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LVMH Rises After Easing Concern of Weakening Vuitton Demand

China Luxury Sales to Get Boost After Leadership Change
Women walk past a Louis Vuitton store, operated by LVMH Moet Hennessy Louis Vuitton SA, in the Tsim Sha Tsui area of Hong Kong, China. Photographer: Lam Yik Fei/Bloomberg

LVMH Moet Hennessy Louis Vuitton SA shares rose after the French company said it raised prices at its flagship fashion and leather-goods brand in Europe, helping to dispel concern about growth at the business.

Louis Vuitton’s third-quarter organic sales growth “doesn’t differ materially” from the previous three months, LVMH Finance Director Jean-Jacques Guiony said on a conference call today. The Paris-based company raised prices at the fashion label by 8 percent in Europe in October, he said.

The world’s largest luxury-goods maker climbed 3.6 percent in Paris, reversing an earlier decline of as much as 1.6 percent after reporting the slowest sales growth since 2009. Organic revenue, which excludes currency swings and acquisitions, climbed 6 percent in the third quarter, LVMH said yesterday after markets closed, missing the 7 percent average estimate of 10 analysts surveyed by Bloomberg.

Guiony “made it quite clear that there was no major slowdown in demand for the company’s products,” Barbara Ambrus, an analyst at Landesbank Baden-Wuerttemberg in Stuttgart, said by e-mail. While third-quarter performance was burdened by excess watch and jewelry inventories and a relative slowdown in tourism in Asia, the finance director had “a rather reassuring tone” on the call.

Diverse Patterns

Luxury-goods makers have reported divergent sales patterns since the end of August. Burberry Group Plc said demand is slowing, particularly at lower price points, while Prada SpA and Hermes International SCA said they’ve yet to be affected by the weakening world economy. Sales of expensive handbags and other items may advance 5 percent in 2012, excluding currency swings, less than half last year’s pace, Bain & Co. estimated.

Total revenue at LVMH in the quarter rose 15 percent to 6.9 billion euros ($9 billion), the company said yesterday. The median of six analysts’ estimates compiled by Bloomberg was 6.88 billion euros.

“All in all, we are operating in a tougher environment, but we are reasonably confident for the near future,” Guiony said. “One shouldn’t see the bottle half empty in my view.”

Asians are still spending in Europe even as the growth rates of Chinese and Japanese tourism within Asia are slowing, the finance director said.

Sales of LVMH’s other fashion and leather-goods labels such as Fendi and Celine slowed in the third quarter, Guiony said, attributing the deceleration to a more selective wholesale policy.

LVMH will probably raise cognac and champagne prices by 2 percent to 3 percent from the first quarter, Guiony also said.

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