Dive Brief:
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LVMH Moët Hennessy Louis Vuitton reported on Monday a 4% increase in revenue in the first nine months of the year, reaching €26.3 billion, compared to 5% growth in the year ago period. With organic revenue growth of 6%, the third quarter saw a particular acceleration.
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Q3 sales rose to €9.14 billion euros ($10.2 billion), beating analyst expectations cited by Bloomberg for €8.92 billion. Its fashion and leather goods business saw organic revenue growth of 2% for the first nine months of 2016, with a 5% increase in Q3 sales, thanks to a rebound in demand for leather.
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LVMH's Sephora brand reported organic revenue growth of 6% for the first nine months of 2016, with online sales rising rapidly across all regions.
Dive Insight:
LVMH appears to be rising in a retail environment where luxury sales have been hit on the manufacturing and sales sides by the strong dollar and where off-price retail is among the few bright spots. “Fashion and leather goods is the big mover, though perfumes and cosmetics and selective retailing were also better,” John Guy, an analyst at MainFirst Bank AG, told Bloomberg. “Clearly momentum has improved for Louis Vuitton, notably in mainland China and in spite of weak tourism flows into France.”
Asia, excluding Japan, showed a significant improvement during the quarter, and sales in the U.S. and Europe are also “well positioned.” LVMH’s approach in general is a vertical, luxury-focused model, and in July sold its Donna Karan line, which had moved toward wholesale and away from her higher-priced apparel to lower-priced lines in recent years, to G-III Apparel Group, Ltd. That transaction, which is subject to the approval of antitrust regulators, is due to be completed in January 2017, the company said.
That all points to the fact that the luxury retail company is focused on its core categories and its sales approach, though it’s also moving into e-commerce, a particularly difficult area for high-fashion companies. “In an uncertain geopolitical and currency environment, LVMH will continue its strategy focused on innovation and targeted geographic expansion in the most promising markets,” the company said in a statement.
