LVMH Moet Hennessy Louis Vuitton SA (MC), the world’s largest luxury-products maker, reported third-quarter revenue that missed estimates as growth slowed in fashion and leather goods, casting doubt on a recovery for demand in the industry.
Revenue advanced to 7.02 billion euros ($9.5 billion) from 6.9 billion euros, Paris-based LVMH said today in a statement. Analysts predicted 7.24 billion euros, according to the median of 15 estimates compiled by Bloomberg. Sales climbed 8 percent, excluding acquisitions, disposals and currency moves, missing the 10 percent gain predicted by analysts.
LVMH is boosting investment in some of its smaller fashion brands and buying stakes in others to help offset slowing growth at Vuitton, its biggest source of revenue and profit. It’s also shuffling its management, with Delphine Arnault joining as executive vice president and artistic director Marc Jacobs leaving after 16 years to focus on his own label.
“Fashion and leather-goods and perfume and cosmetics are the outliers here,” John Guy, an analyst at Berenberg in London, said in a phone interview. “When it comes to profitability and margin, that’s going to have some impact” on the shares, which were little changed in Paris trading today.
Nine-month revenue at LVMH’s fashion and leather-goods unit rose 4 percent on an organic basis, weakening from the first half’s 5 percent gain and trailing the 6 percent median estimate. In April, LVMH, reported organic growth of 3 percent in first-quarter fashion and leather goods sales, the weakest performance since the fourth quarter of 2009, falling short of estimates of a 5 percent gain.
LVMH, which reported its sales after the market close, said it remains confident for 2013, even in the face of an uncertain economic environment in Europe.
“The group will continue its proactive strategy centered on innovation and targeted geographic expansion in the most promising markets,” LVMH said in the statement.
Sales growth is slowing at LVMH as luxury-goods demand wanes. The 8 percent increase in third-quarter organic revenue compared with a 9 percent gain in the previous three months.
Burberry Group Plc (BRBY), the U.K.’s largest luxury-goods maker, expects the business climate to remain “uncertain,” Chief Executive Officer Angela Ahrendts said today as she announced her departure after almost eight years at the company.
Sales growth also slowed at LVMH’s perfume and cosmetics unit during the third-quarter. Nine-month organic revenue rose 5 percent after the first-half’s 6 percent increase. Analysts predicted a 7 percent gain in the nine-month period.
Growth accelerated however at the wines and spirits and watches and jewelry divisions, while the selective retailing unit, which includes the Sephora beauty chain and DFS duty free stores, maintained its 19 percent growth pace in the third quarter.
To contact the reporter on this story: Andrew Roberts in Paris at aroberts36@bloomberg.net
To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net
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