PARIS Louis Vuitton sales to Chinese and European customers improved in the first quarter, parent LVMH (LVMH.PA), the world's biggest luxury group, said on Thursday after posting forecast-beating fashion and leather sales.
Fashion brand Louis Vuitton, the group's biggest contributor to profit and sales, has been enjoying a pick-up in demand in recent months, helping alleviate concerns it lost its sparkle after a decade of strong growth.
LVMH Chief Financial Officer Jean-Jacques Guiony said Louis Vuitton sales to Chinese customers had gone from single digits to nearly double digits in the first quarter and were measured in "double digit" terms overseas.
He also said that Louis Vuitton sales to domestic consumers in Europe had "slightly improved" year-on-year.
"A very positive outcome in a context of weak trends as seen or expected at soft luxury peers," Citi analysts said of LVMH's first-quarter performance, citing rivals such as Tod's (TOD.MI), Gucci (PRTP.PA) and Prada (1913.HK) that had suffered from deteriorating demand.
Shares in LVMH (LVMH.PA) rose strongly after the group posted a 9 percent rise in first-quarter like-for-like sales at its Fashion and Leather division, dominated by Louis Vuitton, beating market expectations of 5-7 percent.
Guiony said Louis Vuitton's growth in the first quarter was close to that of the division, or 9 percent, up from an estimated growth of 3.5-4 pct overall in 2013 and 5 pct in the fourth quarter.
Growth at the unit had started to improve in the final three months of last year, reaching 7 percent, up from 3 percent in the previous third quarter.
LVMH shares touched their highest level in more than four months, up by more than 4 percent at over 142 euros in morning trade, and helping boost rivals such as Gucci's owner Kering which was up nearly 4 percent at 155 euros. Kering publishes its first-quarter sales on April 24.
LVMH shares, among the worse performers in the luxury sector in 2013, have climbed back since the beginning of the year and are now up 3 percent, while the European luxury goods sector on average is down around 4 percent.
On Thursday LVMH shares closed up 3.22 pct at 140.85 euros.
LVMH said Louis Vuitton's performance had been propelled by "strong creative momentum" after the first collection of Nicolas Ghesquiere, who took over the creative helm of the brand in November, replacing Marc Jacobs who had done the job for 16 years.
Analysts said sentiment towards LVMH shares would have been stronger had the group not posted a bigger than expected drop in wines and spirits revenues, which were hit by Chinese retailers' cutting cognac stocks.
"This should not have been a surprise as de-stocking by retailers and pressure from anti-corruption measures in China have been weighing on the industry for several quarters, although we had hoped LVMH would continue to buck the trend, helped by its ability to shift inventory to markets with strong demand," UBS said in a note.
(Editing by Mark Heinrich)