LVMH sales return to growth as China demand improves

PARIS, Oct 16 (Reuters): LVMH's sales increased by 1 per cent in the third quarter, driven by improved demand in China, offering some solace to a luxury goods sector grappling with a prolonged slump.
The rise reported by LVMH on Tuesday represents the first quarter of growth this year for the world's largest luxury goods group, which is seen as a sector bellwether with operations spanning fashion, alcohol and retail.
LVMH said in a statement that trends in Asia excluding Japan, a market dominated by China, showed "noticeable" improvement nine months into the business year.
"Mainland China turned positive in Q3," LVMH Chief Financial Officer Cecile Cabanis told analysts in a call.
Cabanis cautioned that LVMH faces headwinds in the fourth quarter, including unfavorable currency rates and ongoing economic uncertainty, but said the group was confident with the new creative direction its brands are taking.
Sustained financial improvement will "take time" with "gradual sequential improvement", added Cabanis.
Sales at the fashion and leather goods division, home to flagship brands Louis Vuitton and Dior and accounting for more than two-thirds of profits, were down 2 per cent versus a year earlier.
The trading update beat a Visible Alpha consensus cited by HSBC that had seen flat overall sales and a 4 per cent decline for the fashion and leather division.
Quarterly sales at the conglomerate controlled by French billionaire Bernard Arnault, which also owns brands such as jeweller Tiffany, Moet & Chandon champagne and beauty retailer Sephora, rose 1 per cent to 18.28 billion euros ($21.17 billion).
The decline in the group's all-important fashion and leather division in the July to September period marked an improvement from the 9 per cent drop posted after the second quarter.