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Monday, April 13, 2015

Louis Vuitton Says Sales Are Strong Under Nicolas Ghesquière

Louis Vuitton Says Sales Are Strong Under Nicolas Ghesquière:

A detail shot from Louis Vuitton's fall 2015 runway show. Photo: Pascal Le Segretain/Getty Images
A detail shot from Louis Vuitton's fall 2015 runway show. Photo: Pascal Le Segretain/Getty Images
Although LVMH does not break out sales numbers for individual brands in its quarterly earnings reports, the company has been enthusiastic in its praise for Louis Vuitton's Nicolas Ghesquière -- even before his products hit the sales floor this fall. The praise has continued now that LVMH has real sales data to back it up.

Without going into specifics, the company stated in its earnings report for the first quarter of 2015 that Vuitton recorded an "excellent start to the year" and "displayed strong creative momentum with growth in its legendary lines and the unveiling of many new products." No other brand in the category received such acclaim; but the company also noted that Fendi, Céline, Givenchy, Kenzo and Berluti each had an "excellent" quarter. There was no mention of Marc Jacobs, which has been undergoing some internal changes as it pursues an IPO; nor was there any mention of Dior's fashion and leather goods business, though its fragrances and cosmetics are performing well.

Currency issues in Europe are also turning out to be beneficial for European luxury brands. The conglomerate as a whole reported a revenue increase of 16 percent to 8.3 billion euros (about $8.7 billion USD) for the first quarter of 2015. Because most LVMH companies produce within Europe and export internationally, the company has the drop in the euro to thank for much of that growth.

Ignoring the change in exchange rates, organic revenue grew by only 3 percent in the quarter. Wines and spirits were an ongoing weak spot, due to slowing demand in China. Including the exchange rate impact, sales in that category were up 12 percent, but at a constant rate, they fell by 1 percent. Similarly, sales in the fashion and leather goods arena grew by 13 percent, including the exchange rate swings, but rose only 1 percent if you exclude those effects.

LVMH's watches and jewelry sector saw the most organic growth: 7 percent thanks to Bulgari. The effects of an upcoming smartwatch collaboration between Tag Heuer, Google and Intel remain to be seen.

Sephora was another strong performer as it continued to gain market share in all regions.

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