French luxury group LVHM has managed to grow its quarterly turnover by 4 %, with Asia and the United States still craving more clothing, bags, watches and perfume. Cognac is struggling in China though.
First drop in nearly 5 years for 'Wine & Spirits' division
LVMH has managed a 7.21 billion euro turnover in the past quarter, a 4 % increase compared to the year before. If exchange rate fluctuations were taken out of the equation, the increase would have been 6 %. Analysts still expected better as their aim was 7.4 billion euro. The weakened demand for cognac in China is chiefly to blame for the under-performance. The Chinese government has declared war on corruption (no more corporate gifts) and decadence (no more liquor-filled parties).
That meant the 'Wine & Spirits' division had to take a 3 % hit on its turnover, to 888 million euro. This signals the first turnover drop for this LVMH division - with Moët & Chandon and Veuve Clicquot - since 2009's fourth quarter.
The like-for-like turnover growth for the French luxury concern's Fashion & Leather Goods division was 9 %, its best performance in the past two years. This division now brings in nearly 2.64 billion euro and LVMH plans to strengthen its fashion proposition even further. It had already purchased Italian cashmere brand Loro Piana and British shoe brand Nicholas Kirkwood, but it has now also bought a 30 % stake in Vinci, the company that owns shoe label Giuseppe Zanotti.