Oct 13, 2015
LVMH says China stock market collapse affected third-quarter sales
Oct 13, 2015
LVMH on Tuesday became the first major luxury goods provider to say that the stock market collapse in China over the summer had affected sales, particularly at its flagship Louis Vuitton brand.
The world's biggest luxury group, which owns more than 70 luxury brands including jeweller Bulgari and fashion labels Fendi and Celine, said it had seen spending growth rates by Chinese buyers slow down more abroad than at home.
"The Chinese stock market collapse has taken its toll and we expect this to have an impact only for a few months," LVMH Chief Financial Officer Jean-Jacques Guiony told an investor conference call on third-quarter sales, published on Monday.
"We are seeing more Chinese tourists but they are spending a little bit less, that is ... the growth rate is not has high as in was in the first half."
LVMH shares fell more than 3 percent on Tuesday after the Paris-based group said comparable sales growth at its key fashion and leather goods division had slowed more than analysts expected - to 3 percent in the third quarter, down from 10 percent in the previous three months.
Louis Vuitton accounts for the bulk of the division's sales and profits and Guiony said the brand's growth was "not very far away" from that of the division as a whole during the period.
Chinese consumers, the world's No.1 luxury buyers, have been increasingly shopping abroad to save money. But retailers surveyed by Reuters last month said the stock market collapse had not yet impacted revenue.
Guiony said that jewellery sales, which represented about a third of the group watch and jewellery unit, benefited from strong demand at Bulgari in all regions, and from local consumers as well as tourists.
He forecast it would take a "few seasons" to turn around fashion brands Marc Jacobs and DKNY, which are in the middle of a thorough reorganisation.
More positively, Guiony said cognac and spirits sales to Chinese customers had rebounded in the third quarter and remained strong in the United States, generating a 23 percent rise in like-for-like sales during the period.
"We are reasonably optimistic that the rest of the year will be better than what we have seen in the first half," Guiony told investors about cognac sales, adding the business showed no sign of slowing down in the United States.
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