LVMH Rises After Easing Concern About Weakening Vuitton Demand
LVMH Moet Hennessy Louis Vuitton SA (MC) shares rose after the company said it raised prices at its flagship fashion and leather-goods brand in Europe, helping to dispel concern about growth at the business.
Vuitton’s organic third-quarter 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 brand by 8 percent in Europe in October, he said, adding that “the appetite for luxury goods is there.”
LVMH climbed as much as 3.2 percent as of 4:31 p.m. 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.
Luxury-goods makers have reported divergent sales patterns since the end of August. Burberry Group Plc (BRBY) said demand is slowing, particularly at lower price points, while Prada SpA and Hermes International SCA (RMS) 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 ($8.9 billion), the company said yesterday, adding it remains confident in its outlook for 2012. The median of six analysts’ estimates compiled by Bloomberg was 6.88 billion euros.
“The third-quarter figures reflect a tougher environment,” Guiony said. “One shouldn’t see the bottle half empty in my view.”
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