UPDATE 2-LVMH Q1 sales beat forecast, sees spending rebound

Tue Apr 13, 2010 3:56am EDT

* LVMH Q1 sales 4.472 bln euros vs consensus 4.207 bln euros

* Q1 sales up 13 pct like-for-like, 11 pct reported

* Says saw a strong rebound in U.S. and Europe.

* Shares up 3.25 pct, near 10-year high, leads CAC40

(Adds details, analyst quote, background, shares)

By Astrid Wendlandt, European Luxury Goods Correspondent

PARIS, April 13 (Reuters) - LVMH (LVMH.PA), the world's biggest luxury group, posted a forecast-beating 13 percent rise in comparable sales for the first quarter, helped by a strong rebound in the U.S. and Europe.

The upbeat news from the Paris-based maker of Louis Vuitton handbags and Hennessy cognac, helped cement the view that discretionary spending was firmly on the mend after suffering its worst slump in two decades.

LVMH said its wines, spirits, watches and jewellery businesses, all hit hard by the downturn, had benefited from an improvement in consumer spending and demand from distributors replenishing their stocks.

Shares in LVMH, the first major European luxury group to post first-quarter figures, jumped to 92.36 euros in high volume trade, their highest point since September 2000, and by 0722 GMT were still up 3.25 percent at 91.62 euros, the top French blue-chip gainer.

The rest of the luxury sector followed in its slipstream. Shares in PPR (PRTP.PA), which owns Gucci Group, were up 1.63 percent, and shares in Richemont (CFR.VX) were up 1 percent.

LVMH generated revenue of 4.472 billion euros in the three months to March 31, beating a forecast of 4.207 billion euros in a Reuters poll.

"It is much better than expected, across the board," said Dennis Weber, analyst at Evolution Securities.

The group's 13 percent like-for-like growth compared with expectations of 6-7 percent, analysts said.

"There seems to be a perfect alignment of stars for LVMH at the moment," HSBC said in a note.

On a reported basis, sales were up 11 percent.

WINES AND SPIRITS UP 20 PCT

First-quarter sales at its wines and spirits unit, which makes Moet & Chandon and Ruinart champagne and Glenmorangie whisky, rose 20 percent on a comparable basis to 635 million euros.

Meanwhile, LVMH's watches and jewellery business, whose brands include Tag Heuer and Chaumet, reported like-for-like growth of 34 percent to 204 million euros.

Philippe Pascal, the head of the unit, forecast at the Basel jewellery and watch fair last month that first-quarter sales would be up by more than 20 percent, driven mostly by retailers rebuilding their stocks.

LVMH's trading statement comes a week after the French group announced plans to expand in the luxury hotels business, starting with two projects in the Middle East in partnership with Orascom Holdings (ODHN.S).

LVMH shares have underperformed the bull run in the luxury sector. Though they have gained 70 percent in the past year, other luxury stocks such as Richemont and Swatch (UHR.VX) have more than doubled.

LVMH shares are valued at 20 times this year's earnings, at the top end of the European luxury goods sector average of 18-20 times, leading many brokers to see the stock as fairly valued. (Additional reporting by Blaise Robinson and Juliette Rouillon, Editing by Will Waterman)

Photo

After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.