LVMH sales soared as Chinese shoppers bounced back from the world’s strictest lockdowns and splashed out on luxury handbags and jewelry. The shares rose to a record.
Organic sales at the group’s biggest unit, which sells fashion and leather goods, rose 18 percent in the first quarter, LVMH said late Wednesday. That’s almost twice the gain that analysts were expecting from Europe’s most valuable company.
The division’s growth in China came in at a double-digit percentage, LVMH Chief Financial Officer Jean-Jacques Guiony told analysts on a call.
LVMH is “extremely optimistic for China in 2023,” Guiony said. “Numbers in the first quarter bode well for the rest of the year.” The executive, however, said LVMH is seeing a slowdown in US growth, with cognac demand and sales of leather goods particularly affected.
“There’s a lot to like in these results despite the US,” said Rogerio Fujimori, an analyst at Stifel, describing the first-quarter performance as a “strong start to the year.”
LVMH shares rose as much as 3.7 percent to a record in early Paris trading, lifting the Louis Vuitton-owner’s market value to about €433 billion ($476 billion). The stock has climbed by more than a quarter this year after the slump in Chinese demand receded and the mainland moved toward living with the coronavirus.
Demand grew in every region in the first three months as shoppers snapped up luxury items, from Christian Dior handbags to Tiffany rings. Japan saw the strongest quarterly growth, rising 34 percent on an organic basis, followed by a 24 percent uplift in Europe and a 14 percent jump in Asia outside Japan.
Although the US grew 8 percent, Guiony said LVMH had seen a “little bit of slowdown there for its fashion and leather goods, as well as jewelry and watches.”
More notably, demand for its Hennessy cognac was severely hit there as consumers pushed back against price increases, Guiony said. The drinks maker led those hikes following rising input costs for the glass used in the bottles, he explained. Guiony described the cognac market in the US as being “cyclical historically.
When it comes to further product price increases, Guiony said fewer hikes are likely this year.
“Clearly China is booming and we don’t expect that to fade away any time soon,” Aurelie Husson-Dumoutier, an analyst at HSBC, said in an interview with Bloomberg TV. “If the US consumer doesn’t bounce back very strongly, we still have very very strong prospects from Europe that has been stronger for longer and also China.”
LVMH will reach a milestone when Tiffany’s flagship store in New York City reopens at the end of this month. This shop contributed almost 10 percent of total Tiffany sales under the previous owners, Guiony told analysts. Its reopening should have a “positive impact on sales while also benefiting the overall branding and marketing efforts of the US jeweler,” he added.
The French luxury conglomerate said its selective retailing unit, which includes Sephora, grew 28 percent, the strongest overall rate among all the divisions.
Apple makes almost 7pct of its iPhones in India, triples output to $7 blnApple Inc. assembled more than $7 billion of iPhones in India last fiscal year, tripling production in the world’s fastest-growing smartphone arena ... Technology
Zara, Bershka owner gets approval to sell Russian business to UAE’s DaherInditex SA, which runs the Zara and Bershka clothing chains, obtained approval to sell its business in Russia to Daher Group of the United Arab ... Economy
China’s super rich population drops as tech crackdown, global factors hurt wealthMore than 400 people lost their billionaire status last year, most from China, as global monetary tightening, COVID-19 disruptions, and Beijing’s ... World News