- Revenue at division rises 3 percent, missing analyst estimate
- Louis Vuitton brand slowed down in U.S., China, analyst says
LVMH fell in Paris trading after reporting third-quarter fashion and leather goods sales that trailed analysts’ estimates amid softening demand in China.
Revenue at the division that includes Louis Vuitton handbags and Marc Jacobs dresses rose 3 percent on an organic basis, trailing the 6 percent median of analysts’ estimates. The shares fell 2.9 percent to 161.75 euros as of 9:03 a.m. in the French capital.
China’s slumping stock market and currency devaluation have added to the challenges luxury companies face in the world’s second-largest economy. Sales of leather-goods, cognac and watches have fallen in the country following a clampdown on extravagance, though Europe and Japan have benefited as Chinese consumers buy abroad. In the U.S., growth has slowed amid financial market turmoil and as the strong dollar deters spending by tourists.
The quarterly figures, reported late Monday, “were a mixed bag,” said Thomas Chauvet, an analyst at Citigroup in London. “Trends at Louis Vuitton slowed down in the U.S. and Greater China.”
Fashion and leather goods is LVMH’s largest division, accounting for more than a third of sales and more than half of earnings before interest and tax.
Total revenue for the quarter climbed 16 percent to 8.58 billion euros ($9.76 billion). Revenue advanced 7 percent on an organic basis, topping the 5.4 percent median of 18 analysts’ estimates compiled by Bloomberg.
The wines-and-spirits unit provided the biggest surprise, showing a 16 percent increase in organic revenue for the quarter, compared with the median estimate for 5 percent growth. Shipments of Hennessy cognac were helped by a rebound in China, LVMH said.
“In an uncertain economic and financial environment, LVMH will continue its strategy focused on innovation and targeted geographic expansion in the most promising markets,” the Paris-based company said.
LVMH, whose full name is LVMH Moet Hennessy Louis Vuitton SE, will host a conference call with analysts Tuesday at 3 p.m. in Paris.