Louis Vuitton’s parent has luxury goods revenue in the bag
Chinese are still in love with LVHM, and more buying on the mainland makes up for Hong Kong blues
Paris — LVMH bucked concerns about the impact of protests in Hong Kong on sales of luxury goods to the key Chinese consumer market, throwing down a gauntlet to rivals with faster-than-expected revenue growth.
Third-quarter sales of fashion and leather goods rose 19% as the Paris-based company that’s seen as a bellwether for the wider luxury sector flagged “remarkable” performances at Louis Vuitton and Christian Dior. Analysts had predicted a 15% gain on a comparable basis.
The strong performance allays about concerns about the effects of the Hong Kong disruptions, showing that Chinese demand, which is increasingly driving growth in the global luxury industry, remains robust. The demonstrations against the tightening grip of China’s government in the city have curbed travel to Hong Kong — a key shopping destination — by mainland consumers, but they’re still splashing out on high-end fashions elsewhere.
“We believe that the bulk of the Hong Kong weakness has been compensated in other markets,” Citi analyst Thomas Chauvet said in a note. “This sets the bar pretty high for peers.”
Total sales at the luxury conglomerate, which also makes Dom Perignon Champagne and owns cosmetics retailer Sephora, rose 11% to €13.3bn, beating the 9% consensus estimate.
“The US and Europe saw good progress in the third quarter, as did Asia, despite the difficult context in Hong Kong,” the company said in a statement on Wednesday after the close of trading.
LVMH shares have risen 38% so far this year. In midday trading in Hong Kong on Thursday, shares of fashion rival Prada were down 0.4%. Hong Kong-listed beauty-products company L’Occitane International was up 2.5%.
Christian Dior Couture has accelerated since the arrival of a new men's wear chief, Kim Jones. The brand has reissued men’s versions of best-selling Dior products for women like Saddle bags and Bar suits.
Men’s wear revamp
Louis Vuitton, the company’s largest and most profitable brand, is raking in the buzz from increased online marketing spending. The label has also revamped its men’s wear under designer Virgil Abloh, known for his streetwear brand Off-White and work as a creative consultant to Kanye West.
Forecasts for the luxury giant’s growth were tempered as LVMH boutiques in Hong Kong became a backdrop for protests that spilled from the city’s streets to its airport and shopping malls. About 6% of the company’s sales were registered in Hong Kong dollars during the first half of the year, according to an interim financial report.
The protests have slammed a tourism industry that used to thrive on visits from mainland China, raising questions on the future of Hong Kong as a luxury hub. Hong Kong’s retail sales by value plunged a record 23% in August from a year earlier as demand for luxury goods such as jewellery and watches plummeted.
Mainland Chinese have been doing more of their shopping close to home as Beijing cut import duties, bringing down local prices, and cracked down on the widespread practice of returning home from overseas with undeclared purchases.
The protests are expected to speed up that trend. Still, analysts anticipate that most luxury brands will make up only about half of their lost Hong Kong sales elsewhere.
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