* Fashion and leather lfl Q4 sales 7 pct vs 3 pct in Q3
* Wines and spirits lfl Q4 sales 4 pct vs 9 pct in Q3
* LVMH says sees Q1 cognac sales to final customers up in
By Astrid Wendlandt
PARIS, Jan 30 LVMH, the world's No.1
luxury group, enjoyed a step-up in demand for its flagship Louis
Vuitton brand and other fashion labels in the fourth quarter and
predicted cognac sales in China would improve in the current
quarter to March.
Sales growth at LVMH's fashion and leather good unit, its
biggest business, accelerated to 7 percent in the quarter to
Dec. 31 from 3 percent in the previous three months, beating
analysts' growth expectations of 4-5 percent.
"Results were in line, but the sequential pick-up at Louis
Vuitton and the positive trend in cognac (expected in the first
quarter) should be well received by the market," said Antoine
Belge, a luxury goods analyst at HSBC.
The owner of Hennessy cognac and fashion brand Dior said the
profitability of Louis Vuitton, the group's main cash cow,
remained unchanged in 2013 and its upmarket repositioning
progressed, but it admitted to production constraints.
"We have waiting lists that are getting longer," Chief
Executive Bernard Arnault said on Thursday at the group's annual
results presentation at its Paris headquarters, referring to
Louis Vuitton, the No.1 luxury brand which generates more than 7
billion euros in annual sales.
When LVMH published its mid-year figures in July, there was
concern about Louis Vuitton losing momentum after having enjoyed
stellar growth for years.
Those worries continued to weigh on the group, leading its
shares to be among the worst performers in the European luxury
goods sector in 2013. Last year, LVMH shares
lost 4.5 percent, while this month they are down 7.6 percent.
"Fashion and leather and Louis Vuitton growth accelerated
which bodes well, but this did not result in margin expansion,"
noted Bernstein luxury goods analyst Mario Ortelli.
LVMH's improving fortunes contrasted with that of Italian
rival Tod's which published disappointing
fourth-quarter figures on Wednesday, helping cement the view
that major luxury brands such as Louis Vuitton and Kering's
Gucci were suffering from logo fatigue.
LVMH Finance Director Jean-Jacques Guiony estimated Louis
Vuitton sales to Chinese consumers last year, both at home and
abroad, rose 5 percent, well below the 10-20 percent growth
rates the brand enjoyed in the country in previous years.
As Louis Vuitton put brakes on worldwide expansion, the
numbers published for the brand are close to what its same-store
sales growth would be, as they were previously boosted by shop
openings, analysts say. LVMH does not publish same-store sales
for any of its brands.
Recurring profit from LVMH's fashion and leather unit fell 4
percent to 3.14 billion euros in 2013, a drop the group blamed
on investments in the retail networks and image of brands such
as Fendi and Berluti.
Asked about LVMH's acquisition strategy going forward,
Arnault said the group was open to strategic opportunities but
was not studying any target at the moment.
LVMH said it expected sales to end-customers in China to be
"positive" in the first quarter after having joined the ranks of
rivals Diageo Pernod Ricard and Remy Cointreau
which suffered from lower demand for premium spirits
Sales growth at the group's wines and spirits unit fell to 4
percent from 9 percent between the third and fourth quarter.
"Consumption of luxury goods has slowed down in China,
particularly in wines and spirits and the sales of cognac have
been affected," Arnault said, admitting that cognac stocks in
China had been too high compared to the end-demand.
LVMH's overall sales figures benefited from strong growth at
its duty-free and Sephora cosmetics retail chain as organic
sales rose 17 percent in 2013.
Arnault said Sephora was on its way to becoming the biggest
distributor of perfume and cosmetics in the United States where
sales had been rising in "double digit" terms.
The group said it had 150 Sephora shops in China and was
opening about 30 shops a year in that country, where it added
Sephora was profitable.
LVMH's annual sales reached 29.15 billion euros in 2013,
roughly in line with forecasts, while profit from recurring
operations rose 2 percent to 6.02 billion, compared with a 13
percent rise the previous year. The group's operating margin
slipped to 20.7 percent from 21.1 percent in 2012.