Recovering sales of Louis Vuitton handbags helped LVMH contain the fallout from the coronavirus crisis in the third quarter, as the world's biggest luxury goods group reported a smaller-than-expected drop in revenues.
On Thursday, the Hennessy cognac maker said its overall comparable sales fell 7% in the third quarter, beating analysts' average forecast for a 12% fall, with revenues coming in just under €12 billion.
Its fashion and handbag division in particular set a high bar for rivals, after sales swung back into positive territory and rose 12% like-for-like, which strips out acquisitions and currency changes.
The division is home to Vuitton and Christian Dior, which dominate revenues, but Chief Financial Officer Jean-Jacques Guiony said the performance of other labels like Loewe, Celine and Fendi had also improved.
"The update confirms our impression of a strong summer for luxury goods," Bernstein analyst Luca Solca said in a note, adding other top brands including Hermes will likely have benefited.
Resurging sales among Chinese customers in particular, after China emerged from its coronavirus lockdown before much of Europe, also helped, Guiony said.
"China turned positive in the third quarter at Vuitton," he told an analyst conference call.
Revenue Performance
LVMH's revenues were down 21% like-for-like in the first nine months of 2020 as a whole.
In the third quarter, comparable sales at the retailing division - the most exposed to travel flows - plunged 29%, while sales of perfume and cosmetics dropped 16% and watches and jewellery, where it rivals Tiffany, fell 14%.
The wines and spirits unit, home to its Hennessy cognac brand, fared a little better, with sales down 3% in the three months to the end of September.
Bottle Design
Elsewhere, Hennessy has teamed up with architect Frank Gehry on the development of a limited edition bottle to mark the 150th anniversary of its Hennessy X.O. variant (pictured).
“I wanted to bring Hennessy X.O. to life, and so I took inspiration from its birthplace and used this crumpling effect of the material that gives it a feeling of movement," Gehry commented. "The materials I’ve chosen catch the light and make this a really beautiful object on its own, but then you realise it is a bottle of Hennessy X.O."
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
