Louis Vuitton, Dior post strong revenue growth

Bloomberg

LVMH SE posted strong revenue growth as the world’s largest seller of luxury goods defied disruptions from the war in Ukraine and the resurgence of Covid-19 in China, a potential harbinger for the rest of the
industry.
First-quarter sales advanced 23% on an organic basis to 18 billion euros ($19.5 billion), led by LVMH’s biggest unit, fashion and leather goods, the Paris-based company said. Analysts had expected a gain of 17%.
Led by billionaire founder Bernard Arnault, LVMH is the first European luxury-goods maker to publish revenue for the period. The owner of Louis Vuitton and Dior was buoyed by resilient demand in the US and Europe.
“The stellar 1Q highlights their geographical and business reach and lack of reliance on any one group, considering the disruption to current trading in China,” wrote Swetha Ramachandran, who manages GAM’s Luxury Brand Equity Fund, in response to a Bloomberg query.
LVMH’s organic revenue in the US and Europe grew at 26% and 45%, respectively, in the quarter. That compares with an 8% gain for Asia, excluding Japan. The US, meanwhile, generated about a quarter of the company’s revenue.
Revenue at LVMH’s fashion and leather goods unit soared 30%, beating analysts’ forecast for a gain of 23%.
Still, the company said it’s currently seeing a negative impact on demand for luxury products due to lockdowns in China. Chief Financial Officer Jean-Jacques Guiony told analysts he’s confident about medium to long-term demand in China once the situation gets back to normal.
“Investors are digesting the very strong 1Q performance, but also the uncertain outlook for China,” Bernstein analyst Luca Solca said by email.
The wine and spirits unit was the only division not to grow at double digits due to supply
constraints, notably for its
Hennessy cognac, where volume decreased 18% during the period.
LVMH partially offset the drop in volume with price increases, said Chris Hollis, who oversees investor relations, during the call.