strong in the United States and the Middle East. The expansion of the distribution network continues with the opening of its first stores in Indonesia.

 

“Online sales are rapidly increasing in all regions, confirming its leadership in the digital and mobile space.” The Selective division generated sales of €6.6bn ($8,3bn) +5% in reported terms.

 

The Fashion & Leather Goods business group – LVMH’s largest sales division – recorded organic revenue growth of 3% for the first nine months of the year. The company said that Louis Vuitton continued its strong momentum in innovation and creative development driven by Nicolas Ghesquière.

 

It added: “True to the Maison’s spirit of innovation, collaboration and boldness, the launch of the new Monogram collection, as interpreted by six famous designers, will be one of the highlights of the fourth quarter. In parallel, new leather lines continue to progress.

 

P&C OUTPERFORMS MARKET

“Loro Piana remained focused on its strategy of qualitative development. Fendi and Céline made good progress and continued to expand their leather goods and footwear collections while developing their store networks. Other brands, such as Givenchy, Berluti and Kenzo, continued to strengthen their positions”. This division generated €7.6bn ($9.6bn) which corresponded to +8% in reported terms and +3% under organic measure.

 

Perfume and Cosmetics came in at number three with sales of €2.8bn ($3.5bn) up 4% in reported terms and a rise of 8% in organic, as LVMH pointed out that it outperformed the market.

 

The luxurygoods company said: “Parfums Christian Dior continued to benefit from the momentum of its iconic products, in particular with new momentum for J’Adore and the success of Dior Addict.

 

“The make-up segment also contributed to the good performance of the brand. Guerlain was boosted by the launch of its new men’s fragrance, L’Homme Idéal, and the growing success of its premium skincare range Abeille Royale. Fresh, Benefit and Make Up For Ever enjoyed excellent performances”.

 

Not so dynamic was the Wines & Spirits division, where sales for the first nine months declined by 7% in reported accountancy and by -3% to €2.6bn ($3.2bn) under organic measure.

 

 

ASIA IS A BIG CONCERN

LVMH commented that this group suffered from the continued destocking in the Cognac market in China where it has traditionally sold very high value products. However, continued destocking by distributors has continued, while Hennessy is said to have had a better time and generated ‘excellent momentum’ in the United States. Also more positive was the Champagne sales performance in the third quarter, which LVMH said was driven by strength in the American and Japanese markets.

 

Last, but not least, the growing Watches & Jewelry business group reported organic revenue growth of +5% for the first nine months of 2014 to €1.9bn ($2.4bn) and +2% in reported terms. LVMH commented that the third quarter showed ‘a notable acceleration in the jewellery segment, driven notably by Bvlgari, while watches continued to be impacted by the cautious purchasing behaviour of multi-brand retailers in an uncertain economic environment.

 

It added that the launch of the new watch for women Lvcea by Bvlgari and the success of Hublot’s iconic lines were the key highlights of the quarter.