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LVMH, the world’s greatest luxurious group, confirmed little signal of weakening demand for its high-end purses and champagne within the third quarter regardless of rising fears over the worldwide economic system.
The corporate managed by Europe’s richest man, Bernard Arnault, reported quarterly gross sales of €19.8bn on Tuesday, forward of analysts’ expectations for €19.1bn, in line with FactSet knowledge.
When stripping out the impact of acquisitions and foreign money swings, gross sales had been up 19 per cent from the identical interval final yr and matched the tempo of growth within the second quarter.
“Regardless of every part occurring within the world economic system, the demand for our manufacturers stays very vigorous,” stated Jean Jacques Guiony, LVMH’s chief monetary officer.
Driving the expansion was an acceleration at LVMH’s all-important trend and leather-based items division, residence to the Louis Vuitton and Christian Dior manufacturers that generate two-thirds of group working revenue. Gross sales on the unit rose 22 per cent, beating analysts’ expectations for a achieve of 16 per cent.
Europe loved a very robust 43 per cent development in gross sales, helped in by American vacationers whose splurging throughout their summer time holidays was buoyed by a robust greenback. The US market rose 19 per cent, whereas Asia (excluding Japan) was the weakest area with development of simply 2 per cent as Covid-19 restrictions disrupted the Chinese language market.
Buyers have been anticipating that luxurious items gross sales would gradual due to recession fears globally, marking a break from the previous two years which noticed rich customers within the US and China shortly resume buying after the preliminary shock of the Covid-19 pandemic.
The IMF on Tuesday lower its prediction for world financial development from 3.2 per cent in 2022 to 2.7 per cent in 2023, saying there have been “stormy waters” forward due to the struggle in Ukraine, inflation and the vitality disaster.
Shares in LVMH have fallen about 16 per cent this yr, in contrast with a slide of 19 per cent for smaller rival Hermes and 37 per cent for Gucci-owner Kering.
However the reckoning has but to start for bellwether LVMH, which is the primary luxurious group to publish quarterly gross sales. Rivals Hermes and Kering accomplish that on October 20.
HSBC analyst Aurelie Husson-Dumoutier warned in opposition to complacency in a latest notice. “Luxurious is sadly not recession proof,” she stated, and predicted a slowdown subsequent yr. “Resilience shall be examined beginning within the fourth quarter this yr.”
Requested whether or not LVMH was bracing for a downturn by considering slicing prices at its manufacturers, Guiony stated that was in no way the case. As a substitute, manufacturers had been planning to spice up advertising and outreach to high-end purchasers throughout the important thing buying season that runs from the US Thanksgiving celebration to Christmas and the Chinese language new yr.
“We’ve not began belt tightening since there isn’t a must,” he stated. “We should proceed to take a position as a result of the expansion continues to be there.”
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