French luxury goods group LVMH has posted a 3 per cent rise in like-for-like first-quarter sales, helped by the weak euro against the dollar and what it called an "excellent start to the year" at Louis Vuitton.

The world's biggest maker of luxury goods said its wines and spirits unit, which includes its flagship Hennessy cognac brand, was penalised by tough trading in China, however, where distributors continued to lower their stocks.

Wines and spirits sales fell 1 per cent on a comparable basis in the first quarter, LVMH said in a statement. Still, this was better than the 3-4 per cent decline expected by analysts.

Despite the situation in China, LVMH said Hennessy cognac had an overall increase in volume thanks to the “strength of the US market”.

The group’s fashion and leather unit, the bulk of which is made up of Louis Vuitton sales, saw revenue rise only 1 per cent like for like, significantly below the 9 per cent rise in the period a year ago and 4 per cent increase in the fourth quarter.

Many analysts expected a rise of at least 2 per cent.

Japanese VAT increase

LVMH said, however, that last year’s comparative figure was boosted by shoppers in Japan snapping up Louis Vuitton bags and other luxury goods ahead of a VAT increase imposed on April 1st.

“This is not a home run, but a very solid set of results,” said Exane BNP Paribas luxury goods analyst Luca Solca. Shares gained 0.1 per cent to €172.55 in Paris yesterday.

Trading update

Analysts expect management to give a more detailed trading update, particularly regarding its performance in Asia, during a conference call scheduled for today.

LVMH’s overall first-quarter sales rose 16 per cent on a reported basis to €8.323 billion.

“The group recorded excellent momentum in Europe and the United States,” LVMH added. – (Reuters)