(Update: details on the evolution of sales in China in the third quarter, comments from the CFO)
PARIS (Agefi-Dow Jones)–The world’s leading luxury goods company LVMH expressed confidence on Tuesday that it will continue to post double-digit sales growth despite the sharp slowdown in the global economy and inflationary pressures.
“Despite an uncertain geopolitical and economic context, the group is confident in the continuation of the current growth and will maintain a policy of cost control and investment selectivity”, underlined LVMH in a press release.
During the quarter ended at the end of September, the turnover of the group with 75 luxury brands reached 19.75 billion euros, up 27% in published data and 19% at constant exchange rates and perimeter.
According to the consensus established by FactSet, analysts expected an average turnover of 18.9 billion euros for the period.
“Activity in the third quarter is very similar to what we experienced in the first half,” LVMH chief financial officer Jean-Jacques Guiony said during a conference call with analysts.
“Europe, the United States and Japan, up sharply since the beginning of the year, are benefiting from solid demand from local customers and the recovery in international travel. Asia (including China ) experienced less progress in the first nine months of 2022, even if the last quarter improved thanks to the partial easing of health restrictions,” the group said in a press release.
Stability in China where a rebound is expected
Organic growth in Asia, excluding Japan, was 6% in the third quarter year on year, after an 8% decline in the second quarter. In China, Louis Vuitton experienced stable sales compared to the same period in 2021, said Jean-Jacques Guiony, who said he expected a rebound in this market as soon as all health restrictions are lifted.
The financial director also put the impact of inflation and the economic slowdown on the group’s performance into perspective. “Luxury is not a sector insensitive to the economic situation but our customers react more to shocks than to variations in the gross domestic product”, he underlined. For the time being, LVMH does not see a drop in demand for the most expensive products and manages to pass on the increase in costs in its prices, he underlined.
Illustration of this favorable situation, sales of the fashion and leather goods division, which notably houses Louis Vuitton and Christian Dior, jumped 24% over the first nine months of the year, at constant exchange rates. The division alone generates nearly three-quarters of the group’s profits.
LVMH sales amounted to 56.5 billion euros in the first nine months, up 20% like-for-like.
-Francois Schott, Agefi-Dow Jones; +33 (0)1 41 27 47 92; [email protected] ed: LBO – ECH
LVMH FINANCIAL RELEASES:
http://www.lvmh.fr/communication-financiere/communiques
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October 11, 2022 13:25 ET (17:25 GMT)