LVMH Moet Hennessy Louis Vuitton SA (MC), the world’s largest luxury-goods maker, said growth in fashion and leather-goods sales rebounded in the fourth quarter, boosting optimism for a turnaround at its biggest brand.
Sales at the unit, which includes Louis Vuitton and Kenzo, rose 7 percent on an organic basis in the final three months of the year. Growth accelerated from 4 percent in the first nine months of the year, having weakened in the previous quarter.
“The key fashion & leather goods division seems to have seen a fairly sharp rebound,” said Rahul Sharma, managing director of Neev Capital, an advisory firm in London that follows the luxury industry. “I’m surprised as it takes a lot to move the needle at this division.”
Louis Vuitton is introducing more expensive products and opening fewer stores as LVMH’s biggest and most profitable brand seeks to move upscale amid softening demand in Europe and Asia. The transition is going to take some time, Chief Financial Officer Jean-Jacques Guiony has said. Industry sales, which rose at the weakest pace in four years in 2013, according to Bain & Co., could remain under pressure for at least another six months, suitmaker Ermenegildo Zegna SpA has predicted.
LVMH said profit from recurring operations rose 2 percent to 6.02 billion euros ($8.2 billion) in 2013, matching the median of 19 analysts’ estimates compiled by Bloomberg.
“Despite an uncertain economic environment in Europe, LVMH is well-equipped to continue its growth momentum across all business groups in 2014,” the company said in a statement.
Total 2013 revenue advanced to 29.15 billion euros, LVMH said. Analysts predicted 29.4 billion euros. Sales rose 8 percent on an organic basis, matching estimates.
Competitor Salvatore Ferragamo SpA (SFER) also reported revenue that met estimates today as sales gained 9 percent in the fourth quarter, and 11 percent in the year, at constant exchange rates.
LVMH is boosting investment in some of its smaller fashion brands and buying stakes in others to help offset slowing growth at Vuitton. It’s also shuffling Vuitton’s management, appointing Delphine Arnault as executive vice president and Nicolas Ghesquiere as artistic director last year.
The perfumes and cosmetics unit also saw an improvement in the fourth quarter, according to Sharma. Organic sales at the division rose 10 percent, with growth accelerating from 5 percent in the first nine months of the year.
Revenue growth also accelerated at the watches and jewelry division, though slowed to 4 percent at the wines & spirits unit, which includes brands such as Dom Perignon champagne.
LVMH fell 0.7 percent to 122.5 euros in Paris trading today. The results were released after markets closed.
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