by Mimosa Spencer
PARIS (Reuters) – Sales at LVMH, the world’s number one luxury goods company, rose 17% in the second quarter, as a rebound in Asia helped offset a decline in the United States where inflation and economic turmoil have dented demand for high-end products.
The French group, which owns 75 brands, including Louis Vuitton and Dior as well as Hennessy cognac and jeweler Tiffany, announced on Tuesday that it had achieved a turnover of 21.21 billion euros over the April-June period.
This 17% sales growth slightly exceeds the consensus of 16%, according to data from Visible Alpha.
The fashion and leather goods division, which houses Vuitton and Dior, for its part recorded growth of 21% in the second quarter, slightly above the expectations of analysts who expected an average of 20% according to the consensus of Visible Alpha.
While LVMH, seen as a barometer of the luxury sector, is used to reporting results significantly above expectations, some analysts saw this growth as reason to believe the sector was heading towards normalization after the strong post-pandemic growth.
“We are very satisfied with the rebound in China,” Jean-Jacques Guiony, LVMH’s chief financial officer, told reporters.
China accounts for the majority of sales in Asia.
Asia – excluding Japan – recorded 34% annual growth in the second quarter, as COVID-related health restrictions weighed on sales and emptied stores last year.
LVMH refrained from giving any outlook for the rest of the year.
The pace of China’s recovery and growth prospects have become a major talking point for investors, after disappointment with Richemont’s cautious outlook for the Chinese market sent the Swiss group’s share price down, dragging down other luxury stocks.
“The global mood is not in the ‘revenge buying’ that we experienced in 2021 and 2022, so we are talking about normalization rather than anything else,” said Jean-Jacques Guiony.
“We have no visibility, we are not pessimistic and in China we have no reason to be. In the United States, we see that it is not as good as it was in the summer”, he added.
Sales in the United States fell 1% in the quarter, as weak cognac sales weighed on the wine and spirits division.
(Mimosa Spencer report, Diana Mandiá, edited by Jean Terzian)
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