Fashion

LVMH Reports Strong First Quarter Despite Slowing Economy

LVMH Moët Hennessy Louis Vuitton (LVMH) reported its Q1 2019 financial results on April 11, and the results should ease concerns about a slowing luxury market in China. The company’s shares climbed to record highs after posting strong first-quarter sales, thanks primarily to growth within mainland China.

Luxury brands have seen mixed results over the last year due to concerns about the slowing Chinese market and other world economies, which has led many brands to seek out new markets and strategies in order to maintain growth. The first three months of 2019 are of particular interest to investors, as they come on the heels of Christmas-time shopping sprees and include two important holidays for companies dependent on both the mainland Chinese market and that country’s outbound tourist shoppers: Chinese New Year and Valentine’s Day.

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The French luxury behemoth may be the best indicator of how healthy the luxury industry is today since the company boasts a variety of brands and relies on China as one of its top-earning markets. LVMH’s news for the quarter proves that in difficult economic conditions, some brands will be better positioned than others to weather a downturn. In this case, the financial results show that a company thriving in the mainland China market without relying on Chinese tourist shopping will have an edge.

The company has outperformed their competition so far this year, as shares in LVMH have surged 29 percent from the start of the year to April 10. The only negative in the earnings report is that Bulgari’s jewelry sales in the Chinese market slowed more than analysts expected, according to the research of investment firm Morgan Stanley. But the company’s premium jewelry brand, Chaumet, experimented with sales via a WeChat pop-up store earlier in the quarter, and some of those products sold out almost immediately, said the Chinese fashion news media luxe.co.

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Here are 3 Highlights from LVMH’s Q1 2019 financial results:

Revenue grew 11 percent year-on-year to $14.09 billion (€12.5 billion), beating market expectations that predicted 8.8 percent growth.

Hennessy saw strong growth in the quarter, with the wine & spirits division’s revenue growing 9 percent year-on-year, but the company did not indicate whether that was attributed to new marketing campaigns in China despite reporting rapid growth in the region.

Duty-free sales were steady in the quarter as “the Gallerias of Hong Kong and Macau performed particularly well,” the company said. This may be attributed to increased Chinese travel to the Special Administrative Regions during the Chinese New Year.

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