Analysis Of The Reasons For LV'S Growth In The Three Quarter

LVMH Mo t Hennessy Louis Vuitton SE (MC.PA) MOET & CHANDON Hennessy MC.PA -

The group released three quarter results, benefiting from the recovery of the fashion leather sector, the newly launched Louis Vuitton, Louis Weedon perfume and the rebound in demand in the Chinese and US markets. The company recorded an organic growth of 6% in the three quarter, with sales ranging from 6.5% to 9 billion 138 million euros, compared with 8 billion 581 million euros a year earlier.

Organic growth in the first three quarters of 2016 was 5%, and the actual sales volume was 26 billion 326 million euros, an increase of 4.1% over the 25 billion 288 million quarter of last year.

As for the three quarter growth rate, LVMH SE said that its performance in Asia has been greatly improved except for Japan.

Europe and France are still in a favorable position, but the French market continues to show weakness, mainly due to the decline of tourists in the market.

Thomson Reuters's earnings for the three quarter of the LVMH SE group were expected to be 8 billion 910 million euros, an increase of 3%-4%.

Although the organic growth of LVMH SE group dropped to 5% in the first nine months from 6% in the same period last year, the real income growth dropped to 18% from 18% in the same period last year.

The LVMH SE group fashion leather Department, which is most concerned about the market, recorded a 3 billion 106 million quarter income in the three quarter, an increase of 5.7% from 29.39 euros in the same period last year, with an organic growth of 5%, exceeding 2% of market expectations.

The growth of LVMH SE fashion leather Department also has unexpected factors. In early September, the group launched the first perfume series for Louis Vuitton, Louis Weedon, after 90 years. The perfume series was sold only in some flagship shops of Louis Vuitton, Louis Weedon, and in the financial reports, the introduction of perfume was also placed under the fashion leather Department. Therefore, the revenue of perfume from Louis Vuitton Louis Vuitton is undoubtedly classified into the Louis Vuitton Louis Weedon brand and fashion leather Department, unlike other group sales in special stores.

Brand perfume is also included in perfume and beauty categories.

However, as the Louis Vuitton Louis Weedon perfume business is now relatively small and the project is eliminated, the growth of the LVMH SE group fashion leather Department in the three quarter is also better than that of the market.

The United Kingdom and the devaluation of China after the euro referendum are undoubtedly an important factor in the three quarter growth of the LVMH SE fashion group. After the British referendum, the British pound depreciated to its lowest level in 31 years and continued to decline. This has also led to the prosperity of the luxury goods market in Britain in the 8 and September.

The rebound in the Chinese market has benefited from the decline in the consumption of Chinese tourists, the depreciation of the renminbi, and the sharp appreciation of the yen, which has cooled the tourist boom of Chinese tourists to Europe and Japan, and the terrorist attacks in France and Germany have intensified this trend.

Tang Xiaotang, founder of No Agency, a luxury research and consulting firm, said that in the long run, such a trend would be harmful to the luxury market, but it would be harmful because Chinese luxury goods consumption was 2/3 abroad, and only 1/3 in China.

Exane BNP Paribas LucaSolca, a luxury industry analyst, also echoed Tang Xiaotang's views.

Despite the recovery in the three quarter, the overall growth of the LVMH SE fashion clothing department in the first nine months was only 2%, far behind the 5% in the same period last year. The actual growth rate of 1% 1% was not the same as that of the same period last year, and it was still the worst performance in the past 8 years.

In addition to promoting the good performance of the fashion leather department that the group's revenue growth has resumed in the three quarter, the group's most outstanding performance is the perfume and beauty department. In the three quarter, the organic growth of the Department was 10%, and the organic growth in the first nine months was 8%.

The clock and jewelry department is still showing signs of weakness, but the group said the TAG Heuer Heuer Watch has improved significantly, especially after the launch of smart watches.

The Sephora retail sector of the selective retail sector continued to have double-digit revenue growth, of which the growth of online revenue was strong, while duty-free shop DFS was restricted by the weak performance of the Hong Kong and Macao market. The brand has just opened its first European store in Venice, Italy, to cater to the consumption of tourists to Europe.