LVMH sets upbeat tone for luxury brands as China demand rolls on

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LVMH sets upbeat tone for luxury brands as China demand rolls on
Reuters

First-quarter sales rose 13 per cent, beating analysts’ expectations, as mainland consumers snap up Louis Vuitton handbags and Givenchy make-up

LVMH set an upbeat tone for the luxury industry, ploughing ahead with double-digit sales growth that beat analysts’ estimates for the start of the year.

First-quarter sales rose 13 per cent on an organic basis, the Paris-based owner of Sephora and Christian Dior said on Monday after Paris markets closed.

Analysts had estimated a rise of 8.5 per cent, projecting growth to taper off after a 12 per cent jump last year.

LVMH sets upbeat tone for luxury brands as China demand rolls on
Bernard Arnault (left), chairman of LVMH, at Monday’s inauguration of the LVMH start-up accelerator at Station F technology campus in Paris. Photo: Bloomberg

Prosperous Chinese consumers have been stocking up on LVMH’s Louis Vuitton handbags and Givenchy make-up, powering record sales last year for the company with the highest market value in France.

Gucci owner Kering and Birkin bag-maker Hermès International benefited, too.

While China’s economic growth is expected to slow to 6.5 per cent in 2018 compared with 6.9 per cent last year, according to forecast data compiled by Bloomberg, the strong sales show that demand for luxury products remains high.

This is a remarkable start to the year for LVMH, with broad-based market share gains in a buoyant environment for luxury goods – Rogerio Fujimori, analyst

“This is a remarkable start to the year for LVMH, with broad-based market share gains in a buoyant environment for luxury goods,” says Rogerio Fujimori, an analyst at RBC Europe, who rates the shares the equivalent of buy, in a note to clients.

LVMH sets upbeat tone for luxury brands as China demand rolls on
Prosperous Chinese consumers have been stocking up on LVMH’s Louis Vuitton handbags. Photo: Reuters

Digital Efforts

With more than 4,000 stores from Paris’s Avenue Montaigne to Los Angeles’s Rodeo Drive, LVMH is getting a boost from a rising Chinese middle class that is travelling more than ever.

Digital allows us to reach the client more quickly and directly. Innovation and creativity are fundamental values for LVMH – Bernard Arnault, chairman LVMH

It’s also gaining from a push into e-commerce and new products to entice young consumers – such as luxury sneakers and iPhone cases styled like Louis Vuitton trunks.

LVMH highlighted its digital efforts, such as its sponsorship for a start-up accelerator that aims to encourage entrepreneurs developing new technologies and services for the luxury industry.

The programme is situated in Station F, a former Paris terminal that telecommunications billionaire Xavier Niel has turned into a sprawling campus for start-ups.

LVMH sets upbeat tone for luxury brands as China demand rolls on
LVMH is benefitting from a push into e-commerce and new products to entice young consumers. Photo: Reuters

“Digital allows us to reach the client more quickly and directly,” says Bernard Arnault, LVMH’s chairman and France’s richest man, speaking at Monday’s inauguration ceremony for the accelerator. “Innovation and creativity are fundamental values for LVMH.”

LVMH moved to ramp up its e-commerce business across its stable of brands last year with new sites for its Celine handbags and Berluti shoes, the first online store in China for its largest brand, Louis Vuitton, and a new multibrand emporium called 24 Sevres.

“We’ve really seen progress across the board,” chief digital officer Ian Rogers says, pointing to the online openings as well as increased engagement on social-media platforms such as Instagram and China’s WeChat.

The company saw organic growth of 10 per cent or greater in categories such as spirits, fashion goods, cosmetics and jewellery.

Courtesy Bloomberg / SCMP

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