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LVMH Moet Hennessy Louis Vuitton SE reported an impressive increase of 16% in first quarter sales on the back of a weak euro and strong economic growth in the US. The Group recorded excellent results in Europe and the United States. The Louis Vuitton brand had an excellent performance on the back of renewed demand for its handbags. Wines and spirits underperformed as Chinese distributors continued to destock.
Wines and Spirits
Wines and Spirits increased by 12 percent over the same quarter last year. However, 13% of the increase was due to currency movements. Organic growth declined by 1 percent mainly due to China’s policy on luxury items that has led to a massive decline in sales in Asia.
The decline in China was mostly mitigated by cognac sales and the United States, and increase in demand for Moet & Chandon champagne, Glenmorangie whiskey and Belvedere vodka.
Fashion and Leather Goods
This business line experienced an excellent quarter, increasing revenues by 13%, as the Louis Vuitton brand displayed strong growth in its traditional lines and its new products. Other Brands that experienced increases in sales were Fendi, Celine, Givenchy, Kenzo and Berluti.
Perfumes and Cosmetics
Revenues from this business segment increased by 16 percent in the first Quarter of 2015. Christian Dior continued the success of its iconic perfumes J’Adore and Miss Dior and the excellent performance of the make-up segment.
Other successful products in this segment this quarter were L’Homme Ideal by Guerlain, Fresh and Make Up For Ever.
Watches and Jewelry
This segment grew 7% organically is the first Quarter of 2015. Bvlgari’s jewelry line continues to perform well especially the new Lvcea watch for women. Hublot had a very good quarter while TAG Heuer is renovating its offering. During the Basel Watch Fair a partnership between TAG Heuer, Google and Intel with the intention to launch a Smartwatch was announced.
Selective Retailing
Sephora continued to gain market share across all regions, especially in North America and the Middle East. DFS faces growth constraints due to restrictions imposed in China. Overall this segment increased revenues by 20 percent, which represents a 5 percent organic revenue growth.
Outlook
These results are in line with our expected revenue growth targets. Given further weakness in the Euro, continued focus on cost control and a global increase in demand for luxury products, LVHM is positioned to outperform the market in 2015.
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