Wealthy Shoppers Push Aside Trade Dispute Fears to Fuel LVMH -- Update
24 Luglio 2018 - 8:19PM
Dow Jones News
By Matthew Dalton
The world's well-heeled shoppers sent first-half revenue at
luxury conglomerate LVMH Moët Hennessy Louis Vuitton SE to a record
high, brushing aside worries of a trade dispute between the U.S.
and China to splurge on everything from handbags and jewelry to
fine wines.
Revenue in the first six months of the year hit EUR21.8 billion
($25.5 billion), up 10% compared with the same period a year ago,
LVMH said Tuesday. LVMH's net profit jumped 41% to EUR3
billion.
LVMH is the world's biggest luxury-goods company by sales, and
its results are seen as a bellwether for the industry. LVMH owns
leather-goods giant Louis Vuitton, couture house Christian Dior,
high-end jeweler Bulgari, cognac label Hennessy and dozens of other
brands.
The results reflect solid economic growth across major economies
that has prompted wealthier consumers world-wide to open their
wallets. The Trump administration's tax cut has sent the U.S. stock
market to record highs. Chinese growth has defied expectations of a
slowdown. And the eurozone is recovering after years of crisis.
Shoppers splurged even as the U.S. and China kicked off a trade
fight that has roiled stock markets and fueled fears of a global
slowdown. During the half, the two countries have imposed tariffs
on dozens of products.
LVMH Chief Executive Bernard Arnault, whose family is the
company's controlling shareholder, struck a cautious note amid the
record results.
"Despite buoyant global demand, monetary and geopolitical
uncertainties remain," Mr. Arnault said.
Investors worry that an economic slowdown in China could dampen
spending by Chinese shoppers, who are the luxury industry's most
important clientele. Beijing has launched a campaign to curb
lending, leading economists to predict that the economy is set to
slow.
But LVMH executives Tuesday said there were no signs of a
Chinese slowdown hitting its business.
Still, Jean-Jacques Guiony, LVMH's chief financial officer, told
investors that maintaining first-half growth rates for the rest of
the year would be a challenge, given LVMH's strong performance in
the second half of last year and the threat of a spillover effect
from U.S. and Chinese tariffs.
"The current trends cannot realistically be extrapolated to the
rest of the year," Mr. Guiony said.
LVMH's fashion-and-leather-goods division, which includes Louis
Vuitton, the world's biggest luxury brand by revenue, led the way
in the half. Revenue at the division rose 25% to EUR8.6 billion,
though the increase is partly due to LVMH taking full control of
Dior last year.
Revenue at LVMH's wine and spirits division lagged behind other
divisions, slipping 1% to EUR2.3 billion. The company has been
struggling with poor harvests in the Cognac region of France,
limiting production of the liquor despite strong demand in the U.S.
and China.
Write to Matthew Dalton at Matthew.Dalton@wsj.com
(END) Dow Jones Newswires
July 24, 2018 14:04 ET (18:04 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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