LVMH Sales Exceed Analysts’ Estimates on Demand for Leather Luxury Goods
LVMH Moet Hennessy Louis Vuitton SA (MC), the world’s largest luxury-goods maker, said first-quarter sales rose 17 percent, beating analysts’ estimates, as wealthy customers bought more Givenchy handbags and Hublot watches.
Revenue increased to 5.25 billion euros ($7.46 billion) from 4.47 billion euros a year earlier, the Paris-based company said today. That compared with the 4.98 billion-euro average estimate of six analysts compiled by Bloomberg. Excluding acquisitions and currency shifts, sales climbed 14 percent.
Demand for luxury goods has rebounded since the global recession of 2009 as wealthy consumers regained confidence and retailers replenished inventories. LVMH, which has built up a 20.2 stake in Hermes International (RMS) SCA, announced in March plans to acquire Bulgari SpA (BUL), the world’s third-largest jeweler, to double the size of its watch and jewelry unit.
“The group had an excellent start to the year, continuing the trends seen at the end of 2010,” LVMH said in the statement. The company aims “to increase once again in 2011, its leadership of the global high-quality products market.”
LVMH fell 2.25 euros, or 2 percent, to 109.75 euros today in Paris trading. The sales were announced after markets closed. The shares have retreated 11 percent this year, valuing the maker of Dom Perignon champagne at 53.8 billion euros.
Revenue at the fashion and leather-goods unit, LVMH’s largest, rose 17 percent, the company said, led by growth at the Louis Vuitton brand. Vuitton may hire as many as 700 leather workers this year to cope with rising demand, a person familiar with the plans said in February.
Watch and jewelry revenue advanced 28 percent. Sales of wines and spirits gained 20 percent. The quantity of champagne sold in the quarter rose 8 percent, while Hennessy cognac reported a 16 percent increase in volume, LVMH said.
Perfume and cosmetics sales advanced 9 percent, boosted by demand for Dior Addict lipstick and Guerlain’s Shalimar fragrance, LVMH said. Revenue at the selective-retailing unit, which includes Sephora and DFS, rose 20 percent.
Deutsche Bank AG cut its LVMH estimates last month after an earthquake and tsunami in Japan left almost 28,000 people dead or missing and triggered the world’s worst nuclear crisis in a quarter century. LVMH Chief Executive Officer Bernard Arnault said on March 31 that while the company’s Tokyo’s stores were “less full than usual,” the south and west of the country was as yet unaffected, expressing optimism for the medium-term.
Japan accounts for about 9 percent of LVMH’s total sales.
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