Louis Vuitton, Dior Cushioned LVMH Sales in Luxury Slump

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)

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