PARIS: French luxury goods giant LVMH fought off a plunge in its shares yesterday, reassuring that Chinese consumers were still hungry for goods from the key Louis Vuitton part of the business where sales flagged.
The price of shares in the global group was showing a fall of 6.42 percent to ¤135.55 in an overall French market down 0.76 percent.
Analysts at Bank of America-Merrill Lynch lowered their investment recommendation for the shares yesterday.
At brokers Aurel BGC, analyst David Da Maia said: “The setback for Louis Vuitton in the third quarter is likely to weigh on all luxury company shares.”
LVMH also said that currency factors played a role in the performance of sales by the group.
The Louis Vuitton range of products again lagged those of the fashion and leatherware brands.
Louis Vuitton accounts for more than 70 percent of annual sales of the fashion and leatherware division which also includes the brands of Celine, Givenchy, Fendi and Kenzo. Vuitton is the main profit driver of the entire LVMH group.
It turned in sales estimated to total ¤7.3bn ($9.9bn) last year but since then has had difficulty in generating growth.
In the third quarter, internal growth of sales by fashion and leatherware brands, excluding the effect of exchange rates, did not exceed 3 percent, totalling ¤2.4bn, from an increase of 7 percent in the second quarter.
The finance director of LVMH, Jean-Jacques Guiony, said during a telephone press conference that “growth by Vuitton was slightly below” that of the division as had been the case in the previous quarters this year.
The group said that changes in currency values notably of the yen and dollar had undermined sales in each quarter of this year and particularly in the third quarter with a negative impact of 6 percent. Guiony said that the slowing of fashion and leatherware reflected in part a “significant price increase by Vuitton in Japan in July which consumers had anticipated by buying beforehand, which had caused sales to fall later.
Other brands in the division had achieved slightly weaker growth than in the first half, he said. Chinese consumers of luxury goods, whether they shopped at home or while travelling, were not turning their backs on Vuitton and the sales trend in this market was about the same as at the beginning of the year.
Sales in the United States were “reasonably good” and “in Europe as well thanks to tourists”, particularly from China. Sales in Asia were steady. Guiony said that an easing of sales to Japanese customers reflected a fall in Japanese tourism because the yen was weak. AFP