Louis Vuitton, Dior Cushioned LVMH Sales in Luxury Slump
15 Ottobre 2020 - 7:56PM
Dow Jones News
By Matthew Dalton
LVMH Moet Hennessy Louis Vuitton SE said strong growth at its
biggest fashion brands buoyed revenue in the third quarter, partly
offsetting steep declines in other segments of the conglomerate's
luxury empire that have been slammed by the coronavirus
pandemic.
Revenue at the French conglomerate's fashion and leather goods
division, which includes Louis Vuitton and Dior, rose 12% compared
to a year ago. Sales of Hennessy Cognac held steady, driven by
strong consumption in the U.S.
But LVMH's other business fared badly, pulling down overall
revenue 7% to EUR11.96 billion ($13.99 billion). A dearth of
festive occasions hurt the conglomerate's champagne business, which
includes Dom Perignon and Moet & Chandon. A sharp drop in air
travel slammed DFS, LVMH's travel retail division.
And revenue at its watches and jewelry division was down 14%.
The decline could have implications for the legal battle that LVMH
is waging with Tiffany & Co. over its soured deal to buy the
U,S. jeweler. LVMH in court filings has argued that the pandemic
has been particularly damaging for Tiffany, causing a material
adverse change in the business that would allow the French
conglomerate to back out of the merger.
Tiffany, in an unexpected announcement Thursday before LVMH's
results, said its revenue fell "slightly" in August and September
compared to a year ago, and operating earnings rose 25%. Tiffany's
announcement was meant to refute LVMH's argument that the pandemic
has fundamentally damaged Tiffany's business, a person close to
Tiffany said.
"We are very pleased with the way the business has rebounded
following the first quarter and continues to rebound in the third
quarter, especially in Mainland China, and to recover in the United
States," Tiffany Chief Executive Alessandro Bogliolo said.
Jean Jacques Guiony, LVMH's chief financial officer, said the
conglomerate's watches and jewelry brands, including Bulgari and
Tag Heuer, suffered from Chinese and other Asian travellers being
stuck at home, where they are less likely to splurge than when on
trips abroad. Those brands aren't as strong among Western clients
as LVMH's big fashion brands, Mr. Guiony said.
"We lost a big chunk of the touristic business," he said. "We
didn't have the boost of the local client bases, which are less
well-developed than they are at Louis Vuitton and Dior."
Bulgari has been so successful in Asia, the Middle East and
Russia that the brand has focused less on cultivating clients in
Western Europe, Mr. Guiony said. "It's clear the current situation
means we need to do that as well," he said.
(END) Dow Jones Newswires
October 15, 2020 13:41 ET (17:41 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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