Receive the latest articles for free. Click here to get the Luxury Daily newsletters.

LVMH defies sluggish economy to grow 19pc in first 9 months

October 15, 2010

LVMH saw a 19 percent growth in the first nine months of this year

Louis Vuitton Moet Hennessey revenue is up 19 percent this year, putting the company’s overall take for the first nine months of 2010 at close to $20 billion.

LVMH continued to build momentum in Asia, Europe and the United States, reaching a double-digit organic revenue increase. The company’s performance in the first nine months of the year leaves it confident for the final quarter.

“I think the one thing that I would keep in mind is that a lot of LVMH’s brands are in the super high end of luxury and those brands have been showing some bounce back for a while, said Karla Martin, vice president and head of North American retail at Booz & Co., San Francisco.

“LVMH’s strategy is concentrating on getting back to the super high end,” she said. “They have opened stores in emerging markets, like China, that have paid off.

“I think they will see some good growth through Christmas.”

Report summary
The brand’s wine and spirits sector reported 22 percent growth from 2009 and the performance of the champagne business in the third quarter reflected the return of consumer demand.

Hennessy cognac saw an acceleration of its growth rate during the third quarter in Asia.

Meanwhile, the fashion and leather goods sector reported a 20 percent revenue increase in the first nine months of this year, with the leather goods lines Monogram and Damier in particular seeing growth.

Fendi and Donna Karan both saw their brands revenue increase and other fashion brands saw good growth during the third quarter.

Perfumes and cosmetics grew by a reported 14 percent in the first nine months. Christian Dior’s rollout of its lipstick added to its successful brand performance. In the third quarter, Guerlain launched its new skincare Abeille Royale and Givenchy launched the female version of Play.

Watches and jewelry recorded a reported 29 percent since 2009. Tag Heuer benefitted from its 150th anniversary celebration and Hublot gained market share from its Big Bang and King Power lines.

Additionally, Zenith’s latest collections were well received and jewelry brands Chaumet, Fred and De Beers all saw an increase.

Finally, LVMH’s selective retailing division reported 17 percent growth in the first nine months. DFS benefited from an increase in Asian travelers and Sephora saw store revenue growth in all regions and progressive increases in ecommerce.

The fashion conglomerate is looking ahead to the fourth quarter, when it plans to launch a new line of fashion wear.

Luxury keys
The key for luxury companies in this tepid economy is what many brands already seem to be doing. Most have an aggressive outlet strategy, though some such as Burberry more so than others. However, outlet buyers are not core to the brands.

“Aspiration buyers are still a little squeamish about getting back into the market,” Ms. Martin said. “In this year’s holiday sales, you need to look at how many aspirational brands need to come back.”

In comparison to last year, high-end retail brands like Hermes, Burberry and those under LVMH are on their feet again. Their strategy has been re-focused back on their high-end customers, who are willing to spend in the top tier of luxury.

“They need to retreat back into the core of the brand,” Ms. Martin said. “Who is the customer, what does she want and what is she looking for?

“I think we will see a lot of that going forward, LVMH paid a lot of attention to that,” she said. “They showed things that were desirable and looked luxury but weren’t so out there on the runway.”

“I think we will see good holiday growth for brands like that.”

Final Take
Kaitlyn Bonneville, editorial assistant at Luxury Daily, New York