LVMH’s quarterly sales climb as China improves

By Helen Reid and Tassilo Hummel

PARIS, Jan 27 (Reuters) – LVMH, the owner of Louis Vuitton and Tiffany, beat fourth-quarter sales forecasts on Tuesday, boosting hopes of a luxury sector rebound even as trade tensions, a weaker dollar and high gold prices squeezed margins.

Total quarterly sales at the world’s largest luxury group came in at 22.7 billion euros ($27.1 billion), up 1% on a like-for-like basis versus expectations of a 0.3% decline in a consensus compiled by Visible Alpha. 

The French group reported signs of a return to growth in Asia, with domestic Chinese sales rising in the quarter, confirming a recovery it has flagged for several months.

Sales in its watches and jewellery division grew 8% in the quarter, well above forecasts. But revenue in its key fashion and leather division, which generates the bulk of profits, fell 3% when adjusted for currency swings, in line with expectations.

Investors have been looking for signs the sector is recovering from a protracted downturn, and recent results from peers Richemont and Burberry surprised to the upside, helped by a recovery in China.

But LVMH’s results “could bring a bit more prudence to the sector”, Barclays analysts said.

CEO and billionaire owner Bernard Arnault said he was cautious about the year ahead and the company would limit its costs and expenses.

“With the continuing geopolitical crises, with economic uncertainty and the policies of certain states, including ours, to tax us to the maximum and create unemployment – I think there is reason to be a little cautious,” he told analysts.

PRESSURE ON MARGINS  

LVMH’s 2025 operating profit fell by 9%, with margins dragged down by a range of factors, including currency moves – accounting for just over half of the decline – as well as U.S. tariffs hitting alcohol exports and record gold price, which lifted import costs for jewellery. 

Amid a property crisis and strong local competition in China, LVMH has sought to use its financial heft to gain momentum, opening a giant ship-shaped Vuitton store in Shanghai and a new Dior flagship store in Beijing, among other moves. 

The ship-shaped store has been a “great success” for the key Louis Vuitton brand, Arnault said.

Chinese shoppers, including its tourists abroad, account for almost a third of LVMH’s fashion and leather sales, UBS estimates.

At its last trading update, LVMH’s comments about slightly better Chinese demand stoked a luxury stock market rally that added nearly $80 billion to combined company valuations.

LVMH said the weaker dollar led U.S. tourists to spend less in Europe, with regional sales down 2% last quarter, while U.S. sales increased by 1% in the same period. Sales in Asia, including China, rose 1%. 

($1 = 0.8365 euros)

(Reporting by Tassilo Hummel. Editing by Mark Potter)