By Astrid Wendlandt
PARIS (Reuters) – LVMH, the world’s biggest luxury group, bucked an industry downturn with stronger-than-expected fourth-quarter sales growth as resilience in Europe, Japan and the United States helped compensate for weakness in China.
LVMH Chief Executive Bernard Arnault on Tuesday said traffic at the luxury group’s stores in France, where it made 10 percent of revenue, was almost back to normal after the November attacks in Paris led sales to drop 50 percent in some places.
He said trading at the group’s brands, which include flagship labels Louis Vuitton and Christian Dior, was around 4-5 percent below the levels prior to the attacks.
“Over time, sales are coming back to normal,” Arnault said at the group’s annual results presentation.
LVMH’s fashion and leather division, which accounts for the bulk of its sales and profits, saw revenue rise 3 percent like-for-like in the fourth quarter, overshooting analysts’ expectations of flattish growth of around 1 percent.
The division’s growth was unchanged from the third quarter after slowing from 10 percent in the second.
“A solid set of numbers with a good beat on fashion and leather,” said Exane BNP Paribas analyst Luca Solca.
Within that division, Arnault said Louis Vuitton’s reported sales growth was “in double-digit terms” in 2015, while that of fashion brand Fendi exceeded 20 percent. However, the figures were boosted by exchange rates, as the euro was weak against the dollar, and he did not provide comparable sales figures.
Growth in the luxury goods market has slowed, particularly in the second half of 2015 after the attacks in Paris put tourists off travelling to Europe, where many luxury brands make a significant proportion of their sales.
Low oil prices have dented the purchasing power of big luxury customers in the Middle East and Russia, while China’s stock market fall has hit the confidence of Chinese consumers, who are the top luxury buyers.
Cartier owner Richemont last month said business was likely to remain challenging after sales fell 4 percent in the final three months of 2015, as the Hong Kong market remained very weak and tourist spending fell in Europe.
Tourism has become a major driving force for revenue in the luxury sector in recent years. There has been a regional shift in spending from China and Hong Kong, and later in the year from the U.S. in favour of markets such as Japan and Europe.
LVMH made a profit from recurring operations of 6.6 billion euros on revenue of 35.7 billion euros ($ 39 billion). The performance beat the average estimate in a Thomson Reuters I/B/E/S poll of profit of 6.5 billion euros on sales of 35.51 billion euros.
(Editing by James Regan and Alexander Smith)
