LVMH Moet Hennessy Louis Vuitton soared in Paris trading after renewed demand for its biggest brand led to better-than-expected growth at its fashion and leather-goods unit and liquor sales showed improving trends.
Organic sales of apparel and accessories advanced 4 per cent in the fourth quarter, buoyed by demand for new limited edition Louis Vuitton handbags, the Paris-based company said yesterday after markets closed.
That represented an acceleration from the previous three months and topped analysts’ predictions for no growth.
Louis Vuitton sales were “sharply up” in January, the world’s largest luxury-goods maker also said.
The shares advanced as much as 7.3 per cent to €155, the highest intraday price since December 30, 1998, and were trading up 5.1 per cent at €151.90 as of 9:21 a.m. in Paris.
“LVMH has been our top pick among the large cap European luxury names for some time with the successful repositioning of the Louis Vuitton brand an essential part of our thesis,” said Eva Quiroga, an analyst at UBS in London.
This “has been vindicated by these FY14 results.”
Cognac volume, which slumped last year in China amid a crackdown on largesse, should pick up in the second half, LVMH also said after reporting a 1 percent quarterly decline at its wines and spirits division.
Selective retailing and perfume and cosmetics sales also beat estimates, though watches and jewelry trailed predictions.
The final quarter’s improvement was in contrast to the full year, when profit from recurring operations fell 5 per cent to €5.72 billion, the first annual decline since 2009. Analysts predicted €5.83 billion, according to the average estimate. Currency shifts dragged earnings down by €282 million.
LVMH has had to wrestle with Chinese tourists spending less in Hong Kong because of pro-democracy protests that ran for 79 days last year and restarted this month, while anti-graft measures are weighing on sales in China.
Still, strengthening demand in the Americas has helped cushion the effect of the slowdown in Asia for LVMH.
LVMH chairman and chief executive officer Bernard Arnault said he's "relatively confident" for 2015 and expects economic trends that prevailed at the end of last year such as falling commodity prices and currency volatility to continue. "What really is the source of our confidence is the word desire," Mr Arnault said at a presentation in Paris yesterday. "We will continue to offer creative products, but products whose quality is exceptional." Full-year sales of €30.6 billion were at the top end of estimates that spanned €30 billion to €30.7 billion.
Fourth-quarter revenue rose 10 per cent to €9.2 billion, including organic growth of 5 per cent, LVMH said. Net income jumped 64 per cent to €5.65 billion in 2014 as LVMH booked a €2.81 billion capital gain after distributing its 23 per cent stake in Hermes International to investors.
Bloomberg
