LVMH results shrug off Hong Kong protest effect
Luxury goods group LVMH has shrugged off the impact of the recent Hong Kong protests and global economic uncertainty, recording a 19 per cent increase in sales of leathergoods and fashion during the third quarter.
The Paris-headquartered group singled out its Louis Vuitton and Christian Dior brands as major contributors to the rise, describing their performance as “remarkable.’.
Analysts at Bloomberg said the group’s performance allays some concerns about the effects of the Hong Kong disruptions, “showing that the Chinese demand that is increasingly driving growth in the industry remains robust”.
In short, while Mainland Chinese consumers are shunning Hong Kong, they are still buying goods elsewhere, including at home where tariffs have eased.
In August, the month when protests closed Hong Kong International Airport and inbound tourist numbers plummeted, luxury goods sales in the territory plunged about 40 per cent and some retailers have flagged even greater declines in the subsequent weeks.
“We believe that the bulk of the Hong Kong weakness has been compensated in other markets,” Citi analyst Thomas Chauvet said in a note, as reported by Bloomberg. “This sets the bar pretty high for peers.”
LVMH’s share price surged 5.5 per cent after the results were released this week and the stock is up by about 45 per cent year to date.
Overall group sales – including through its Sephora cosmetics division – rose 11 per cent to US$14.6 billion, well ahead of analyst predictions of around 9 per cent.
“The US and Europe saw good progress in the third quarter, as did Asia, despite the difficult context in Hong Kong,” the company said in an earnings statement.