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LVMH Third-Quarter Sales Rise 24% on Watches, Handbags

LVMH Third-Quarter Sales Rise 24% on Watches, Handbags
At the fashion and leather-goods unit, the company’s largest, revenue increased 26 percent, led by the Louis Vuitton brand. Photographer: Chris Ratcliffe/Bloomberg

LVMH Moet Hennessy Louis Vuitton SA, the world’s largest luxury-goods maker, said third-quarter sales rose 24 percent, beating analysts’ estimates, as wealthy customers bought more watches and accessories.

Revenue increased to 5.11 billion euros ($7.2 billion) from 4.14 billion euros a year earlier, the Paris-based company said today. That compared with the 4.88 billion-euro average estimate of seven analysts compiled by Bloomberg.

The first nine months of 2010 confirmed the company’s confidence for the year, LVMH said. Demand for luxury goods is recovering as wealthy Asian shoppers splurge on timepieces and handbags, and retailers replenish inventories in the U.S. and Europe after the industry’s worst year on record. Burberry Group Plc, the U.K.’s largest luxury retailer, said yesterday that second-quarter revenue rose 11 percent, while Hugo Boss AG raised full-year sales and earnings forecasts today.

At LVMH “all divisions did better than we expected,” said Melanie Flouquet, an analyst at JPMorgan Cazenove in Paris. Watches and LVMH’s retail unit outperformed the most, she said.

LVMH fell 70 cents, or 0.6 percent, to 110.15 euros at 9:13 a.m. in Paris trading, after initially rising to a record 112 euros. The shares have risen more than 40 percent this year, giving the maker of Zenith watches and Fendi handbags a market value of about 54 billion euros.

Leather-Goods Unit

At the fashion and leather-goods unit, the company’s largest, revenue increased 26 percent, led by the Louis Vuitton brand. LVMH is building a new leather-goods factory in Marsaz, France as demand outstrips supply, Chief Executive Officer Bernard Arnault said in July.

The company will start selling a new line of leather goods in the fourth quarter, it said today, adding that “strong momentum” has returned to the Fendi and Donna Karan brands since the beginning of the year.

Watch and jewelry revenue advanced 30 percent. U.S. retailers have rebuilt their depleted inventories and sales to end-consumers have improved, Jean-Claude Biver, CEO of Hublot, the Swiss watch brand owned by LVMH, said last month. Hublot gained market share with its Big Bang and King Power lines.

Sales of wines and spirits gained 24 percent, while perfume and cosmetics advanced 17 percent, boosted by sales of Christian Dior perfume and lipsticks, LVMH said.

Revenue at the selective-retailing unit, which includes Sephora and DFS, rose 24 percent.

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