Picture: BLOOMBERG/AKOS STILLER
Picture: BLOOMBERG/AKOS STILLER

Paris — On Wednesday, Louis Vuitton owner LVMH set a high bar for rival luxury goods companies trying to capitalise on Chinese demand for high-end handbags and clothing, with stronger-than-expected sales growth in the first quarter.

The conglomerate, which owns other labels such as Christian Dior in fashion and Krug in Champagne, was boosted by a strong performance in its leather goods unit, in particular, while sales of spirits such as Cognac improved from a quarter earlier.

Its performance bodes well for other companies that derive much of their profit from high-margin handbags, and which have proved a hit with consumers in recent years, such as Kering’s Gucci or Birkin bag maker Hermès.

The group, which cited a “buoyant environment” at the start of the year, posted revenue of €12.5bn in the period, up 16% as reported. It rose 11% on a like-for-like basis, which strips out currency swings and the impact of acquisitions or disposals, beating analyst forecasts and marking an acceleration from the 9% growth notched up a quarter earlier.

The company did not break down its performance by region, with more details due during a conference call on Thursday. However, it had previously flagged enduring demand in China at the start of 2019, a key market for luxury brands now trying to increasingly court Chinese consumers on their home turf.

Sales at LVMH’s leather goods unit, which is largely driven by Vuitton, rose 15%, beating the roughly 11% to 12% growth expected by analysts.

Reuters