LVMH said lacklustre demand from Asia had affected sales at Louis Vuitton, the luxury goods group’s flagship brand, which reported weaker-than-expected growth in the first quarter.
Speaking to analysts on Tuesday, a day after LVMH released the quarterly sales figures, Jean-Jacques Guiony, LVMH’s finance director, said: “Half of our business is done in the eastern part of the world. And for the last 9-10 months there has been flattish growth there. Our business model is suited to much stronger demand.”
Mr Guiony said that growth at Louis Vuitton, part of the group’s fashion and leather goods division, had not been “materially different” from the division’s overall 3 per cent organic growth rate in the first quarter, compared with the same three months in 2012. The group does not split out the performance of its different brands.
But LVMH’s policy of limiting business with wholesalers contributed to the unit’s underperformance. Unlike Louis Vuitton, which LVMH controls through its own network of retail stores, many of its other fashion brands – which include Celine and Marc Jacobs – are sold through third party distributors.
Analysts had expected growth of 5-6 per cent in the core fashion and leather goods unit, and the relative underperformance contributed to a 4 per cent fall in LVMH’s shares, which closed at €126.25.
Total sales at LVMH were up 7 per cent in organic terms – stripping out the effect of currencies and store openings – to €6.9bn in the first quarter.
Mr Guiony said demand in China had been affected by lower economic growth, the change in political leadership and tighter rules on offering gifts to Chinese officials. The rise of the renminbi last year against the euro had accentuated the price difference with Europe, prompting those living on the mainland to defer purchases until they could travel and buy outside the country.
In contrast, China provided a boost to Danone, the Paris-based food producer which reported “booming” sales in the Asia-Pacific region – especially China – for its baby foods division, which reported a 17 per cent rise in organic sales.
The producer of Activia yoghurt and Evian water reported a 5.6 per cent rise in total sales in the first quarter, like for like, to €5.3bn, which was above expectations.
Danone sales in Europe – which accounts for 40 per cent of the total – were 5.1 per cent lower in line with expectations.
Sharply falling sales in austerity-hit southern Europe last year in the core dairy business led to a profits warning last year and a cost-cutting programme.
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