French luxury group LVMH has had an excellent third quarter: thanks to its spirits division, group turnover grew 7 % organically. The leatherwear division is experiencing slower growth, particularly in the Far East.
8.85 billion euro turnover
The group which owns luxury brands like Louis Vuitton, Moët & Chandon and Hennessy managed a 8.85 billion euro turnover over the past three months, which represents a 7 % organic growth. Not only did the company beat the expectations of many analysts, it also did better than the 6 % growth the French luxury group managed in the first six months.
With a 3 % growth, its most important division, the leatherwear division, did not perform as well as in the first half of the year, when it managed a 5 % growth. The slower economic growth in China, the Shanghai stock market collapse, the Russian recession and the drop in tourism in Hong Kong and Macao have had a huge impact on these results.
The spirits division has found its way back to growth: the second largest profit engine within LVMH managed a 16 % growth spurt, compared to only 2 % growth in the first six months. The company says the Chinese demand for Hennessy cognac has exploded.
All divisions managed growth
All other division also managed growth, like the perfume and cosmetics division (including brands like Dior, Guerlain and Givenchy) which continued its performance from the first 6 months, with a 7 % organic growth. Bvlgari's jewelry and Hublot's watches performed well, more than making up for watch brand Tag Heuer's lackluster performance as it is repositioning itself. The entire division went up 11 %.
"Selective distribution" also went up 5 %, thanks to perfumery chain Sephora's excellent performance, balancing out the weakened duty free shopping branch mainly because of the lower Chinese tourist numbers into Hong Kong.
LVHM is the world's largest luxury concern, including more than 70 major brands and a retail network of more than 3,700 stores worldwide. In 2014, the group managed a 30.6 billion euro turnover, but the group is already up to 25.3 billion euro this year, after only three quarters. That is up 18 % compared to the same period last year and a 6 % organic growth.