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PARIS, France — Luxury-goods leader LVMH reported first-quarter sales that far exceeded estimates as both the fashion and drinks units benefited from a rebound in demand across the industry.
Sales rose 15 percent to €9.88 billion ($10.5 billion), the maker of Dior fragrances and Hennessy cognac said after the Paris market closed Monday. Analysts had predicted €9.5 billion, according to the median of 17 estimates. Revenue climbed 13 percent on an organic basis, compared with the 8 percent median forecast.
LVMH joins luxury-goods providers such as Hermès International SCA and Gucci owner Kering SA in reporting a turnaround after several years of ebbing demand in China and a slowdown in travel to Europe. The performance benefited from comparison with a period of last year when the industry was struggling with the aftermath of terror attacks in Paris and the company said such levels of growth shouldn't be expected for the full year.
“There is a better consumer environment for luxury, and LVMH is gaining share,” said Mario Ortelli, an analyst at Sanford C. Bernstein. “Keeping up growth in the second half will be more difficult. It will require that consumer sentiment in Asia continues to be good, notably in China, and that the environment in the US continues to improve.”
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Fashion Flourish
The owner of Louis Vuitton handbags and the Italian textile maker Loro Piana was boosted by its fashion and leather-goods unit, where organic sales rose 15 percent in the quarter, compared with the 9 percent estimated by 16 analysts surveyed by Bloomberg. Revenue in the key division, which generated more than half of the company’s 7 billion euros in earnings last year, had been unchanged in the same quarter of 2016.
Louis Vuitton’s recent fall-winter show in the Marly courtyard at the Louvre was very well received, while the Fendi brand continues its good performance, the company said.
The wines-and-spirits and perfume-and-cosmetics units also came in well ahead of analyst projections, as did the selective-retailing division, which includes beauty emporium Sephora and the tax-free airport retailer DFS.
A steep increase in Hennessy cognac’s volume during the quarter will lead to a shortage of inventory for the rest of the year, the company said, repeating an earlier warning.
Shares of the company, whose full name is LVMH Moet Hennessy Louis Vuitton SE, fell 0.9 percent to €207.45 in Paris on Monday. Financial director Jean-Jacques Guiony will discuss the results in a call with analysts Tuesday.
By Robert Williams; editors: Eric Pfanner and John Bowker.
