PARIS (Reuters) – Accelerating sales growth at fashion and handbag brands such as Louis Vuitton and Christian Dior lifted LVMH’s <LVMH.PA> revenue at a faster-than-expected pace in the second quarter, boosted like many luxury goods rivals by booming Asian demand.
The industry’s top players are still riding high on thriving demand for designer goods from Chinese clients in particular, in spite of a Beijing-Washington trade war that could ultimately weigh on consumer sentiment.
Sustained momentum at LVMH’s powerhouse Vuitton – its main sales driver – bodes well for some of its big rivals like Kering’s <PRTP.PA> Gucci, which has also expanded rapidly in recent years and has a strong presence in high-margin areas such as handbags.
LVMH, whose other labels include champagne maker Moet & Chandon, said second quarter sales across the group rose 15% to 12.5 billion euros ($13.9 billion) euros, up 12% at stable exchange rates and a comparable number of stores. Analysts had expected like-for-like sales growth of around 10%.
Italy luxury outerwear maker Moncler <MONC.MI> echoed the upbeat tone on Wednesday, and also posted a pick-up in sales growth in the second quarter.
The gap is growing, however, with brands still in turnaround mode, like Italian shoemaker Tod’s <TOD.MI> or fashion house Prada <1913.HK>, grappling with internal overhauls while trying to ensure they stay on top of shifting spending patterns.
Chinese consumers for instance, the luxury industry’s biggest client base, have started shopping more at home, drawn by price shifts as Beijing cuts VAT and import tariffs.
For the six months to end-June, LVMH’s earnings before interest and tax (Ebit) rose 14% to 5.3 billion euros, a touch below forecasts, and giving an operating margin of 21.1%, flat from a year earlier.
(Reporting by Sarah White and Pascale Denis; Editing by Leigh Thomas)