UPDATE 1-LVMH says no major slowdown at Louis Vuitton in Q3

Tue Oct 16, 2012 11:55am EDT

* LVMH says Louis Vuitton Q3 comparable to Q2

* Says no drop in demand but comparative basis high

By Astrid Wendlandt

PARIS, Oct 16 (Reuters) - French luxury group LVMH said its flagship Louis Vuitton brand had not suffered any major slowdown in like-for-like sales growth in the third quarter against the previous three months.

The Paris-based group calmed investor concerns that the brand's growth was running out of steam, particularly in Asia, after enjoying years of high growth, sending the stock up 3.6 percent to close at 128.25 euros.

"There is no major slowdown in the third quarter compared to the second quarter," LVMH Chief Financial Officer Jean-Jacques Guiony told a conference call with analysts on Tuesday, a day after reporting third-quarter sales.

"Our figures for Louis Vuitton are pretty comparable to the second quarter."

Guiony added, however, that there had been "some slowdown here and there", particularly in Asia outside China, where there were lower tourist flows this year compared with last year.

The CFO said there was no drop in demand for Louis Vuitton products - which include LV-embossed canvas bags costing 600 euros ($780) - but that year-ago comparative figures were high.

Referring to Louis Vuitton's sales performance globally, Guiony said: "Europe is a bit higher, U.S. a bit lower and China is close to (the first half), with low single-digit (growth)."

Consultancy Bain & Co forecast global luxury sales growth would slow to 10 percent this year at current exchange rates from 11 percent in 2011.

"Vuitton is growing faster than that," Guiony said.

FASHION-SAVVY

Louis Vuitton, which is the world's biggest luxury brand in terms of sales with revenue of more than 7 billion euros, makes up about 75 percent of the fashion and leather sales of parent LVMH.

There have been concerns among luxury investors that Chinese consumers were starting to fall out of love with big brands such as Louis Vuitton and Gucci as they became more fashion-savvy.

Some investors also believe the Chinese government's crackdown on corruption coupled with growing criticism of conspicuous consumption has encouraged Chinese consumers to opt for less logo-branded, more discreet luxury goods.

In its report published on Monday, Bain said the Chinese had become the world's biggest buyers of luxury goods ahead of the Japanese, the Americans and the Europeans. They had also become increasingly sophisticated, "shifting from over-exposed logo brands to absolute quality products".

Guiony conceded there was a "wait and see" attitude among luxury buyers in China due to the current government change, which he forecast would take until "beyond the fourth quarter" to fade.

Revenue generated by LVMH's fashion and leather goods division rose 5 percent in the third quarter against 8 percent in the second quarter and 12 in the first three months of the year.

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