LVMH reports 18 per cent rise in revenue

<p>The French luxury goods group was boosted by the weak euro and strong sales for wine and spirits.</p>

French luxury goods giant LVMH Moet Hennessy Louis Vuitton has reported an 18 per cent rise in revenue for the nine months to September compared to the previous nine months.

During the period, the firm saw €25.3 billion (£18.74 billion) in revenue. It also reported that organic revenue, which strips out the effects of currency movements, grew at a rate of seven per cent for the three months to September – analysts had forecast a rise of only around 5.5 per cent.

Based in Paris, LVMH is the world's biggest luxury group. As its name implies, it sells Louis Vuitton handbags, Champagne brands like Moet and Hennessy cognac. It also includes fashion labels like Fendi and Marc Jacobs, as well as a number of perfumes, cosmetics, watches and jewellery brands.

The third quarter was boosted by a weaker euro, as well as strong sales for wine and spirits. This helped to outweigh slowing growth in fashion. The firm also noted that there had been overall growth in both Europe and the US. Plus, it has seen "acceleration" in Japan.

Overall revenue for the three months to September rose by 16 per cent.

The firm says that in China, wine and spirit sales saw "notable acceleration in the third quarter" - previously, the market had taken a hit by the country's anti-corruption drive.

"Hennessy cognac [...] benefited in the third quarter from a strong rebound in shipments to China and continued excellent momentum in the United States," it explained.

However, sales in the group's fashion and leather businesses were slower than expected.

Weak euro benefits European luxury brands

The Wall Street Journal (WSJ) explains that LVMH's large gap between organic and overall growth demonstrates how the low euro has boosted Europe's luxury industry.

A weak euro means that overseas sales translate to even more when converted back to euros. Plus, the volatile currency attracts Chinese shoppers to Western Europe and Japan because prices for luxury goods are significantly higher in their home countries due to taxes and exchange rates.

WSJ notes that other luxury firms like Hermes International SCA and Kering SA, which owns Gucci, have reported similar phenomena this year.

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