LVMH reported first-quarter sales growth of 3 per cent at its flagship fashion and leather goods business, well below analysts’ expectations of 5-6 per cent, which is likely to raise once again concerns about the maturity of Louis Vuitton, its main profits motor.
The Paris-based group, headed by Bernard Arnault, France’s richest man, who has been at the centre of a political storm over high taxes and nationality, gave no explanation for the underperformance relative to market expectations in a statement issued after the Paris market closed on Monday night.
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As the world’s largest luxury goods group, LVMH is seen as an industry bellwether. However, the resistance of some smaller and less logo-driven leather goods brands, such as Hermes and PPR’s Bottega Veneta, to last year’s economic downturn in China – a market on which western luxury goods groups have become increasingly dependent for growth – has raised questions about Louis Vuitton’s bellwether status.
LVMH owns more than 60 brands, but fashion and leather goods is by far its most important division, accounting for 60 per cent of group operating profit. Organic sales in fashion and leather goods slowed quarter on quarter last year from 12 per cent in the first quarter to 4.5 per cent in the final.
