LVMH growth continues in Q3

The ever-popular Louis Vuitton brand continues to drive profits at luxury group LVMH. The group has posted an 11 percent rise in revenues to €10.6 billion in the first nine months of 2006. Sales in the third quarter gained 6.8 percent to €3.66 billion. Despite tough comparables, organic growth was up in the double-digits in the third quarter and up 11 percent in the first nine months. Revenue growth of the Wines & Spirits division fell below analysts' expectations, but Fashion & Leather Goods continued to make headway with 11 percent organic growth to €3.73 billion in the third quarter. The group pointed out that the Louis Vuitton brand “performed extremely well in Europe and Asia and continued its strong momentum in the US �. It cited the “huge� success of its new Monogram Mini line as well as the continued popularity of handbags like the Speedy. The group also mentioned rapid growth at the Fendi brand, thanks to Karl Lagerfeld's ready-to-wear collection and the phenomenal success of the Spy and Fendi B. bags. The label continues its programme of store renovations and new boutique openings. The group also mentioned strong performances of Loewe's Amazona handbag line, Berluti's La Démesure collection and accessories from the labels Marc Jacobs and Marc by Marc Jacobs. The Watches & Jewellery division saw sales soar 27 percent, while Perfumes & Cosmetics sales rose 13 percent. The only division that did not experience double-digit gains is company's selective retailing business.

LVMH anticipates maintained momentum in the second half and “confirms its objective of a very significant increase in its results in 2006.� However, during the conference call held on earlier this week, analysts were critical of the performance of Wines & Spirits and its effect on overall sales results. Trade magazine WWD even hinted at a slowdown in the luxury goods market, due to the strong euro. Independent investment researcher and credit rating firm Standard & Poor lowered its recommendation for the group from buy to hold this summer, citing concerns over further weakening of the dollar and the yen and a worsening of the macro economic environment, including the increased threat of terrorist attacks. It did say that it saw potential for the group's share price in the long term.