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October 16, 2013 12:59 pm
Shares in LVMH, the world’s biggest luxury goods group by revenue, fell more than 6 per cent on Wednesday morning as investors reacted to a slowdown in third-quarter sales growth.
The share price fall, which wiped about €4bn off LVMH’s market capitalisation, came as the group said that sales at its flagship Louis Vuitton brand between July and the end of September had been lower than its fashion and leather goods division as a whole.
On Tuesday night, the group said that sales of fashion and leather goods were €2.43bn during the quarter, lower than the €2.52bn during the same period last year.
Analysts said that the fall stemmed from a shake-up of Louis Vuitton as its parent company looked to take the brand further upmarket.
As part of that process, the company this month announced the departure of Marc Jacobs as creative director – a post he had held for 16 years. In June, the company appointed Delphine Arnault, daughter of LVMH founder Bernard Arnault, as its executive vice-president.
On Wednesday morning, Jean-Jacques Guiony, LVMH’s chief financial officer, confirmed the weaker-than-expected performance of Louis Vuitton, which accounts for most of the division’s sales.
“The growth of Vuitton was slightly below the rest of the division,” he told analysts.
Shares in the group were down 6.4 per cent at €135.55 in afternoon trading.
Sales during the first nine months of the year at the group’s fashion and leather goods division increased 4 per cent on an organic basis compared with 5 per cent for the first six months of the year. Analysts had expected a figure closer to 6 per cent.
“What these numbers tell us is that the transition in fashion and leather goods will likely be bumpier and longer,” said Luca Solca, an analyst at Exane BNP Paribas.
The Paris-based group, which includes the Dior brands and Celine, said that revenue across its divisions was €7bn between July and the end of September, above the €6.9bn reported in the same period last year but below the €7.24bn that analysts were expecting.
However, the group said that its sales of champagne experienced a rebound during the third quarter, driven by strong demand in Asia and American markets. That helped push sales in its wines and spirits division to €2.84bn for the first nine months of this year – a 7 per cent increase in organic terms over the same period of 2012, and a 3 per cent increase on a reported basis.
Overall, revenue for LVMH during the first nine months of this year was €20.7bn, an increase of 8 per cent in organic terms and 4 per cent on a reported basis. Analysts had expected a 9 per cent increase in organic terms.
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