LVMH May Rise in Paris After Net Jumps 53%, Beating Estimates
A Louis Vuitton branded handbag sits on display. Photographer: Chris Ratcliffe/Bloomberg
LVMH Moet Hennessy Louis Vuitton SA, the world’s largest maker of luxury goods, rose in Paris trading after reporting a 53 percent surge in first-half profit that beat analysts’ estimates.
The shares advanced as much as 3.3 percent to 95.30 euros as of 9:31 a.m. in Paris. Net income rose to 1.05 billion euros ($1.36 billion), the Paris-based company said yesterday in a statement after the market closed. The average estimate of 10 analysts compiled by Bloomberg was 956.2 million euros.
“The performance across all divisions at LVMH further confirms that the recovery in luxury -- versus an extremely difficult 2009 -- continues to gain momentum,” said Luca Solca, an analyst at Sanford Bernstein, in a report. LVMH’s results were “impressive,” he added.
Demand for luxury goods is returning as Chinese shoppers buy more high-end clothing and accessories and U.S. and European retailers replenish inventories after the recession. Hermes International SCA, the French maker of luxury handbags and silk scarves, said last week that revenue may grow as much as 12 percent this year, excluding currency swings.
LVMH is “fairly confident” on the company’s performance in the second half, Chief Executive Officer Bernard Arnault said yesterday at a presentation in Paris. The sales trend in July matches the first six months of the year, he said. Second- quarter sales advanced 22 percent to 4.63 billion euros, boosted by favorable currency moves and increased demand for fashion and leather goods.
New Products
“In the current recovery from the economic crisis, LVMH will continue to gain market share thanks to the numerous product launches planned before the end of the year, to its geographic expansion in promising markets and to its cost management,” the company said in the statement.
LVMH will also build a new leather goods factory in Marsaz, France, adding 320 new craftsmen, and initiate production at a new tannery in Belgium. Demand is outstripping supply, Arnault said. “There’s a waiting list at Louis Vuitton.”
First-half revenue increased 16 percent, or 14 percent excluding currency swings and acquisitions, LVMH said. There is a “strong increase” in local shoppers at the company’s stores around the world, Arnault said. “It’s not just tourists.”
On a local currency basis, sales gained 18 percent in the U.S., 21 percent in Asia and 11 percent in Europe. Sales rose 27 percent in China and declined 6 percent in Japan.
Louis Vuitton
At the fashion and leather-goods unit, LVMH’s largest, sales climbed 18 percent, led by “double-digit organic revenue growth” at the Louis Vuitton brand, the company said. So-called profit from recurring operations increased 28 percent to 1.18 billion euros, the maker of Fendi bags said.
Watch and jewelry revenue advanced 28 percent, slowing from the first-quarter’s 33 percent surge, as restocking effects faded. Sales of wines and spirits gained 21 percent, while perfume and cosmetics advanced 12 percent, LVMH said. Revenue at the selective retailing unit, which includes Sephora and DFS, rose 14 percent.
LVMH will pay an interim dividend of 70 cents a share on Dec. 2, the company said. LVMH will also use cash to buy back debt, which was 2.57 billion euros as of June 30, Chief Financial Officer Jean-Jacques Guiony said.
To contact the reporters on this story: Andrew Roberts in Paris at aroberts36@bloomberg.net.
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